Viku articles

Millionaires who gave it away

2010-03-23T01:29:00.000+05:30

By Investopedia

Here are a half-dozen individuals who have found that the highest and best use of their wealth is in helping others.

It comes as no surprise that a large number of Americans fantasize about being rich. The Pew Research Center reported in 2008 that more than 55% of Americans rank becoming wealthy as "important" (43%) or "very important" (13%).

Who wouldn't want to be rich?

The answer is more complicated than you might think. Here’s a brief look at millionaires who, rather than live rich, gave their money away.

The $7 million secret

Grace Groner, a "friendly" and "unassuming" woman from Lake Forest, Ill., made news after she passed away in January at the age of 100. The publicity shone a light on her modest lifestyle as well as what she left behind: $7 million donated to her alma mater, Lake Forest College. Rather than live large, Groner preferred living in a plainly furnished one-bedroom house and buying her clothes at rummage sales.
Groner's fortune came from shares she owned of Abbott Laboratories, where she worked for 43 years and became the president's secretary. In 1935, Groner bought three shares of Abbott costing $60 each. She held on to them as they split many times and paid dividends, which she reinvested.
By the time Groner passed away, the initial investment had allowed her to make the largest gift in her alma mater's history. Groner set up a foundation for the college that will be used for scholarships, especially for students interested in studying abroad.

From alpine villa to mountain hut?

Austrian businessman Karl Rabeder has all the trappings of wealth: luxury cars, beautiful homes, three-week vacations in Hawaii. But he doesn't care for any of it.

The 47-year-old Rabeder, who made his fortune selling interior furnishings and accessories, told the Daily Telegraph newspaper in the United Kingdom that his five-star lifestyle was "soulless" and that he felt that he was a "a slave for things (he) did not wish for or need."
So Rabeder decided to raffle off his luxury villa in the Austrian Alps, worth an estimated $2 million, and sell many of his other possessions. Proceeds will go into the microcredit charity he set up to make loans to the needy in Central and South America.
Once everything is gone, Rabeder says, he may move into a modest hut in the Austrian mountains or to an apartment building in Innsbruck.

An entrepreneur's grass-roots movement

Millard Fuller became a millionaire before he was 30 by forming a direct-marketing company that sold cookbooks and candy to high school chapters of the Future Homemakers of America. But rather than kick back and enjoy the fruits of his labor, Fuller and his wife, Linda, gave it all away and set out on a life of Christian service that led to the building of homes for more than 1 million people. The Fullers founded two organizations -- Habitat for Humanity and the Fuller Center for Housing -- that inspire donors to give money, material and labor to build homes for low-income families.

Fuller died last year at the age of 74. The Fullers' story is the subject of a pending documentary titled "One Moment," which examines the couple's contributions to the international campaign to build affordable housing.

A duty to the vulnerable

New Jersey-born Charles "Chuck" F. Feeney made much of his fortune by co-creating Duty Free Shoppers Group, the airport gift shop chain that began in 1960 with outlets in Hong Kong and Honolulu and grew into the world's largest travel retailer. Feeney is famously frugal and goes to great lengths to conceal his wealth -- and his enormous philanthropic donations -- from the public.
Feeney sold Duty Free Shoppers in 1997 to luxury retailer LVMH Moet Hennessy Louis Vuitton. Despite his wealth, Feeney doesn't own a home or a car, according to a 2008 profile by Citywire, a U.K. financial publication, which characterized Feeney as "anything but the image of a wealthy businessman."
Feeney created a charitable organization in 1982 to spread his wealth. That organization evolved into The Atlantic Philanthropies, an international foundation focused on helping disadvantaged and vulnerable individuals through four program areas: aging; children and youth; health; and reconciliation and human rights.
Since its founding, The Atlantic Philanthropies has given away about $5 billion. Today, it has an endowment of about $4 billion, and Feeney wants to see it empty its coffers by 2016 -- this would require spending $400 million a year on charitable causes.

Down-to-earth

Have you ever heard of Priscilla Bullitt Collins? The Seattle philanthropist passed away in 2003 at the age of 82 after having given away more than $100 million on behalf of such causes as the environment, education and the arts -- on the condition that not one iota of this largesse bear her name, ever. Collins came to her fortune through the sale of King Broadcasting, a pioneering media empire in Seattle built by her mother, Dorothy Stimson Bullitt. Described by a Seattle newspaper as a woman who "looked like a cashier at a church bake sale," Priscilla Bullitt Collins lived in a one-bedroom apartment and drove a beat-up yellow Datsun.

Calculator: Save $1 million

Despite her frugal ways, she didn't have any trouble parting with her fortune and championing charitable causes, including the construction of housing for some of Seattle's working poor.
Proceeds from the sale of King Broadcasting were funneled into the Bullitt Foundation, dedicated to protecting the air, land and waters of the Pacific Northwest.

Omaha's altruistic oracle

No list of frugal philanthropists is complete without the inclusion of Warren Buffett. The renowned investor and chairman of Berkshire Hathaway was ranked as the richest person in the world by Forbes magazine in 2008 with a net worth of $62 billion. He dropped to the second-richest in the world in 2009 and third-richest in 2010 after he began moving money to charity.

