Apple Board Has Been "Considering" Dividends and Buybacks Since 2005

[IJ Reilly]

Which is why dropping it to $50 will allow it to go up to $200 fairly quickly, say... within two to three years. Apple to $1578 might take forever if not ever due to the seeming impossible buy-in of the currently increasing cost.

This is simply not the case. The market price of a stock is driven by earnings growth. If Apple's earnings growth justifies a quadrupling in the stock price in 2-3 years from post-split $50 it would do the same from pre-split $470 since the split hasn't changed the total market value of the shares by one penny. Note also, you are talking about a market cap for AAPL of over $1.6 trillion.

 

[thekev]

Then by all means, explain how I'm wrong. My understanding is that there are corporate tax rates to repatriated earnings. These earnings have already been taxed where they are earned.



Back up your claims. If you want to sit there and argue that allowing money to flow back into the United States that is currently being held abroad is somehow not a positive for the economy, go ahead. Apple has sufficient cash for their operations in the U.S., I just don't think it can hurt to bring the balance to the U.S. Just make your point and move on. We can all do without the hostility. Be civil.

Sorry I think I'm just excessively annoyed by the tax holiday issue. Corporations do push domestic earnings offshore to mitigate tax liability, so not all of these are truly foreign earnings. You might remember the GE thing a bit ago. That's the thing though. Off shore investments (including legitimate ones) are written off, yet they can let the money sit outside of the US for tax reasons. The arguments for a tax holiday are the same as they've been in the past (that it would stimulate investment). It hasn't done that in the past. Companies might pay dividends, but it doesn't actually stimulate hiring. If they think they can force a tax holiday every few years, it just increases the appeal in outsourcing.

 

[IJ Reilly]

I've heard this version.... " Buy on bad news, sell on good news. " Too much good news coming from Apple for my tastes.

Of course I'm also the one who bought Nortel at the $5 share recently.... I mean... how much more bad news could there be? Between that episode and others I've concluded that I should let the professionals manage my portfolio... that has actually worked out for me.

The next bad news could be bankruptcy, and in bankruptcy investor equity is generally wiped out even if they company reorganizes and remerges. You never know, until you know. I bought two seeming bargain stocks over the years that looked like good recovery candidates and both went bankrupt. They were tiny investments, so the pain was minimal -- but it sure does happen. OTOH, I also made an investment in AAPL 15 years ago. I took a chance at that time because a couple of suitors were sniffing around (Sun Microsystems for one -- how ironic is that?) so I figured the downside risk was minimal. So that worked out.

The lesson is you never know when a stock is undervalued or overvalued until after the fact.

 

[TallManNY]

Back up your claims, then. If you want to sit there and argue that allowing money to flow back into the United States is somehow not a positive for the economy, go ahead. It's true that Apple has sufficient cash for their operations in the U.S., I just don't think it can hurt to bring the balance to the U.S, especially since most repatriated earnings result in distributions to equity holders. Just make your point and move on. We can all do without the hostility. Be civil.

There was a corporate tax holiday which was supposed to allow cash to come back to the U.S. and allow the companies to then invest in the U.S. This did not happen. This should not be a surprise. Take Apple. Do you think Apple is not investing in the U.S. because they have lack of access to capital? The $30 billion that they have in the U.S. is not enough, but the $60 billion overseas would change everything? How about the fact that Apple can, of course, borrow billions at very very low rates (one would think under 2%) if it wants to. If Apple saw an opportunity to make a good return by investment in the U.S., it would and could do it with or without the repatriated money.

However, Apple is holding the money overseas waiting for a tax holiday. I expect a republican congress and president would give that to them. Then they could bring the money back and dividend it to shareholders saving a great deal in taxes. So as a shareholder I applaud the strategy.

While there would be only limited additional investment, the repatriated money would be paid out to executives and shareholders, which, largely would mean going to a lot of U.S. citizens, so I suspect it would have a positive effect on the U.S. economy. But not nearly as much of one as proponents usually argue. And since we have done this in the past we already have seen how this plays out. It isn't bad, but it isn't much of a win.

