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Subject: persfin-digest V4 #37
Date: Mon, 19 May 1997 21:00:23 -0400 (EDT)
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persfin-digest Monday, May 19 1997 Volume 04 : Number 037
IN THIS ISSUE:
ADVERTISEMENT: MCI FAX REPLY SERVICE [Oppenheimer Software <Connect-Sale]
My Favorite Rebate Card: Sheraton Optima [Rakesh Agrawal <rocky@openpage]
Any Opinions on Bob Davis, Investment Guru? [eric <73354.3477@CompuServe.]
Money Market Fund and Taxes? [Sergej Zoubok <sqz1909@is2.nyu.edu>]
Cost of Living for Metro Areas? [hartwig@gate.net (Bob Hartwig)]
Legal Term/Right of Way Info Needed (long) [Jacqueline.D.Richardson@Hitch]
Car accident - advice needed [Alexandra Reed <alreed@cisco.com>]
Re: IRA........for minors [jimm@hi.com (Jim McGrath)]
Re: 2nd Mortgage with little equity [jimm@hi.com (Jim McGrath)]
Tips on buying a small business ["Sidney G. Wasch" <swasch@iname.com>]
Re:IRA.....for minors [hrj@juno.com (Harold R Justice)]
Saving for the Kid's College [JONESW@CCSUA.CTSTATEU.EDU]
Re: Any tips for buying a small business? ["L. Chen" <am302@FreeNet.Buffa]
Re: Tax Consequences for Home Sharing ["L. Chen" <am302@FreeNet.Buffalo.E]
at-home MBA? [Ken Stone <kstone@pantheon.YALE.EDU>]
Re: Microsoft Diversification [Scott Barnett <sab@newton.crisp.net>]
Re: Any Credit Cards with Rebates? [David Meyers <dmeyers@panix.com>]
Experience with Frank Armstrong's Book "Investment Strategies for the 21st Century" [mikemore@juno.com (Michael]
Real-estate appraisal as a career? [bh314@scn.org (SCN User)]
AARP supplemental medicare insurance? [eric <73354.3477@CompuServe.COM>]
RE: Hotel discounts, 401K/IRA/house sharing ["Thomas J. Stevens" <amadan@]
RE: Microsoft's Entering Other Markets [Rob Curran <rcurran@halcyon.com>]
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Date: Mon, 19 May 1997 20:33:30 -0400 (EDT)
From: Oppenheimer Software <Connect-Sales@mcimail.com>
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------------------------------
Date: Mon, 19 May 1997 20:35:18 -0400 (EDT)
From: Rakesh Agrawal <rocky@openpage.com>
Subject: My Favorite Rebate Card: Sheraton Optima
My new favorite rebate card is the Sheraton Optima card. Of course, it
isn't a Visa/MC, but if you can live with AMEX as a primary card, it's a
great deal.
There is no annual fee and $1 = 1 Sheraton Club Mile. After you've
accumulated 2,500 Club Miles, (you get a 1,000 bonus for first use of the
card) you can transfer them into a bunch of frequent flier plans. You get
many more choices of airlines than you do with AMEX's Membeship Rewards,
although not as many as Diners Club's Club Rewards.
You can also use the miles for hotel stays, which IMHO is more valuable.
Miles required for a hotel stay range from 3,000-10,000. The 3,000 miles
typically applies to Sheraton Inns and Four Points. You could get a room at
most of their hotels for 7,000 miles or less. (Stays at the Luxury
Collection require the 10,000 points.)
You can find more info at the Sheraton Web site. (http://www.sheraton.com) Once
you get the card, you can check account status online through ExpressNet.
Diners Club also offers 1 mile per $1, although it isn't as widely accepted
and it has an $80 annual fee. However, they do offer some bonuses for first
timers that make it worth the $80. I've got pamphlets for a couple of
special offers that I'd be glad to pass on:
12,000 frequent flier miles -- You get 1,000 miles for each month that you
use the credit card in the first year. At 2c per mile, that's $240. (I've
got one coupon for this which I don't need because I'm already a
cardholder.)
10,000 frequent flier miles -- You get 10,000 miles after you pay the
annual fee. At 2c per mile, that's $200. (I've got one of these; if you
sign up, I get bonus miles for the referral.)