Famously, Buffett doesn't believe in dynastic wealth or five-star living. In 2006 he announced that he would give his fortune to charity, mostly to the Bill & Melinda Gates Foundation. His pledge hardly represents his entire fortune, some of which he plans to leave to his heirs (in modest amounts).
But don't assume Buffett is living the high life. The famously frugal investor still lives in the same Omaha, Neb., house he bought in 1958 and indulges in such simple pleasures as eating junk food and watching sports on TV.

The bottom line

These modest millionaires (and billionaires) defy our expectations of the superwealthy, and even of human nature. As it turns out, not everyone wants to be rich, and even those who think they do find that there are richer experiences than the luxuries their wealth affords.This article was reported by Tara Struyk for Investopedia.

Insurer targeted HIV patients to drop coverage

2010-03-21T08:21:00.001+05:30

When Jerome Mitchell was diagnosed with HIV he was thankful he had bought health insurance. Until his insurance company revoked his policy.

In May 2002, Jerome Mitchell, a 17-year old college freshman from rural South Carolina, learned he had contracted HIV. The news, of course, was devastating, but Mitchell believed that he had one thing going for him: On his own initiative, in anticipation of his first year in college, he had purchased his own health insurance.

Quiz: What's your life worth?

Shortly after his diagnosis, however, his insurance company, Fortis, revoked his policy. Mitchell was told that without further treatment his HIV would become full-blown AIDS within a year or two and he would most likely die within two years after that.

So he hired an attorney -- not because he wanted to sue anyone; on the contrary, the shy African-American teenager expected his insurance was canceled by mistake and would be reinstated once he set the company straight.

But Fortis, now known as Assurant Health, ignored his attorney's letters, as it had earlier inquiries from a case worker at a local clinic who was helping him. So Mitchell sued.

In 2004, a jury in Florence County, South Carolina, ordered Assurant Health, part of Assurant Inc, to pay Mitchell $15 million for wrongly revoking his health insurance policy. In September 2009, the South Carolina Supreme Court upheld the lower court's verdict, although the court reduced the amount to be paid him to $10 million.

By winning the verdict against Fortis, Mitchell not only obtained a measure of justice for himself; he also helped expose wrongdoing on the part of Fortis that could have repercussions for the entire health insurance industry.

Previously undisclosed records from Mitchell's case reveal that Fortis had a company policy of targeting policyholders with HIV. A computer program and algorithm targeted every policyholder recently diagnosed with HIV for an automatic fraud investigation, as the company searched for any pretext to revoke their policy. As was the case with Mitchell, their insurance policies often were canceled on erroneous information, the flimsiest of evidence, or for no good reason at all, according to the court documents and interviews with state and federal investigators.

The revelations come at a time when president Barack Obama, in his push to rescue the administration's health care plan, has stepped up his criticism of insurers. The U.S. House of Representatives is expected to vote Sunday on an overhaul of the health system, which Obama has said is essential to do away controversial and unpopular industry practices.

Insurance companies have long engaged in the practice of "rescission," whereby they investigate policyholders shortly after they've been diagnosed with life-threatening illnesses. But government regulators and investigators who have overseen the actions of Assurant and other health insurance companies say it is unprecedented for a company to single out people with HIV.

In his previously undisclosed court ruling, the judge in the Mitchell case also criticized what he said were the company's efforts to cover its tracks.

Assurant Health said that as a matter of policy it did not comment on individual customer claims.

"We disagree with certain of the court's characterizations of Assurant Health's policies and procedures in the Mitchell case," it said in a statement provided by spokesman Peter Duckler, adding: "The case continues to progress through the appellate process."

What really broke the banks

2010-03-21T00:17:00.000+05:30

By Bill Fleckenstein

For all the finger-pointing, a thick report on Lehman shows again that incompetent management was the problem. Short-sellers merely spotted it first.

I'd like to begin by talking about short selling, something near and dear to my heart for about 12 years until I closed my short fund a year ago.

Specifically, let me touch on the topic of all the blame heaped on short-sellers -- who trade in a way that lets them make money when a stock goes down -- for the calamity that was the financial crisis.

What prompts this week's rant: the release of a 2,200-page report on the collapse of Lehman Brothers written by bankruptcy examiner Anton Valukas and filed March 11 in a Manhattan court.

Mirror, mirror on Wall Street

It was and still is a bit pathetic to blame short-sellers, given that the table for that disaster was set by reckless risk taking on the part of the fools running large financial institutions. But all through the crisis, people such as Lehman's Dick Fuld, Morgan Stanley's (MS, news, msgs) John Mack and Citigroup's (C, news, msgs) Vikram Pandit blamed their problems on short-sellers.

(Back then, the Securities and Exchange Commission found their sob story somewhat moving: To quote from a July 2008 column on my Web site: "The SEC has announced an investigation into negative rumors that 'hit' Lehman. Funny, I don't ever remember the SEC investigating buyout rumors surrounding Lehman or Bear Stearns. . . . It would seem that they're so clueless about what the real problem is that they're stuck lashing out at short-sellers.")