 

[Avatar74]

I've heard this version.... " Buy on bad news, sell on good news. " Too much good news coming from Apple for my tastes.

Of course I'm also the one who bought Nortel at the $5 share recently.... I mean... how much more bad news could there be? Between that episode and others I've concluded that I should let the professionals manage my portfolio... that has actually worked out for me.

That's a bit of oversimplification, though this is not rocket science. As a business analyst I disregard media reports. What I look for is intrinsic value relative to price. This is why I'm out of Apple. Everyone's on that ride now... it is overpriced not because my gut tells me so, not because Wall Street analysts think so (they don't, of course, because they want you to keep making their high net worth and institutional clients richer), but because my analysis of Apple's operating value says so.

As far as bad news, it depends on what the bad news is versus what the company is really doing. If the bad news is that Company XYZ is going bankrupt because they're underwater with debt, well, then fundamentally there's a problem with operations. But you didn't need to read news to see that. You needed to sift through financial records to see that. But if the bad news is that global markets took a beating, but XYZ's operations are rock solid and havent changed since yesterday when they were x points higher, then that could be a buying opportunity if the rest of your analysis determines that they've got the capacity to generate positive operating cash flows for the next five quarters forward (discounted to net present value, of course).

Price alone doesn't tell you enough of what you need to know... a stock can "look" very cheap and be overpriced. A while ago, Ford was still overpriced at $5 a share.... by about five times relative to their tangible book value. It's not a coincidence that Warren Buffett, Walter Schloss, Jean-Marie Eviellard, Stan Perlmeter and numerous others have all become billionaires by repeatedly acquiring securities priced at a fraction of working capital.

 

[GfPQqmcRKUvP]

Sorry I think I'm just excessively annoyed by the tax holiday issue. Corporations do push domestic earnings offshore to mitigate tax liability, so not all of these are truly foreign earnings.

Ah, I thought it was only foreign earnings that are offshore and would be eligible for repatriation. I'm assuming we're veering into the realm of transfer pricing?

Companies might pay dividends

Seems like a pretty solid reason to me.

If they think they can force a tax holiday every few years, it just increases the appeal in outsourcing.

Maybe, but I think that tells you that taxes are too high in the U.S. Our labor costs are already high compared with developing world (well, because they don't make as much money at all), but from the literature I've read the U.S. has some of the highest effective corporate tax-rates around (despite everyone thinking that there are so many tax breaks no one pays taxes).

Do you think Apple is not investing in the U.S. because they have lack of access to capital? The $30 billion that they have in the U.S. is not enough, but the $60 billion overseas would change everything?

No. Maybe you're making the point for others, but that's exactly the point I was making in the post you quoted: Apple has enough capital for operations/expansion anyway.

While there would be only limited additional investment, the repatriated money would be paid out to executives and shareholders, which, largely would mean going to a lot of U.S. citizens, so I suspect it would have a positive effect on the U.S. economy. But not nearly as much of one as proponents usually argue. And since we have done this in the past we already have seen how this plays out. It isn't bad, but it isn't much of a win.

Fair enough.

 

[thekev]

Ah, I thought it was only foreign earnings that are offshore and would be eligible for repatriation. I'm assuming we're veering into the realm of transfer pricing?

I wasn't under the impression that the two were separated in this theoretical tax holiday. That seems like it would be difficult to enforce. Yes we're talking about transfer pricing.

Seems like a pretty solid reason to me.

It had nothing to do with the arguments in favor of a tax holiday. Companies lobbying for one don't exactly propose a scenario of what will happen. They make suggestions that are marketable to the public. They don't ask for a tax holiday to pay dividends, which could still be paid on the post tax amount anyway. They ask for a tax holiday claiming that it will stimulate job growth. I kind of figured you were a heavy investor that favored such a thing because of the potential for dividends.

Maybe, but I think that tells you that taxes are too high in the U.S. Our labor costs are already high compared with developing world (well, because they don't make as much money at all), but from the literature I've read the U.S. has some of the highest effective corporate tax-rates around (despite everyone thinking that there are so many tax breaks no one pays taxes).