DC also has no-cost primary car rental coverage. Unlike most credit card
coverage, it pays first -- you don't have to go to your insurance company.
- --
Rakesh Agrawal (rocky@openpage.com)
Electronic publishing consultant,
OpenPage
------------------------------
Date: Mon, 19 May 1997 20:35:53 -0400 (EDT)
From: eric <73354.3477@CompuServe.COM>
Subject: Any Opinions on Bob Davis, Investment Guru?
Has anyone been following the advice of various internet stock market gurus?
Bob Davis, for example?
------------------------------
Date: Mon, 19 May 1997 20:41:58 -0400 (EDT)
From: Sergej Zoubok <sqz1909@is2.nyu.edu>
Subject: Money Market Fund and Taxes?
Hi all,
I've been following the list for a long time now and finally have a
question. I'd like to put some money into a Money Market Fund (Vanguard)
but am unclear about something. When I make use of the check writing
privileges on such an account, do I have to pay capital gains on this
amount, since I'm essentially selling shares? If I plan on writing checks
every other month or so, am I better off with a money market account from a
bank rather than a fund? Am I misunderstanding something? I would
appreciate any help.
Regards,
Sergej
Sergej Zoubok
New York University
Department of Politics
sqz1909@is2.nyu.edu
(Editor's Comment - Technically you are, but money markets keep the net
asset value at $1/share, so there is no capital gain (or loss). Also, you
are receiving "dividends", not interest from a MMF. That's why you get a
1099-DIV instead of a 1099-INT. -IK)
------------------------------
Date: Mon, 19 May 1997 20:42:27 -0400 (EDT)
From: hartwig@gate.net (Bob Hartwig)
Subject: Cost of Living for Metro Areas?
I'm looking for additonal sources of information regarding cost of living
differences in different parts of the country. The US Statistical Abstract
reprints some info from the American Chamber of Commerce's ACCRA
publication, but I'm wondering if any other numbers are available.
Specifically, have any Persfinners come across rankings of metro areas by
cost in publications such as Money or Fortune, etc.?
Thanks
Bob
------------------------------
Date: Mon, 19 May 1997 20:43:07 -0400 (EDT)
From: Jacqueline.D.Richardson@Hitchcock.ORG (Jacqueline D. Richardson)
Subject: Legal Term/Right of Way Info Needed (long)
I am thinking of purchasing a 4 unit apartment house. Years ago a small
business-type building was subdivided off from this property. When that was
done a right of way was given to the business over the driveway of the
apartment house so the business could get to the back of their building. I
have a number of concerns about this right of way, but I'm not sure if
they are big enough to warrant not purchasing the apartment house. I like
the building and it is in a good location and provided I could buy it for
the right price I think it is a good investment.
My concerns about the right of way are:
1) Do I have any right to insist that delivery vehicles not park in the
driveway to unload and thus block access by my tenants?
2) When the time comes to repair or repave the driveway am I totally
responsible for the cost or does the business owner have to contribute? (I
will include some text from the current deed below which may shed some light on
this one for those knowledgeable in this area.)
3) How liable am I should someone from the business (either employees or
delivery people) run over a child living in the apartment building who happens
to be playing in the driveway?
Also, please let me know if I haven't thought of something I should have
thought of.
The text from the deed is as follows:
"Together with a right of way upon, over and across the driveway above referred
to, lying northerly of the tract hereby conveyed, to be used in common by the
grantors and the grantee to afford access to the grantee to the building and
premises hereby conveyed, and particularly to afford access to that area of the
tract hereby conveyed which lies easterly of the building situated upon said
tract." (Don't you just love all this legal mumbo jumbo?)
The words "in common" caught my eye - that is where I was wondering if there
might be a sharing of expenses to maintain the driveway, especially should
heavy delivery trucks damage the driveway. Currently, the business is
unoccupied and the building is for sale so there is no telling what may go in
there.
Thank you all very much for any light you could shed on this for me.
jackie
Jacqueline.D.Richardson@Hitchcock.org
------------------------------
Date: Mon, 19 May 1997 20:43:33 -0400 (EDT)
From: Alexandra Reed <alreed@cisco.com>
Subject: Car accident - advice needed
Having lurked in this group for several months, I have come to know you as a
knowledgeable and creative group. Would any of you share your knowledge
with me in a moment of need?
