Why Get Angry When You Can Invest?
All those many moons ago when anyone with more than enough money could make even more just by throwing it at a high-tech stock, the slick magazines published article after article about how to invest. Now that the bloom is off the boom, the alternative press can reveal what the most successful investors have always known: if you should happen upon a company that is particularly abusive or socially irresponsible, buy stock.
Nice companies are companies that are anxious to get customers, revenues, favorable court rulings; nasty companies are the ones who already have all the business and favors they need. This can be thanks to jealously guarded patents or brand names, distribution monopolies, strip mining, union busting, arms sales, unfair trade practices, illegal campaign contributions.
It's not that the real investors don't want to know these dirty secrets, they don't need to. They're happy enough thinking of all the money these companies aren't wasting on customer-service consultants and pollution-control devices.
I'm embarrassed to admit how many decades it took me to realize this simple truth. If not for a certain illustrious cruise and airline company, I might still be reading articles on such wonders as value and growth stocks, day trading, momentum investing, going to the mall and asking teenagers what products are hot.
Several years ago my wife and I purchased a ticket to fly from here to there with this company. I was not particularly surprised to read, around the time of the flight, that the company's cruise ships were dumping their waste products, untreated, into the Caribbean, violating or circumventing any number of important environmental regulations, killing reefs, poisoning fish, dirtying the beautiful blue waters. But then we got to the airport and found our departure delayed because someone wanted to buy a ticket with $100 bills, and the clerk had no change and no idea where she might get some. And on arrival, as our plane was waiting for its gate, one of our older fellow passengers got up to go the bathroom. A steward yelled down the aisle for the man to go back to his seat; but -- hard of hearing or small of bladder -- the old man kept going. Whereupon the steward came running down the aisle and tackled him.
It happened that one of the mutual funds I had invested in had taken a very large position in this travel company's stock. I decided that rather than the standard irate letter to the company's president, I would write the fund manager, warning him that questionable behavior by front-line employees was often a sign of more serious managerial problems, and that -- even if he thought environmentalists were addle-brained alarmists -- he could hardly be optimistic about a Caribbean cruise company that was fouling the Caribbean: its very stock in trade.
"While I appreciate your concerns," the manager replied, "I am afraid my board would have difficulty understanding my unloading a stock from which the fund has made hundreds of millions of dollars and stands to make many hundred millions more."
A momentary glimmer of understanding reached my brain. Perhaps this was not a bad company, but a transcendent one -- a company that had gone beyond caring about customers or law suits or the future of its natural-resource base. What better signs could there be of a profitable, rapidly growing business?
When General Electric was revealed to have discharged poisons into a major American river and then adamantly refused to pay for the clean-up, I should have realized that here was a true blue chip (the best-managed company in America, I think at least one magazine called it). Environmental organizations have now spent years trying to get the company to take responsibility for its misbehavior, and I have written countless letters to politicians and complained even more loudly to my wife -- and not only are the PCBs still in the river, G.E.'s stock has gone through the roof.
I blame my parents, my schoolteachers, the Church. Whoever got rich thinking goodness was its own reward? Why did they imbue me with the perverse notion that grand ideals guide human behavior, rather than simply acting as a kind of counter-weight? If only I hadn't believed all the talk about the "search for excellence," "good corporate citizens," "the customer is always right." For many years, I didn't merely fail to recognize great companies, I fell in love with the bad.
I remember back when the savvy were putting their money in "downsizing" (replacing full-time workers, their salaries, pensions, health insurance and rights with people who can be engaged and disengaged at will, and otherwise left to fend for themselves). Myself, though in desperate need of a real job, I had assumed an unpaid, highly unofficial, position doing p.r. for my long-distance telephone company. I raved to anyone and everyone who would listen how, if I called the company with a minor billing problem, or when one of their competitors was offering me a bonus to switch, the "customer-service representative" -- the very human being I was talking to -- would, right then and there, lower my rates and throw in a $50 or $100 credit. Talk about empowering your front-line staff, I said. Talk about building customer loyalty!
Talk about a dead stock. P/E ratio around 10 and headed south. A few years later my mailbox began filling with ads for special telephone codes -- a few numbers that, once dialed, would halve my phone rates. My wife's family is in Europe; the offers were tempting. I called my beloved long-distance carrier, thinking -- hoping -- they would convince me not to stray. Twenty minutes at least I had to listen to a recording about how busy and thankful the company was. Then a representative came on the line to tell me I couldn't be helped.
I wrote the standard irate letter to the company's president. Never mind the standard coupon for some new service I didn't want -- I didn't even get a reply.
"Here's a business that's lost track of its business plan," I told my wife. Only to read shortly thereafter that the company was being bought for an extraordinary premium, the President himself pocketing the traditional large fortune.
The scales fell from my eyes, and I saw forthwith how to tell good from bad. When a company pisses you off, this is no time to be writing letters -- call a broker. And, similarly, if ever you come across a company that is persistently helpful or responsive -- continuing to offer credits or apologies, or to provide useful information about its products; kowtowing to consumer or environmental groups -- sell short! (Whatever that is.) Here are sure signs of a loser, a company that actually has to compete!
How wonderfully simple the world has come to seem. I read in the papers that some big-name sneaker-maker or clothing label is exploiting Third World child labor. Formerly, I might even have joined a protest march. Now I recall that, since the Greeks, the exploitation of cheap labor has been a key to financial success. Let the critics rail away, these companies will still have Wall Street's support.
But then let's say I read that the sneaker-maker is meeting with labor leaders and do-gooders, making commitments to pay 10 or even 20 cents an hour, encouraging infant sneaker-gluers to go to school. It doesn't even take a glance at the aging Naproxen and Ibuprofen bottles in my medicine chest to realize that jogging is passé. (Similarly, twenty-some years ago, when Philip Morris began sponsoring every major American art exhibit, trying to look like the best friend the high-browed and well-connected ever had, I should have foreseen the anti-smoking law suits, the battered stock prices.)
A branch of a new movie-rental chain has opened up in our neighborhood. A very nice addition. Not only do the clerks hold the door for the customers and welcome us warmly, for $2 they let us keep a video for five days, they don't get us all tangled up in credit-card liens and receipts to sign, and they have an excellent selection -- of non-American movies even.
Time was I would not only have recommended the company to friends, I would have been moved to sing the praises of capitalism, which leads the ambitious and creative to figure out what people want and deliver it to them in the most efficient manner. And I would have felt personally affronted and demoralized a few years hence when my wonderful video store went out of business -- or when a mixture of smiling, underselling and strong financial backing allowed its parent company to wipe out all the local competition. (With the standard consequences: elimination of the wide selection, hefty increases in rental prices, paperwork and rudeness.)
Now I find myself fantasizing about the day when I have to open the door myself, when this clerk has been replaced by another who must accept half his salary and who thus has half his good humor. I like to think that, instead of getting angry -- on this poor clerk's account or my own -- I will just go on-line and buy a load of stock. There'll be no need to rent any more videos, I'll be having too much fun calculating capital gains.
It has occurred to me that this may impinge on one of my cherished fantasies: that I am a good person. But at least I'll have the solace of getting rich in a hurry. I have already placed an order for the largest, least-energy-efficient, most-accident-prone sport utility vehicle now on the market. It may not offer the sport of my old bicycle, the utility of public transportation or the modesty of a small used car, but at least its owner will be assured, as he sits high above the traffic-clogged streets, that he is one of the winners, one of the smart ones, one of the crushers, instead of the crushed.
A former editor for the alternative press, William Warner now writes satires from New York City.