I, Jim Chanos and others pointed out at the time that it wasn't the short-sellers who caused the collapse in many of the financial stocks. It was incompetent management and, most likely, one financial institution selling another financial institution's stock to try to hedge its own risk.

A lot of what occurred was also probably a function of the goings-on in the market for collateralized debt obligations -- the complicated packages of loans that got banks into so much trouble -- as sellers of these products tried to hedge out their risk.

I like many of Valukas' conclusions, including one that found Fuld "at least grossly negligent," which is something you could say about virtually all the leaders of financial institutions.

And, the report -- which corroborates what anyone with an ounce of brains already knows -- flies in the face of Pandit's testimony in front of Congress earlier this month.

Quoting the Financial Times' coverage of that testimony: "Vikram Pandit, chief executive of Citigroup, blamed short selling rather than any self-inflicted weakness for the bank's near-collapse in 2008 and thanked taxpayers for its government bail-out."

And, quoting the chief finger pointer himself: "There are ways that fear overtakes it (a specific stock), and that's the tool short-sellers need to make money."

To which I would counter: Pandit is either clueless or truth-challenged. Short-sellers do not make money by spreading rumors or pounding share prices lower. They had nothing to do with the problems of Citigroup, Bear Stearns, Lehman, Merrill Lynch or Enron.

Short-sellers simply spot trouble

What short-sellers need to make money is to find companies such as the above that are badly managed, have poor capital structures, or both, and are wildly mispriced. The facts win out in the end, and that's how short-sellers make money (after having endured managements' hype along the way).

If only it were so "easy." I would be remiss if I didn't include the force wielded by stock market speculators. I can see that speculation is starting to intensify -- with respect to the action in certain questionable stocks and the level of put/call ratios, as well as the fact that the VIX index ($VIX.X), which tracks market volatility, now sits at a relatively high 16.

All of which makes me think that sometime in the next 90 days or so there might be a decent opportunity on the short side, though that has not yet presented itself.

Ten Tips for New Small Businesses

2010-03-18T01:53:00.000+05:30

Save up as much money as possible before starting.

All too often, people go into business without any savings, exclusively using loan money from friends, banks, or the SBA. They except to be able to start paying the loans back right away with their profits. What these business owners don't realize is that it can take months or years to make a profit. And once a lender discovers a business isn't as profitable as expected, the lender is likely to call in the loan or refuse to renew it for another year. Often new business owners then have to take out home equity loans or use credit cards to pay off their loans (which puts their home and credit rating at risk). For more information, see Business Financing FAQ. A better plan is to save up as much of the needed investment money as possible, including your living expenses for the first year, or even two. Odds are that your business won't be profitable for one to two years. Even if you get plenty of business coming your way -- and your customers pay you on time, which isn't always a sure thing -- you'll want to be able to invest most of that money back in the business for space, equipment, advertising, and insurance needs.

Start on a shoestring.

Think small. Don't rent premises if you can work somewhere else, and don't hire employees until you can keep them busy. (You can hire independent contractors or temps in the meantime.) People who start their small business on the cheap, often in a garage, den, or some other scavenged space, and create their first goods or services with more sweat than cash, have the luxury of making their inevitable rookie mistakes on a small scale. And precisely because their early screw-ups don't bury them in debt, they are usually able to learn and recover from them.

Protect your personal assets.

When you go into business for yourself, you are usually personally liable for all judgments and debts that the business incurs. This includes business loans, taxes, money owed to suppliers and landlords, and any judgments against the business as a result of a lawsuit. If you don't protect yourself, a creditor can go after your personal assets, such as your car and your house, to pay for these debts. While you can protect yourself against lawsuits by buying business liability insurance, this won't help you with business debts. If you will be running up big debts, consider forming a corporation or limited liability company (LLC). Just one person can form either of these types of businesses.

Understand how -- and if -- you will make a profit.

You should be able to state in just a few sentences how your business plans to make a substantial profit. For starters, you need to know your costs: how much you'll spend purchasing inventory, paying the rent, compensating any employees, and covering what is likely to be a surprisingly long list of other costs. Then you can figure out exactly how much you need to sell each month, for how many dollars, to cover those expenses and have an adequate profit besides. These numbers are all you need to create a "break-even analysis."

Make a business plan, no matter how short.

Understanding your profit numbers and creating a break-even analysis is the first step in making a business plan. For most small companies, the key portions of a business plan are the break-even analysis, a profit-and-loss forecast, and a cash flow projection. (Projecting your cash flow is key and will make or break your company: Even if your business is getting plenty of work or selling its products, if you're not getting paid for 90-180 days, you're not going to survive unless you've planned for it.) With a cash flow spreadsheet in place, as well as a profit-and-loss forecast, you can tinker with your business idea and improve it before you start -- and continue to use them after you start. Creating a business plan also allows you to determine what your projected start-up costs are (how much money you'll need to save) and what you marketing strategies are (how you'll reach customers to make sales). If you can't make the numbers work on paper, you won't be able to make them work in real life.