Here's the story:-
I need advice on finding both an attorney and an insurer because my Honda
Civic was crashed into from the rear by a Chevy truck which failed to brake
promptly, yesterday evening, as I stopped at an intersection for traffic
lights in San Jose, California.
I now feel pain in my left leg, back muscles, neck and right wrist and have
had a persistent headache ever since the accident (6.15pm 5/15/97). I had
my car towed back to my home as it's in very bad shape. I cannot drive it.
I really would like to engage the services of a legal professional. I have
lived in the USA just one year and am not clear on the legal situation. The
truck has insurance through California AAA. My own insurance policy had
lapsed, so I was uninsured yesterday.
Any comments or shared experiences any of you may have on claiming
restitution for such a case of severe vehicle damage and maybe bodily
injury, and any references to appropriate attorneys which any of you may
care to provide will be warmly welcomed. If any of you would point me in
the right direction for guidance in what to do next, I will be most grateful.
Regards
Alexandra Reed
------------------------------
Date: Mon, 19 May 1997 20:44:07 -0400 (EDT)
From: jimm@hi.com (Jim McGrath)
Subject: Re: IRA........for minors
> As per a recent post, money can be put into an IRA up to the amount of
> a person's earned income (I might have misquoted). Has anyone done
> this for their child(ren)?
The children must have their own earned income before they can
contribute to an IRA. They can contribute the lesser of $2000 or
their own income. A spousal IRA is the only case in which one
person's income can be contributed to another's IRA.
The money to fund the child's IRA can come from the parent in the form
of a gift to the child, as long as the child had at least that much
earned income. It might be wise for the child to file an income tax
return, even if no taxes are due to show the source of income.
Jim
------------------------------
Date: Mon, 19 May 1997 20:45:24 -0400 (EDT)
From: jimm@hi.com (Jim McGrath)
Subject: Re: 2nd Mortgage with little equity
>
> I have a question about getting a second mortgage to consolidate
> consumer debts. My wife and I received a mailing that offered us a
> second mortgage. After getting details, we were very interested for
> several reasons:
>
> 1) our monthly debt payments would be lowered,
> 2) there is almost no prepayment penalty,
> 3) the interest rate would be lower than on some of our consumer debt,
> and
> 4) most or all of the interest would be deductable at tax time.
>
> This all sounds great to us. The problem I have is that they are
> offering approx 125% of the value of our home even though we have very
> little equity built up. I realize that this could cause a problem if we
> needed to sell the house. But if we were willing to assume that risk
> (that we won't have to sell before we get the 2nd mortgage paid off) are
> there any other dangers to this? Is it maybe even a scam?
There are some downsides to this. A little consumer credit counseling
might be in order before you take any actions.
You would be converting unsecured debt to secured debt. As things
stand now, as long as you continue making mortgage payments, your
other creditors can't touch your house. If things are financially
shakey now, you could stand to loose a lot more if you refinance.
I'm not familiar with the company, but it may not be a scam. I would
guess that they are charging a high enough interest rate that they
will come out ahead on average even if there are some defaults.
If you pay off your other debts with the refinance, what's going to
stop you from running those debts again and being in even worse shape?
Do you have the willpower to cut up your cards, and never charge
another thing until the second mortgate is paid off?
Jim
------------------------------
Date: Mon, 19 May 1997 20:46:24 -0400 (EDT)
From: "Sidney G. Wasch" <swasch@iname.com>
Subject: Tips on buying a small business
Sam Andrusko writes:
>Hello, everyone,
>A friend of mine is thinking of buying a small business, a restaurant
(not a fancy one, a small one (seats about 40)). It's for sale for
$125,000. Any advice, tips, >warnings about the pre-purchase negotiating
would be quit welcome. For example, is the sales price an indicator of
the amount of business the restaurant >does-with rental real estate it
is, but what about with businesses?
>Many thanks.
Contact SCORE.
SCORE is an acronym for Service Corps of Retired Executives. It's
sponsored by the Small Business Administration and the counselors are
mostly retired business executives who volunteer their time to help small
businesses.
It's Free. Look in your telephone directory for the nearest SCORE chapter.
