The Noble Experiment Ends

Fifteen years ago, a young citizen emerged, bright-eyed and optimistic, from the ivory towers of higher academia and wandered out into the world to seek his fortune. Thanks to scholarships, miserly careful spending and sometimes up to three concurrent part-time jobs, he’d managed to make it through four years of college (and a misguided semester of grad school) with no loans and a small pile of money in the bank.

It was the dawn of the first Bush presidency, though, and eight years of Reaganomics had left no suitable jobs that were worthy of our hero’s august credentials. Indeed, our hero’s local paper, which usually featured a good 10 or 15 pages of job openings, offered only one page of jobs for most of the first year of his bachelor’s-degreed existence. Our hero had to fight to land a job as a waiter that first summer … and he had to live his first few years out of college with his parents. But that’s not really the point of our story.

The point is this: Our hero was going to be RICH and HAPPY and have a fulfilling career and a fabulous boyfriend and maybe write a semi-popular blog just as soon as blogs got invented.

But it takes money to make money, and our hero was determined to start early with his investing. So, acting on a hot tip from a rich friend with a distractingly round butt, our intrepid hero bought $377.31 worth of stock (including a $43.93 commission) in an up-and-coming company that developed disposable surgical supplies. The wave of the future!

But disposable surgical supplies never managed to capture medical consumers’ imagination, and the up-and-coming company spent the next decade bouncing around from merger to buyout, devolving from promising superpower to parts-is-parts corporate jetsam.

And one day, our hero woke up to news about a company called Tyco whose corrupt CEO and CFO had been shamelessly and quite conspicuously robbing the company and its investors blind … and our hero suddenly realized that—thanks to all those corporate buyouts—he was now one of those bilked investors.

And thanks to his minuscule initial investment, our hero owned a mere six shares of Tyco, which over the years earned him quarterly dividends that ranged anywhere from 8¢ to 60¢. And—thinking back to that original $43.93 commission (in 1992 dollars)—our hero believed that selling off his meager holdings would involve modern commissions completely eclipsing whatever value remained in his initial investment.

Until.

Until last week, when our hero casually mentioned his predicament to his investment advisor, who casually mentioned that the current investment company would probably buy back his meager holdings with only minimal feeage.

And when our hero called the 800 number and navigated clumsily through the frustrating voice-activation menu, he learned his investment advisor had been right! For a mere $15 selling fee (plus a bonus commission of 10¢ a share plus certified postage of $8.37), he could cut his losses, be free of the embarrassing stocks and laughable dividend checks, and probably see about $150 in cash within a few weeks.

Which is still a net loss of $225 (before inflation), but our hero trusts that the loss will also include some modest benefit on his tax return, which is always better than a kick in the pants and a case of the clap.

And thus our hero’s noble experiment ends. His lesson? Rich friends with cute butts do not investment advisors make. Plus: Well-managed mutual funds, diversified IRAs and licensed investment advisors can help you grow your wealth steadily and reliably. And jettison bad investments with minimal financial impact.