Europe has the same thing with labor costs. This is completely normal. What concerns me is seeing things like engineering positions sent overseas. It's not so much the raw labor positions, but those that require education and later feed the senior level talent pool.

 

[IJ Reilly]

That's a bit of oversimplification, though this is not rocket science. As a business analyst I disregard media reports. What I look for is intrinsic value relative to price. This is why I'm out of Apple. Everyone's on that ride now... it is overpriced not because my gut tells me so, not because Wall Street analysts think so (they don't, of course, because they want you to keep making their high net worth and institutional clients richer), but because my analysis of Apple's operating value says so.

As far as bad news, it depends on what the bad news is versus what the company is really doing. If the bad news is that Company XYZ is going bankrupt because they're underwater with debt, well, then fundamentally there's a problem with operations. But you didn't need to read news to see that. You needed to sift through financial records to see that. But if the bad news is that global markets took a beating, but XYZ's operations are rock solid and havent changed since yesterday when they were x points higher, then that could be a buying opportunity if the rest of your analysis determines that they've got the capacity to generate positive operating cash flows for the next five quarters forward (discounted to net present value, of course).

Price alone doesn't tell you enough of what you need to know... a stock can "look" very cheap and be overpriced. A while ago, Ford was still overpriced at $5 a share.... by about five times relative to their tangible book value. It's not a coincidence that Warren Buffett, Walter Schloss, Jean-Marie Eviellard, Stan Perlmeter and numerous others have all become billionaires by repeatedly acquiring securities priced at a fraction of working capital.

While there's certainly a lot of truth in what you say, you do make it all sound so formulaic. The analysis is never so simple, and neither is picking winners and losers. The markets abhor a system. Even professional stock-pickers have a very difficult time beating the broader averages over time. In fact few do. A stock in a company with great fundamentals can go nowhere simply because the markets do not see them as growth story. Take MSFT for example. The fundamentals are great. Lots of cash, free cash flow, growth, no debt -- and yet, it's a dead stock and has been for over ten years now.

Take another, AAPL. In the mid-2000s it was selling for over 100 times earnings (at one point over 200). Justified? Not on the basis of any reading of the fundamentals. To buy and hold the stock at those multiples required a leap of faith, that being the company would continue to out-innovate their competitors and release wildly successful new products that nobody had even heard of yet. You will never find that information in a balance sheet, no matter how far down you dig.

 

[TallManNY]

Take another, AAPL. In the mid-2000s it was selling for over 100 times earnings (at one point over 200). Justified? Not on the basis of any reading of the fundamentals. To buy and hold the stock at those multiples required a leap of faith, that being the company would continue to out-innovate their competitors and release wildly successful new products that nobody had even heard of yet. You will never find that information in a balance sheet, no matter how far down you dig.

Lovely point. To beat the market, you need to have an insight that the market has missed. It is very hard to dig deeply into a balance sheet or any other corporate report and figure something out that isn't already understood by the market and priced into the stock. I only invest specifically into a stock when I think I've figured something out that is different from the conclusions of others. I have a nice track record on a percentage basis, but I don't put enough cash in play on those picks and my insights are too infrequent for me to make any meaningful money. So I still have to do my day job.

 

[Aussieiphone]

The point is that people invest in companies that are trying to maximize returns. If the company isn't trying to do that (you know, by paying their people triple the market rate), they are wasting the money that is invested.

Well, by your own admission, your money is being wasted. Apple haven't fulfilled their "fiduciary duty" to you as an investor -paying their employees above the mininmum wage (by almost $4/hr) when then could pay lower wages and earn another billion. How can you just standby and watch this happen? Surely uneducated retail employees are plentiful with the current unemployment rate and store closures.

Btw, I have actually known a janitor, very intelligent and very well educated who was working as a janitor for more than 8 years before he was able to gain employment in the finance field. $8/hr with his head in the toilet bowl, knowing he himself could be doing much greater things, that's a man with morals.