Get and keep a competitive edge.

Building a competitive edge into the fabric of your business is crucially important to long-term success. Some ways to get this edge are by knowing more than your competitors, making a product that is hard or impossible to imitate, being able to produce or distribute your product more efficiently, having a better location, or offering superior customer service. One way to hold on to your competitive edge is to protect your trade secrets -- confidential information that gives you a competitive advantage in the marketplace. Examples of trade secrets include customer lists, survey methods, marketing strategies, and manufacturing techniques. To protect your trade secrets under the law, you need to take steps to keep the information confidential. This includes marking documents "Confidential," using passwords to protect computer information, using nondisclosure and/or noncompete agreements, and limiting access to employees with a reasonable need to know the trade secrets.

Another way to keep your competitive edge is to react quickly to bad news. Once you see that your business faces some kind of adversity, you need to come up with a plan to deal with it immediately. This may involve moving your offices, introducing a new product or service, or developing a better way to reach customers.

Put all agreements in writing.

The laws of your state require you to put some contracts and agreements in writing:

Contracts that will last longer than a year.
Contracts that involve the sale of goods worth $500 or more.
Contracts that transfer the ownership of copyrights or real estate.

Even if not legally required, it's wise to put almost everything in writing, because oral agreements can be difficult or impossible to prove. This includes leases or rental agreements, storage agreements, contracts for services (such as consulting or electrical work), purchase orders or contracts for goods worth more than a couple hundred dollars, offer letters of employment, and employment policies. Get in the habit of getting and giving receipts for all goods, services, and deposits, regardless of how much.

Hire and keep good people.

Your goal should be to hire and retain truly excellent employees -- not just reasonably competent ones. A highly competent and truly enthusiastic employee is at least two and sometimes even three times as valuable as a person of average skills. To create a stable and happy workforce, it's essential not only that your employees (and independent contractors) believe they are being fairly treated, but that your business is worthy of respect. Employees and contractors who like their work will represent you well on and off the job. And customers will more likely be loyal to an upbeat business -- and are more likely to recommend it to their friends.

Pay attention to the legal status of your workers.

When you hire workers as independent contractors, make sure they shouldn't really be taxed as employees. The IRS can impose substantial penalties against you for not withholding taxes and paying taxes for a worker who is really an employee. The IRS and other agencies are likely to think that a worker is an employee rather than an independent contractor under any of these conditions:

The worker works full-time or nearly full-time for you.
The worker doesn't work for anyone else.
The worker provides services that are an integral part of your operations.
You control how the worker does the job and provide detailed instructions and training for the worker.

One way to help avoid trouble is to have the worker sign a written service contract, or independent contractor agreement.

Most employees you hire will be "at-will" employees -- subject to being fired at any time and for any reason (except for illegal motives such as discrimination). It's important to preserve your at-will rights because they protect you from having to prove that you have a valid business-related reason to terminate an employee. Don't make any promises to prospective or current employees that you are offering a permanent job or that they will lose their job only if they perform poorly, because this will limit your ability to terminate the employee for other reasons, such as personality conflicts or finances.

When hiring an at-will employee, have the employee sign an offer letter that makes it clear that the employment relationship is at will. Except for high-level executives, you shouldn't have employees sign an employment contract -- this can limit your ability to alter the terms of employment as your business needs change and subjects you to higher legal standards.

Pay your bills early and your taxes on time.

In the real world, where a reputation for keeping one's word is a hugely important asset, a good strategy is either to pay your bills up front or pay them early. You gain trust, build a positive credit profile, and have a built-in safety net if things go badly. These benefits outweigh any interest you might earn by holding onto your money until the last possible minute. Most importantly, pay your payroll taxes on time, especially the portion that you withhold from your employees' paychecks. The IRS and state tax authorities can hold you personally liable for these taxes, plus stiff penalties, if they're not paid. This is true even if you operate your business as a corporation or LLC or if your business goes bankrupt -- you will still be personally and legally on the hook to pay back payroll taxes.

Still printing money at full speed

2010-03-18T01:52:00.000+05:30

By Bill Fleckenstein

A year after the market bottom, fear has faded, and stocks are up. But what happens if the printing presses stop rolling?

It's hard to believe a whole year has passed since we saw the market lows.

Obviously, there was a tremendous amount of fear at this time last year, but money printing by the government and the Federal Reserve has worked its magic, and stock prices have done what they have done.

That, compared with the weak job market, makes for quite a large dichotomy. Indeed, the scope of economic problems that need to be dealt with is still enormous.

Of course, because expectations were so dismal a year ago, a certain amount of improvement was due to take place.

Although central banks worldwide are beginning to contemplate removing the liquidity they've created, none of it has been removed thus far. If anything, backpedaling has been the order of the day.

We will soon see how far the Fed can go in its attempts to stop its quantitative easing, which has meant buying Treasurys and other assets to put money directly into the economy.

Which sort of leads us to Greece and the paradox known as the euro.