Sidney G. Wasch
Swasch@iname.com
------------------------------
Date: Mon, 19 May 1997 20:46:50 -0400 (EDT)
From: hrj@juno.com (Harold R Justice)
Subject: Re:IRA.....for minors
Paul Landsberg wrote:
Imagine your finances if you didn't have to put very much, if anything
aside for retirement? Maybe this wouldn't be a fantasy if a parent
had put money into an IRA when you were a minor. Ah, the joys of
60 years of compounding.
[exit dream, enter question]
As per a recent post, money can be put into an IRA up to the amount of
a person's earned income (I might have misquoted). Has anyone done
this for their child(ren)?
********************************************************************************
Paul,
I did this several years ago for my three children before they finished
college but I only put in as much as each could match. We opened the
accounts for the minimum $500, with each of them putting in $250 earned
from summer jobs. Two out of the three have continued funding the IRA
each year. The other one is contributing to his company's 401-K plan.
I think it is a good thing to do to get them to think about saving for
the future and it doesn't cost you very much to get them started. After I
got them started they were on their own to continue or not. I think the
key to the success of this idea is getting them to commit half the
initial investment.
Harold
------------------------------
Date: Mon, 19 May 1997 20:51:32 -0400 (EDT)
From: JONESW@CCSUA.CTSTATEU.EDU
Subject: Saving for the Kid's College
>From Bill Jones
Jim Reed says we should be careful about putting savings for our children's
college education in our children's names, even if it might save on taxes.
I agree, but not because I don't trust my child. If your child will be
going to college some time in the future, you should not save any money for
that until after you have fully funded your 403b/401k/Keough possibilities.
Even though it means you will have to go further into debt during the college
years, the earnings from your 403b et al will more than exceed the interest
costs on the debt, because the 403b is tax-free. This is true without even
allowing for the fact that 403b assets do not count for computing financial
aid for your child, so you could get even more of an advantage.
------------------------------
Date: Mon, 19 May 1997 20:52:35 -0400 (EDT)
From: "L. Chen" <am302@FreeNet.Buffalo.EDU>
Subject: Re: Any tips for buying a small business?
> would be quit welcome. For example, is the sales price an indicator of the
> amount of business the restaurant does--with rental real estate it is, but
> what about with businesses?
The key issue is the business' NET income Before tax (after depreciation
and your friend's own salary for whatever amount of time he puts in).
In order to determine that, you need to verify the Sales. Many seller
will tell you that they cheat on taxes and there4 can't prove to you the
true sales.
And some will tell you to sit in the restaurant and deermine for yourself.
That depends on the seasonality of the business. Business owners usually
try to sell during the busy season. Unless you know the business
seasonality well, you may be too optimistic in your projections.
My advice/opinion is to make your evaluation on provable sales only.
Lily Chen
am302@freenet.buffalo.edu
------------------------------
Date: Mon, 19 May 1997 20:53:09 -0400 (EDT)
From: "L. Chen" <am302@FreeNet.Buffalo.EDU>
Subject: Re: Tax Consequences for Home Sharing
> When you rent something, you are in a business. You can deduct the
> expenses of the business from the income of the business and possibly from
> your other income.
>
> You can also depreciate the parts of the house that is used exclusively for
> rentals.
But keep in mind tha when you sell your primary residence (1/2 of it is
rented out), only part of the capital gains, if any, can be deferred --
the part that pertains to the rental unit will be taxed on sale. And the
"basis" for calculating the gain on the rental half is "cost -
depreciation + improvements"
On the other hand, if you have a capital loss on the rental helf, it is
tax deductible on sale.
It is theorectically possible that you can have a loss on your home part
and a gain on your rental half.
Lily Chen
am302@freenet.buffalo.edu
------------------------------
Date: Mon, 19 May 1997 20:54:13 -0400 (EDT)
From: Ken Stone <kstone@pantheon.YALE.EDU>
Subject: at-home MBA?
Can anyone recommend any at-home MBA courses? Either web-based, electronic
media or correspondance-by-mail? Responses appreciated regarding both
specific programs and general impression of quality of at-home MBA's. Would
it be better to go to a local university's evening program?