 

[GfPQqmcRKUvP]

Well, by your own admission, your money is being wasted. Apple haven't fulfilled their "fiduciary duty" to you as an investor -paying their employees above the mininmum wage (by almost $4/hr) when then could pay lower wages and earn another billion. How can you just standby and watch this happen? Surely uneducated retail employees are plentiful with the current unemployment rate and store closures.

Oh c'mon. You're arguing in favor of tripling what comparable companies pay. That is just being frivolous with shareholders' money.

Btw, I have actually known a janitor, very intelligent and very well educated who was working as a janitor for more than 8 years before he was able to gain employment in the finance field. $8/hr with his head in the toilet bowl, knowing he himself could be doing much greater things, that's a man with morals.

What's the point of this? I have no kind of disdain for retail employees. Look, could my company afford to pay me double what I make? Yes. Do I expect them to do so knowing that there's a line of people hunting for my job right now at a wage lower than mine? Absolutely not.

EDIT: There are lots of outstanding companies with morals and social responsibility. Find me a single public one that pays triple what it's competitors do. There's a reason: Use cash judiciously. These companies didn't get to the size they are today by wasting money.

 

[freediverdude]

I think Apple should keep the money for now, and keep trying to innovate and change the industry. If they started offering dividends, then people start buying the stock for the dividends and stability, and then it becomes all about managing the expections of the dividend and the amount of the dividend.

Right now with a huge cash pile, they hold all the cards. They can buy up supplies well in advance, they could purchase other large companies to do what they want, they can spend as much as they need to on legal fees to succeed, they can build new factories or campuses.....it's just so strategically advantageous to have all that cash. I say keep it!

 

[Avatar74]

While there's certainly a lot of truth in what you say, you do make it all sound so formulaic. The analysis is never so simple, and neither is picking winners and losers.

I think you're picturing me as describing a methodology of betting on a future target price, which I'm not. I'm talking purely about business valuation, irrespective of market activity. Business valuation in the real world (not "professional stock pickers" or market analysts but business, M&A consultants, and the like) is more conservative than typical market activity.... but it's also a triangulation of several things that I couldn't boil down to one formula.

But for the wary investor, this is where the concept of margin of safety comes in. The less certainty there is depending on the factors playing into your analysis, you pick a margin of safety to offset that... So if you have a fairly weak analysis that says enterprise value is X, then seek an acquisition price at 10%, 20%, 30% discount to that X metric... and limit your share volume as well.

The markets abhor a system.

Business analysis is not a "system" in the sense of gaming the markets... What I'm talking about is finding a dollar worth of assets that the market prices at 60 cents. And then doing it again, and again, and again, and amassing a portfolio of securities you acquired at a substantial discount to working capital. What you do with it from there is up to you, but more often than not, if you've done your homework you know how working capital, a competitive moat and soundness of management tick and tie together to produce consistently positive operating cash flows. It's not magic. It's like weight loss. If you spend more calories than you consume, you will lose weight. If you spend more money than you make, you will lose money.

While there are exceptions, the tendency on securities you've acquired at or below their working capital plus forward cash flows is that they recede less in times of market distress (due to the lack of market hype) and advance moderately in times of market positivity. Once in a while, one of them will advance spectacularly... but the KEY is that rarely will a diversified portfolio of value acquisitions ever expose you to catastrophic loss.

The net result of this repeated acquisition of underpriced issues, with no concern about the horizon (I don't trade on margin and I make good money in my career so I have no pressure to sell any security at any given time), is that while people chasing large, unsustainable returns will risk loss of principal, you'll preserve principal and consequently see your compounded gains over time far outpace the swaggering risk takers.

Even professional stock-pickers have a very difficult time beating the broader averages over time. In fact few do.

I don't care and neither should you. What I do is boring. It doesn't make great water cooler talk compared to "Yeah, I just bought a boatload of that hot stock." But, for what it's worth, fund managers this year have done as badly as 48% losses. I'm sitting at an unrealized gain of 12.5%. I'm quite content with beating the S&P 500 historical average (9.3%). This is not a one-year feat for value investors. Read "The Superinvestors of Graham-and-Doddsville" if you haven't already. There are a number of billionaires made by value investing. Day trading has never made a billionaire.