They've got only a garlic press

For many years, I and others thought that when times got tough, it would be virtually impossible for the European currency to hold together. That's because of foreseeable problems like the Germans not agreeing with the Greeks (as we're seeing now, in just one of any number of examples we could use). On the other hand, there is an attractiveness about the euro: No member country of the European Union can print it. And membership does come with rules, even if they are somewhat flexible.

The EU is doing exactly what it should do as its attempts to make Greece behave in a sensible fiscal fashion. Yet, as Portugal, Spain, Italy, etc., deal with their own fiscal imbalances, it's hard to see how the euro will manage to come out the other side intact.

My reason for delving into this subject: If one looks at the dollar, it's a piece of paper that answers to no rules. None, period.

Can you imagine the uproar in this country if the president proposed the sort of budget cuts and tax hikes that the Greek government is proposing, and that have Greeks taking to the streets? (That is not to say the Greeks don't have a lot of fat to cut.) But neither the president nor Congress will propose anything like that. It's the pressure being applied to the euro because of rules that is getting Greece to act. And, to repeat, we have no rules for the dollar.

So, as poor a currency as some folks want to believe the euro is, the dollar is that much worse.

The printing-press hangover

At some point, the consequences of money printing run amok will be forced upon us, and they will be painful. It will happen when the world funding crisis now playing out elsewhere eventually hits our shores. Quite likely, the United Kingdom will be the next to be taken to school. (For details on the U.S. funding crisis I expect, read "The next crisis has already begun.")For now, stock bulls have reason to cheer on "the copious amounts of money being created from thin air by the world's central banks. Money printing plus imagination are potent forces that can't solve our problems but can affect the stock market in such a way as to make it appear that the worst has passed." (From my April 6, 2009, column, "A bear rally in bull's clothing?")

In deference to those forces, I followed up with these comments: "Throughout the recent stock market rally, I have proclaimed my agnosticism about what might happen next, although I've been leaning toward the fact that money-printing may make stocks go higher (and thus have not wanted to be short)." (From an Aug. 13, 2009,

It seems that the view of billionaire commodity pro Jim Rogers is remarkably similar. That observation comes by way of a couple of interviews he's done with the Wall St. Cheat Sheet.

In a December conversation, he first took on suggestions by economist Nouriel Roubini, known as "Dr. Doom," that risky financial bubbles are building in the gold market and in China:

"I am flabbergasted at Mr. Roubini's comment about (gold and China) bubbles because there is not a single market in the world making all-time highs except gold, U.S. government bonds, cocoa and the Sri Lankan stock market. That's hardly reason to call for a bubble. So, I am most perplexed about this alleged bubble which is out there."

Windowsill veggies worth $200?

2010-03-18T01:43:00.001+05:30

By Donna Freedman

You don't need land to garden. And containerized gardens will, at the very least, yield enough to cover your startup costs. So what have you got to lose?

All right, so I don't know if you can really grow $200 worth of vegetables on your windowsill. It's probably less -- but it might be more, depending on what you grow.

The harvest won't be huge. But have you priced salad greens or fresh herbs lately? (And have you ever tasted a real tomato?) Done right, these little spreads will at least pay for their startup costs and may actually make a dent in your food bills.

Just ask Manhattan resident Mike Lieberman, who blogs at Urban Organic Gardener. In three large self-watering containers and a dozen hanging pots on his fire escape, he grew lettuce, kale, chard, cherry tomatoes, sweet and hot peppers, and four herbs.

"The first time I harvested a salad, it was overwhelming," says Lieberman. "It (feels) good knowing that it's of my own work, my own effort -- and knowing that what I just picked would have cost me $3 if I'd gone to the store."

A fire-escape garden like Lieberman's may not be strictly legal (he says he leaves room for emergency flight). But even a single sunny windowsill can support dill or chives that add real zing to scrambled eggs or salad.

About that salad: Fill a window box with colorful mesclun mixes and your salad will be the star of the table rather than an anemic supporting player.

Best of all, you'll know exactly how fresh it is because you just picked it, and you can limit or eliminate the chemical fertilizers and pesticides common to modern farming.

A balcony increases your options, with delights such as Tomato Tumbler cherry tomatoes (a hybrid developed for hanging baskets), bambino eggplant, red Malabar spinach (a climbing variety), baby Persian cucumbers, Pot of Gold chard, Orange Pixie tomatoes, Super Chili hot peppers and Round Romeo carrots.

This is not a gardening column, so I won't give chapter and verse about pinch-backs or pollination. Instead, I'll offer the basic components and tips on how to keep startup costs low.

Liquid kelp and worm castings

According to a 2009 survey from the National Gardening Association, 31% of American gardeners grow food, and nearly half of those do at least some gardening in containers. The average amount spent on the garden is $70.

"The Impact of Home and Community Gardening in America" (.pdf file) further notes that the wobbly economy isn't the only reason people grow food. Improved flavor, quality and food safety were also frequently cited.

"You know where it came from, how fresh it is -- and it wasn't flown in," says Maria Finn, the author of "A Little Piece of Earth: How to Grow Your Own Food in Small Spaces."

