Tuesday After Lunch Money Memo 1-07-09: Dilbert Interviewed by Barron's

"What is the meaning of a gold standard and a redeemable currency? It represents integrity. It insures the people's control over the government's use of the public purse. It is the best guarantee against the socialization of a nation. It enables a people to keep the government and banks in check. It prevents currency expansion from getting ever farther out of bounds until it becomes worthless. It tends to force standards of honesty on government and bank officials. It is the symbol of a free society and an honorable government. It is a necessary prerequisite to economic health. It is the first economic bulwark of free men."
Professor Walter E. Spahr,
Chairman, Econ. Department, NYU (1927 to 1956)

I'm not sure, but when Barron's begins interviewing cartoonists for their opinions on investing, it tells me that all of their alleged financial experts have fallen into a ditch. Somebody at Barron's probably said, "Hey, since Soros, Buffett and God Himself lost money in 2008, why not talk to the funny office satire guy."

(The following has been edited for clarity…and shortened.)

No Laughing Matter
Barron's January 5, 2009 By JIM MCTAGUE

Cartoonist and blogger Scott Adams is outspoken about economics, politics and more — but tight-lipped about Dilbert, hero to cubicle jockeys.

JUST WHEN YOU THOUGHT THE ECONOMY COULDN'T POSSIBLY get worse comes this disturbing news: Dilbert's mismanaged high-tech company is foundering, jeopardizing the lovable cartoon character's oppressive but steady job as an electrical engineer in a stuffy cubicle, where he's manufactured laughs about illogical and inhumane corporate managers for nearly 20 years. Barron's won't divulge the climax of the current plot, but they don't point to a happy conclusion.

Adams' current strips and very funny blog (http://www.dilbert.com/blog/), which often feature the cartoonist's insightful economic and stock-market commentaries, provide more hints about Dilbert's fate.

A Dec. 12, 2008 blog argues that the recession is anything but temporary: "I think we are on the verge of a change as profound as the Industrial Revolution. Society will have to retool its expectations to meet the reality that there just won't be enough money to provide necessary services if we insist on consuming in an inefficient way."

One clue about Dilbert's fate appeared last Dec. 13 in newspapers around the world (Dilbert is published in 70 countries and 25 languages) in what turned out to be one of the most popular episodes in the strip's history: A financial adviser recommends that Dilbert's pointy-haired boss invest all of the company's funds in sick livestock.

Don't buy just one sick cow, the adviser urges; buy an entire herd, because by aggregating sick cows, the risk goes away. "It's called math," the adviser adds, in a send-up of the asset-backed securitizations that have helped topple the global economy.

The financial adviser, by the way, is a malicious canine. In his blogs, Adams is equally unkind to real advisers and money managers. In his view, formed long before the disrobing of Bernie Madoff, they're always conniving to steal investors' money. Perhaps this depiction is payback: Adams lost a bundle following advice during the tech bubble, which also convinced him that investing in individual stocks and "professionally managed" funds is a losers' game. His advisers put half of his portfolio into WorldCom, Enron and other sure things and lost 40% of his invested cash, he says.

He managed the other half and lost only 20% in the tech wreck., "Most of the investments I made in individual stocks went bad because managements were lying. They are the source of the information for the markets." His conclusion: "It is even dumber to pay an expert to talk to the liar for you and charge you 1% of your portfolio." Some folks who bought funds of funds that invested with Madoff surely would agree.

Though he admits there's a chance he could get lucky — this being one of those rare times when Scott thinks that decimated markets could recover significantly — his real reason for edging back into equities is to diversify. "I was more afraid that my muni bonds would become worthless than I was convinced stocks would be a good investment. The minimum I want is that the companies in the Fortune 500 don't go completely under. That was my play." Of course, one can't overestimate the destructive power of bad advice. There now are so many people, on and off Wall Street, capable of vaporizing so much capital in so little time that, in Adams' opinion, they've consigned capitalism to the dustbin of history.

Scott says, "CAPITALISM WAS CONCEIVED before the Internet and before the gears of commerce became computerized. The system could absorb a lot of con artists because they didn't have the ability to steal fast enough to cripple the system," he says. "…That has changed; the balance of power has swung to the crooks and the market manipulators."

Adams, who has a bachelor's degree in economics and a master's in business from Cal, and is a certified hypnotist, stands about five-foot-eight and has the slight build of a runner, although he isn't one. (Tennis is his favorite form of exercise.) He's affable, charming and has a quick mind. Part humorist, part idealist, part logician, he enjoys skewering notions and actions that some people view favorably but that he considers inane.

One of them is the bailout of the Big Three. He argues that Uncle Sam should focus on a transportation solution that would cost taxpayers little: Make it legal for anyone to turn a car into a taxi, sans licensing and fees. This would reduce the overall need for motor vehicles and curb traffic jams, pollution and U.S. dependence on foreign oil.

In his pre-cartoonist days, Adams worked for Crocker National Bank and then Pacific Bell. He's opened two restaurants as an outlet for the MBA portion of his brain. One, in Pleasonton, Calif., is called Stacy's Cafe. It's run by a former waitress of that name who had higher aspirations and is a money maker. The other, in his hometown of Dublin, Calif., is called Stacy's at Waterford and is run by Adams. It's a money loser. Why doesn't he close it? First, he says, he'd still owe rent on the space. Second, he loves the challenge and employee interaction.

On the day Barron's visited, no one in the restaurant was wearing a tie. In fact, it might be that no one in Dublin, which is home to several technology firms, even owns a tie. This reporter felt overdressed in a blazer and slacks. Jeans seemed de rigueur. But Dilbert wears a tie, which is upturned. Why? "A troop of Girl Scouts first asked me that question," says Adams. "I told them it is a metaphor for his inability to control his environment."

But in recent strips, there is no tie. Dilbert has become the company scapegoat and must wear a goat skin to the office. Poor Dilbert. Poor us.

Michael McGowan,

The Financial Foghorn, and author of

"Financial Foghorn's Guide to Gold–

Get Rich, Get Happy, and Get to Heaven

with Monetary Metals."

www.financialfoghorn.com

Tags: Recession, TAL, Warren Buffett