Thanks,
Ken
------------------------------
Date: Mon, 19 May 1997 20:54:34 -0400 (EDT)
From: Scott Barnett <sab@newton.crisp.net>
Subject: Re: Microsoft Diversification
> (Editor's Question - Can a company acquire a monopoly position, squeeze
> competitors, and drive prices up, with no regulation? -IK)
Exactly. The examples of truly diversified companies I saw were
GE and GM. Does GE's ownership of NBC help them in any way to
sell dishwashers? My concern with Microsoft is that they are
getting into "complementary" businesses that allow them to significantly
leverage either their existing technology, or their market share.
I have no problem with companies building their enterprises, but not
if it will ultimately squash innovation. If you look at Microsoft's
strategy, it appears to try and gain significant market share in a
new market by essentially giving away the technology or service, or
incorporating it into existing product for no or little additional
cost. This makes it extremely hard for others to compete. I don't
necessarily see this happening with GE or GM.
- --
Scott Barnett
sab@crisp.net
------------------------------
Date: Mon, 19 May 1997 20:55:09 -0400 (EDT)
From: David Meyers <dmeyers@panix.com>
Subject: Re: Any Credit Cards with Rebates?
>From: "Alexei Chadovich" <AlexCh@InConnect.com>
>
>I use two cards both with 1% rebate and no annual fee.
>
>One is REI MasterCard (Seafirst Bank), 800-552-7302. It's also an REI
>membership card and they pay the rebate through the REI stores in June.
I was considering the REI card. REI is actually run as
a cooperative, and all members get a rebate based on their
purchases there over the year. And the rebate has been
on the order of 10%. However, for purposes of the rebate,
they give back _less_ when you charge things than when you
use cash - to the tune of about 3% - due to the cost of
processing credit cards I guess. Anyway, when you charge
things on the REI card _at_ REI, they treat it as cash for
the sake of the rebate. Plus getting credit, of course,
for charges elsewhere (was it 1%?).
I held off on the REI card because I'd heard that service
from their bank, Seafirst, was horrible. Having in
the past had to deal with bad charges and such, bank
service for a credit card is pretty important to me. Have
you any comments about this?
>The other one is Frontier VISA (M&T bank) that pays back in cash in
>January, 800-790-5955. It also is a calling card (5% rebate on phone
>calls) but I never used it as such.
I'll take a look into this. Is there a fee?
- --D
------------------------------
Date: Mon, 19 May 1997 20:56:16 -0400 (EDT)
From: mikemore@juno.com (Michael E Morehouse)
Subject: Experience with Frank Armstrong's Book "Investment Strategies for the 21st Century"
I have been reading this book off the net. Does anyone out there have
experience using the strategies outlined in this book or does anyone
have first-hand investment experience with Frank's firm, "Managed
Account Services, Inc."?
Also is there any kind of a downloadable database off the Web that gives
P/B ratios for various mutual funds. I am trying to locate value funds
with low P/B's.
Any advice?
Thanks
Mike Morehouse
mikemore@juno.com
------------------------------
Date: Mon, 19 May 1997 20:57:18 -0400 (EDT)
From: bh314@scn.org (SCN User)
Subject: Real-estate appraisal as a career?
I've seen a number of very informative posts on this
list from real-estate professionals. I'm wondering if
someone can help me with information, or pointers to
information, about real-estate appraisal as a career.
I'm interested in:
- --supply/demand projections for RE appraisers
- --training and education requirements
- --salary ranges
- --advantages/disadvantages of residential vs commercial
RE appraisal
- --RE appraisal professional organizations
- --info available on the net/www
- --anything else you think would be useful!
Thanks in advance for info and pointers--
bh314@scn.org
------------------------------
Date: Mon, 19 May 1997 20:57:42 -0400 (EDT)
From: eric <73354.3477@CompuServe.COM>
Subject: AARP supplemental medicare insurance?
Does anyone have this coverage? Any feedback- good or bad?
------------------------------
Date: Mon, 19 May 1997 20:58:16 -0400 (EDT)
From: "Thomas J. Stevens" <amadan@ziplink.net>
Subject: RE: Hotel discounts, 401K/IRA/house sharing
In persfin-digest V4 #35 (Tue, 13 May 1997) there were a few things for
which I thought I would donate my 2 cents worth - again, I'm NOT an expert
or finance professional.
First, thanks Ira for a great service. I pick up a lot of good advice and
logic amongst all the questions and responses.