Fruits and vegetables are often bred to stand up to transport and long storage, Finn notes, which means that "flavor is not a priority." For those who do their harvesting in supermarkets, freshly picked produce is a revelation.

Growing in a box is not the same as growing in the ground. First off: Do not poach soil from the park or your mom's garden. Containerized plants do best with potting soil because it drains readily, doesn't compact and has no weeds or pests.

The smaller the bag, the more you'll pay, unless you luck into a stupendous loss-leader sale. Consider splitting the cost of a bigger bag with other apartment farmers.

You'll need to fertilize, because every time you water your plant, some nutrients drain away. Renee Shepherd of Renee's Garden urges the organic route; liquid fish emulsion and liquid kelp don't cost much, she says. Use at half-strength a couple of times during the summer.

"Fish emulsion can be kind of stinky," Shepherd says, "but you can find deodorized fish emulsion or some other organic fertilizer suitable for containers."

Garden author Finn augments her soil with help from a worm-composting box in her kitchen. The red wigglers eat kitchen scraps, coffee grounds and tea bags, and their nutrient-rich castings (the polite word for worm turds) make containerized veggies happy. It's easy to make a worm-composting box.

Lieberman has had success with worm-free composting. He uses scavenged containers such as an empty cat-litter bucket. It's one way of dealing with food waste. Incidentally, the required "brown" (carbon-rich) materials can be things such as nut shells, dry pine needles and stale cereal or grains.

Store-bought fertilizer need not be pricey either. You could share a container with others. Or if you're a fan of free gift card programs, cash in some points for a Home Depot or Amazon.com card and use them to buy your cuke food. Maybe your potting soil, too.

Lessons of a $618,616 death

2010-03-11T22:07:00.001+05:30

By Amanda Bennett

Two years after her husband's death and almost 10 years after his cancer diagnosis, a woman examines the wrenching emotional and financial costs of keeping him alive.

It was sometime after midnight on Dec. 8, 2007, when Dr. Eric Goren told me my husband might not live till morning. The kidney cancer that had metastasized almost six years earlier was growing in his lungs. He was in intensive care at the Hospital of the University of Pennsylvania in Philadelphia and had begun to spit blood.

Terence Bryan Foley, 67 years old, my husband of 20 years, father of our two teenagers, a Chinese historian who earned a doctorate in his 60s, a man who played more than 15 musical instruments and spoke six languages, a San Francisco cable-car conductor and sports photographer, and an expert on dairy cattle and swine nutrition, film noir and Dixieland jazz, was confused. He knew his name, but not the year. He wanted a Coke.

Should Terence begin to hemorrhage, the doctor asked, what should he do?

This was our third end-of-life warning in seven years. We had fought off the others, so perhaps we could dodge this one, too. Terence's oncologist and I both believed that a new medicine he had just begun taking, Pfizer's Sutent, would buy him more life.

Keep him alive if you can, I said.

Terence died six days later, on Friday, Dec. 14.

What I couldn't know then was that the thinking behind my request -- along with hundreds of decisions we made over the years -- was a window on the impossible calculus at the core of today's health care dilemma. Terence and I were eager to beat his cancer. Backed by robust medical insurance provided by a succession of my corporate employers, we were able to wage a fierce battle. As we made our way through a series of expensive last chances, like the one I asked for that night, we didn't have to think about money, allocation of medical resources, the struggles of roughly 46 million uninsured Americans, or the impact on corporate bottom lines.

Compare health insurance quotes

Terence's treatment was expensive. The bills for his seven years of medical care totaled $618,616, almost two-thirds of which was for his final 24 months. Still, no one can say for sure whether the treatments helped extend his life.

Over the final four days before hospice -- two in intensive care, two in a cancer ward -- our insurance was billed $43,711 for doctors, medicines, monitors, X-rays and scans. Two years later, the only thing I can see that the money bought for certain was confirmation he was dying. Along with a colleague, Charles Babcock, I spent months poring over almost 5,000 pages of documents collected from six hospitals, four insurers, Medicare, three oncologists and a surgeon. Those papers tell the story of a system filled with people doing their best. Stepping back and looking at that large stack through a different lens, a string of complex questions emerges.

31% for paperwork

Health care costs represent 17% of today's U.S. gross domestic product. Medicare devotes about a quarter of its budget to care in the last year of life, according to the policy journal Health Affairs. Yet as I fought to buy my husband more time, it didn't matter to me that the hospital charged more than 12 times what Medicare then reimbursed for a chest scan. It also didn't matter that UnitedHealthcare reimbursed the hospital for 80% of the $3,232 price of a scan, while a few months later our new insurer, Empire BlueCross BlueShield, paid 24% for the same test. And I didn't have time to be thankful that the insurers negotiated the rates with the hospital so neither my employers nor I actually paid the difference between the sticker and discounted prices.

Looking at that stack of documents, it is easy to see why 31% of the money spent on health care went to paperwork and administration, according to research published in 2003 in The New England Journal of Medicine. That number has stayed the same or grown since then, says Dr. Steffie Woolhandler, a professor at Harvard Medical School and a co-author of the study. Often Terence's bills, with their blizzard of codes, took days to decipher. What did "opd patins t" or "bal xfr ded" mean? Was the dose charged the same as the dose prescribed?

The documents revealed an economic system in which the sellers don't set the prices and the buyers don't know what they are. Prices bear little relation to demand or how well goods and services work. "No other nation would allow a health system to be run the way we do it. It's completely insane," said Uwe E. Reinhardt, a political economy professor at Princeton University who has advised Congress, the Department of Veterans Affairs and other federal agencies on health care economics.

In reviewing Terence's records, we found Presbyterian Medical Center in Philadelphia charged UnitedHealthcare $8,120 in 2006 for a 350-milligram dose of the drug Avastin, which should have been free as part of a clinical trial. When my Bloomberg colleague inquired, the 80% insurance payment was refunded. A small mix-up, but telling.

Some drugs Terence took probably did him no good. At least one helped fewer than 10% of patients. Today, pharmaceutical companies and government agencies are trying to sort out the economics of developing drugs that will help only a small subset of patients. These drugs are very expensive. Should every patient have the right to them?

Terence and I answered yes. Each drug potentially added life. Yet that, too, led me to a question I still can't answer. When is it time to quit? Congress dodged the question last year as it tried to craft a health care bill. The mere hint of limiting the ability to choose care created a whirlwind of accusations of "death panels."

One thing I know is that I don't envy the policymakers. As the health care debate heated up, I remembered the fat sheaf of insurance statements that had piled up after Terence's death. Our children, Terry, 21, and Georgia, 15, assented to my idea of gathering every record to examine what they would show about end-of-life care -- its science, emotions and costs. Terence would have approved.

Taking it all into account, the data showed we had made a bargain that hardly any economist looking solely at the numbers would say made sense.

Why did we do it? I was one big reason. Not me alone, of course. The system has a strong bias toward action. My husband, too, was unusual, said Keith Flaherty, his oncologist, in his passionate willingness to endure discomfort for a chance to see his daughter grow from a child to a young woman and his son graduate from high school.

After Terence died, Flaherty drew me a picture of a bell curve, showing the range of survival times for people with kidney cancer. Terence was way off in the tail on the right-hand side, an indication he had beaten the odds. For many, an explosion of research and drug discoveries had made it possible to daisy-chain treatments and extend lives for years -- enough time to keep our quest from having been total madness.

Terence used to tell a story, almost certainly apocryphal, about his Uncle Bob. Climbing aboard a landing craft before the invasion of Normandy, Bob's sergeant was said to have told the men that by the end of the day, nine out of 10 of them would be dead. Said Bob: "Each one of us looked around and felt so sorry for those other nine poor sonsabitches."

For me, it was about pushing the bell curve. Knowing there was something to be done, we couldn't not do it. Believing beyond logic that we were going to escape the fate of those other poor sonsabitches.

Foreign versions of our coming crisis

2010-03-08T01:23:00.004+05:30

By Bill Fleckenstein

Greece and the United Kingdom are suffering a dire funding problem that is headed for US shores.

Regrettably, these days it seems that ferreting out the right investment decisions is sort of all macro, all the time. The top-down economic overview is far more important, I think, than the bottom-up fundamental view of any company or stock.

Important pieces to that macro jigsaw puzzle are Greece and the United Kingdom, as the U.S. is headed for a variation of the funding crisis, though how severe ours will be remains to be seen. Without a money-printing press -- because it uses the euro, not a currency of its own -- Greece is forced to consider austerity measures to deal with its debt woes. The U.K., on the other hand, is not as bad off as Greece, and it does have a press.

For America: A Greco-Anglo scenario?

A crisis of confidence has invaded Greek and U.K. shores, and we can all learn a bit about what our future might look like as we watch developments there. (The U.K. may be the most useful example for us, since we also have a printing press.)We will soon find out whether Bank of England Gov. Mervyn King will extend quantitative easing and, if he does, how the bond market will respond to a renewed effort to pump money directly into that economy. (The pound is already under a good deal of downward pressure.)

I would say that the U.K.'s funding crisis -- to use my ballgame analogy -- is probably in the third inning or so, even if we are still taking batting practice over here. (Read "Economy sinks as we save bankers" and "The next crisis has already begun" to brush up on that analogy.)

Greece braces for tough times

Go to Wall Street Journal

Back to Greece for a second: The sort of straitjacket that it's being placed in by its inability to print money is what's forcing the country to consider making tough decisions. Only in a funding crisis where you have no other options are the Western world's "soft" social democracies willing to -- or rather, are forced to -- make hard decisions. So, the upside of the crisis is potentially coming out the other side in a more sane, sustainable fashion. That's what we all have to hope for.

Inflation ahoy?

But before facing our own debt and currency crisis, the U.S. is liable to experience a period of stagflation and inflation. Regular readers know my view about the strong connectivity between money printing and inflation. (Read "Why all roads lead to inflation" for more on this.)What's difficult is trying to describe in advance the exact path whose destination is inflation. That's because government money printing infects certain markets or niches sooner, with some affected more than others. But one thing is knowable: Money printing always ends up raising prices.