>Web Sites for Hotel Discount Cards?
I've "used" the Entertainment card simply by asking the reservation
clerk if they accepted it. I no longer actually had one and got the
discounts anyway. I unfortunately don't know if they have a WWW
site, but give just simply asking for the Entertainment discount a shot.
> Multiple inquiries re: IRA and 401K plan - Can I Have Both?
All the advice is essentially correct - Sure, you can have both but
with another "qualified" plan working for you, there is a phase-out
as to how much of your $2000 contribution to the IRA would be
deductible on the US return. The maximum contribution for married
couples where one spouse has no earned income is reportedly rising
from $2250 to $4000. In any case, contributing extra toward retirement
is a good idea, especially since the tax on the interest would be
federally tax-deferred. Make sure that you're getting enough return to
justify tolerating the limitations of an IRA. If you can get a much
better return elsewhere, consult your tax advisor as to which deal would
benefit you the most.
>tax consequences for house sharing?
This is a response to Bipin K. Dalmia's and Andrea Welch's separate
questions regarding possible tax deductions for homes.
The first part of this response is applicable mostly to Andrea's
situation.
> [I] rent out one apartment as well as a room in my unit.
> can I deduct partial expenses for my home also?
(1) first you have to
declare the rental income, so don't forget that part
(2) after making part of your home an income property, the proportional
share of those expenses can be deducted and some have to be split
between the "business" (rental) portion of the home and your personal
quarters.
Essentially, look at US Form 1040 schedules A & E. Take part of your
mortgage interest and real estate taxes on A and part on E. The
proportional cost of the insurance, utilities, maintenance, etc. go on
schedule E. Then there's the matter of the basis of the property:
The basis of the business portion of the property may be depreciated on
schedule E. This REDUCES your basis in the property as there now has
been a "conversion" of use and you stand to have a greater profit at the
time of sale of the property due to your basis or "cost" being lowered.
Don't forget to deduct the proportional value of the land from the
business basis as that can NOT be depreciated.
There are lots of details to cover here, especially in a conversion of
use. It boils down to keeping good records and attributing the right
portions of certain expenses to the rental or personal side of the
property and reporting that information on the proper schedule. I'm sure
that other persfin subscribers will also contribute to this discussion,
but check out the
free IRS publications such as Publication 17 ("Your Federal Income Tax")
and Publication 527 ("Residential Rental Property") to bring yourself up
to speed.
Bipin basically asked an essentially similar set of questions, but it
was unclear as to if the property was entirely personal or if any part
of it was leased in exchange for rental income.
> are homeowners association dues tax deductible...?
> can i apply part of the per month homeowners dues towards the cost
> basis of my home?
No on both counts, unless part of the dues contribute to the structural
elements in the your unit, such as a new roof or water heater (add to
basis)or if any part goes to local or state taxes (deduct.) Special
assessments for local improvements DO increase your basis but are not
deductible.
>i got a FHA loan. is the mortgage insurance premium (MIP)
>tax-deductible?
While it is an expense to you of obtaining the financing for the
property, it is an insurance premium and not interest and therefore is not
deductible on your federal return (unless, again, it was somehow for
income-producing property.)
>is my homeowners insurance premium tax-deductible?
Only the business/income property portion. You can not deduct
homeowner's insurance premiums on your Federal return.
As pointed out in an earlier issue, this is to your benefit as had the
premiums been deductible than the benefits/proceeds would be taxable.
It's much better this way as the benefits - should you ever make a claim
- -
would be orders of magnitude greater than the premiums.
>if i add 'home improvements', do they increase the... basis?
In a personal-use only residence, routine maintenance such as
painting the garage or minor repairs do not qualify. Major
improvements (again, get a hold of IRS Publication 17) such
as a replacement roof, an addition, replacement water heater,
new deck, etc. which add structurally or functionally to the
home DO add to the basis. Window treatments and the like
are removable and cosmetic and do not add to the basis. A fence,
paving the driveway and the garage door opener add to the
value of the property or extend its life and are therefore added
to the basis. Remember, some things such as Insurance payments
for casualty losses (in the tax sense) DECREASE your basis in
the property
If any portion of the property is rented, the same rules apply
but the accounting is different. In addition, you can DEDUCT
the cost of window treatments that you bought for the rental
portion and other similar expenses. Read my response to
Andrea (above) to get a better idea.
There's my opinion... hope I've helped.
------------------------------
Date: Mon, 19 May 1997 20:58:33 -0400 (EDT)
From: Rob Curran <rcurran@halcyon.com>
Subject: RE: Microsoft's Entering Other Markets
>(Editor's Question - Can a company acquire a monopoly position, squeeze
>competitors, and drive prices up, with no regulation? -IK)
Ira, if we were talking about the last remaining insulin vendor or
electric utility, I'd probably agree with your implication. But we're
not talking about a life-sustaining substance with no substitute - we're
talking about software. Frankly, any person reading this list right now
COULD compete with Microsoft. It would take time, and training, and the
will to ACT, but the means of production - ideas - is in all of our
hands.
Is competing with Microsoft easy? Hades, no. The Redmond campus is
packed with extremely bright, arrogant people just itching to kick tush
on the competition. They have more money in the bank than the GNP of
many third-world nations. They play rough, from buying any company with
a promising new technology that could cut into Microsoft's market
position, to hiring away the last vestige of Borland's programming
talent.
And, some people think they actually make a decent product. (I'm one of
them, but I don't want to go down that road.)
But the fact is, NO ONE *HAS* TO BUY MICROSOFT PRODUCTS. Unix. Lotus.
Macintosh. Linux. Netscape. Oracle. GNU. Everything you do with
Microsoft products, you can accomplish with a substitute. Or, if through
a freak of nature no substitute is readily available, YOU can make one.
With your brain and your fingers.
How exactly did Microsoft "acquire a monopoly position?" Let's all keep
in mind how Microsoft got where it is. It's simple. Millions of
individual software consumers, for one reason or another, chose a
Microsoft product over a competing product. Free will. No coercion. No
gun barrels. No nicotine.
As long as you have an alternative, Microsoft is not *forcing* you to do
anything. You probably chose to use its products because you don't
*like* the alternatives, but there are alternatives. Don't like Word?
Pull out that IBM Selectric gathering dust in the closet and start
banging away. Also, when last I checked, the Microsoft Office suite now
is a hell of a lot cheaper than Word + Excel + Access + PowerPoint three
years ago. That's not exactly driving prices up. And exactly how much
did you pay for Microsoft Internet Explorer? Sure sounds like coercion
to me.
Bill and Co. remind me of one of my favorite books - Atlas Shrugged. As
in that Ayn Rand novel, the "heroes" of the Microsoft Story are
single-minded, unpopular SOBs that pretty much do what they want,
regardless of public opinion. But they're also responsible for creating
today's versions of steel mills, copper mines, railroads - now, it's
compilers, browsers, clustering servers. And, just like in the book, if
the Public starts passing laws, filing lawsuits and making judgements
about what is "fair" and "in the Common Good" as far as Bill's
productive fruits are concerned, he's going to shut off the lights and
go home. And then we're all certainly better off, aren't we? No,
frankly, we'd be screwed, because no self-righteous mob has ever turned
out a C++ compiler.
This is not a popularity contest. This is a business, propelled by the
intellect of one man. Microsoft does not exist to shore up the
self-esteem of its competitors, or make the general public believe that
the Tooth Fairy is providing them with their spreadsheets. Make no
mistake -- Microsoft does not exist for the sake of Society. The
MicroSerfs of Redmond are not working for the Good of Society. Or for
your approval. They're doing it to get rich. Or because the challenge
gets them going in the morning. Or because they couldn't possibly do
anything else. But out of that fountain of selfishness and nakedly
capitalistic behavior, we all get to enjoy the benefits of their labors.
That is, if we choose to, because when last I checked, no one was
holding a gun to my head when that insipid "Microsoft Sound.wav" played
for over the 1,000th time on my PC this morning.
If the Public doesn't like Bill or his products, the Public shouldn't
buy them. Enter into a transaction with someone more of your liking. Or
program the darn thing yourself. But don't damn Bill for single-mindedly
pursuing his interests. Respect him and others like him for it, because
people like him bear the world on their backs.
The day we criminalize success and competence - I'm packin' my bags to
look for Dagney, Hank, and John Galt.
------------------------------
End of persfin-digest V4 #37
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