Thus far here in America, we've witnessed a lot of taxes and user fees raised by the government, and businesses that have seen competitors fall away have increased prices. That's a variation of inflation, which will be exacerbated by more money printing.

But a really fine example -- and one that's liable to shock most people, as it actually did me -- is what's happening in China. For that, we can look to a recent New York Times story headlined "Defying global slump, China has labor shortage" (registration required):

"Just a year after laying off millions of factory workers, China is facing an increasingly acute labor shortage. (Meanwhile), as American workers struggle with near double-digit unemployment, unskilled factory workers here in China's industrial heartland are being offered signing bonuses. Factory wages have risen as much as 20% in recent months. . . .

"Some manufacturers, already weeks behind schedule because they can't find enough workers, are closing down production lines and considering raising prices. Such increases would most likely drive up the prices American consumers pay for all sorts of Chinese-made goods. . . . "The immediate cause of the shortage is that millions of migrant workers who traveled home for the long Lunar New Year earlier this month are not returning to the coast. Thanks to a half-trillion-dollar government stimulus program, jobs are being created in the interior."

So there you have it: Massive amounts of monetary and fiscal stimuli are leading, as they always do, to inflation.

Housekeeping

If all that "macro" stuff confuses you, then listen to a new interview I just did with Eric King of King World News dealing with how Greece, the U.K., the funding crisis, bailouts, money printing, gold and gold stocks are all connected.

Buffett's tips for new investors

2010-03-07T00:32:00.004+05:30

By The Wall Street Journal

The world's most famous investor lays out his basic principles in this year's annual letter to Berkshire Hathaway shareholders.

Every few years, critics say Warren Buffett has lost his touch. He's too old and too old-fashioned, they claim. He doesn't get it anymore. This time he's wrong.

* Quiz: How much risk can you tolerate?

It happened during the dot-com bubble, when Buffett was mocked for refusing to join the party. And it happened again last year. As the Dow Jones Industrial Average ($INDU) tumbled below 7,000, Buffett came under fire for having jumped into the crisis too early and too boldly, making big bets on Goldman Sachs (GS, news, msgs) and General Electric (GE, news, msgs) during the fall of 2008, and urging the public to plunge into shares.

Now it's time for those critics to sit down for their traditional three-course meal: humble pie, their own words and crow.

On Saturday, Buffett's Berkshire Hathaway (BRK.A, news, msgs) reported that net earnings rocketed 61% last year to $5,193 per share, while book value jumped 20% to a record high. Berkshire's Class A shares, which slumped to nearly $70,000 last year, have rebounded to $120,000.

Those bets on GE and Goldman? They've made billions so far. And anyone who took Buffett's advice and invested in the stock market in October 2008, even through a simple index fund, is up about 25%.

This is nothing new, of course. Anyone who held a $10,000 stake in Berkshire Hathaway at the start of 1965 has about $80 million today.

How does he do it? Buffett explained his beliefs to new investors in his letter to stockholders Saturday:

Inside the Berkshire Empire

Go to CNBC

Stay liquid. "We will never become dependent on the kindness of strangers," he wrote. "We will always arrange our affairs so that any requirements for cash we may conceivably have will be dwarfed by our own liquidity. Moreover, that liquidity will be constantly refreshed by a gusher of earnings from our many and diverse businesses."

Buy when everyone else is selling. "We've put a lot of money to work during the chaos of the last two years. It's been an ideal period for investors: A climate of fear is their best friend. . . . Big opportunities come infrequently. When it's raining gold, reach for a bucket, not a thimble."

Don't buy when everyone else is buying. "Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance," Buffett wrote. The obvious corollary is to be patient. You can only buy when everyone else is selling if you have held your fire when everyone was buying.

Value, value, value. "In the end, what counts in investing is what you pay for a business -- through the purchase of a small piece of it in the stock market -- and what that business earns in the succeeding decade or two."

Don't get suckered by big growth stories. Buffett reminded investors that he and Berkshire Vice Chairman Charlie Munger "avoid businesses whose futures we can't evaluate, no matter how exciting their products may be."

Diversify your portfolio

Most investors who bet on the auto industry in 1910, planes in 1930 or TV makers in 1950 ended up losing their shirts, even though the products really did change the world. "Dramatic growth" doesn't always lead to high profit margins and returns on capital. China, anyone?

Understand what you own. "Investors who buy and sell based upon media or analyst commentary are not for us," Buffett wrote.

"We want partners who join us at Berkshire because they wish to make a long-term investment in a business they themselves understand and because it's one that follows policies with which they concur."

Defense beats offense. "Though we have lagged the S&P in some years that were positive for the market, we have consistently done better than the S&P in the 11 years during which it delivered negative results. In other words, our defense has been better than our offense, and that's likely to continue."

Timely advice from Buffett for turbulent times.

This article was reported by Brett Arends for The Wall Street Journal.