A stock in a company with great fundamentals can go nowhere simply because the markets do not see them as growth story. Take MSFT for example. The fundamentals are great. Lots of cash, free cash flow, growth, no debt -- and yet, it's a dead stock and has been for over ten years now.

I'm fine with an issue or two going nowhere rather than going backward... Gaining isn't how you win. Knowing how not to lose your principal is how you win.

As for MSFT.... Microsoft isn't a manufacturing company. They're a software company. That is one of the intrinsic factors that makes them harder to evaluate. I have a few rules... that include no software companies, no banks, etc. I like large scale manufacturing companies in varied industries because there's a logic to the connection between working capital and operating cash flows. So I stick to that and I do outperform the broader market quite often in positive years, and I don't lose my shirt in bad years.

Take another, AAPL. In the mid-2000s it was selling for over 100 times earnings (at one point over 200). Justified? Not on the basis of any reading of the fundamentals. To buy and hold the stock at those multiples required a leap of faith, that being the company would continue to out-innovate their competitors and release wildly successful new products that nobody had even heard of yet. You will never find that information in a balance sheet, no matter how far down you dig.

Earnings is an easily manipulated figure. It doesn't tell me what the actual organic cash generating ability of the company is. Operating cash flows do. The only thing a P/E multiple ever tells you is what every other dummy was willing to pay for a stock in excess of its earnings capacity. It doesn't and will not tell you what you should pay. The key is selling to the dummy, not being the dummy.

Apple has solid operating results for many quarters past, and they have a fairly strong moat and sound management that are, based on their RSU grants and other information, incented to look out for the long term growth of the company. But the reason I sold Apple is because at their scale, year over year growth figures have to shrink because there's a real limit to share of wallet that they can acquire... and every other product they make that people want narrows that share of wallet. At $100+ billion annual revenue, it takes a much larger marginal bump in dollars to produce the same percent growth or more than last year's... and so on.

But let's put this another way. I bought Apple when a market downturn priced them beneath my calculation of their intrinsic value. Not by much but that's what Buffett calls a "one puff" stock (think a half used cigarette, maybe has one good puff or two left in it). Imagine me and some other guy both sold AAPL at the same price... but he thought $440 was what made it hot, when I had acquired it at $86 several years ago. I don't care what gain he might get in the future, because I've already moved on to the next cigarette... which currently is doing about 40%, or more than twice Apple's gain over the past year.

While others may disagree with me, the fact that I've estimated Apple to be worth about $40 per share less than what they're trading at now has not hurt me. and that's my point here. Erring on the side of caution is not a bad thing. Protecting principal, not seeking the largest possible returns, is what leads to the snowball effect. Only impatient people don't realize this... and they succumb to the Gambler's Ruin whereby they keep trading to recover losses of principal, compounding losses of principal, until they wipe out their principal.

But they never do the math on how much in future gains that loss of principal ends up costing them down the road. Every dollar of principal sacrificed to the gods of instant gratification is a dollar plus years of compounded annual interest lost forever. Let's not even get me started on those dumb enough to margin trade.

"Any number times zero is still zero." - Warren Buffett

 

[TallManNY]

Interesting post Avatar.

By working capital, I assume you mean capital that is being put to work. So a big factory owned by a company is part of their working capital. The more normal use of that term, I think, is the cash companies keep on hand for day to day expenses. But I got what you are saying there.

Another clarification. I don't think you use the term Gambler's Ruin the way I understand it. Gambler's Ruin is a probability reality that a gambler's holdings will go up and down over the course of playing a game of chance. But the Gambler will generally not leave the table until they have lost a lot or all of their money. In essence, the game continues until the Gambler is busted. On the flip side, the Casino can in practice never get busted, so it can always continue to play the game which is just every so slightly tilted in their favor. So with fluctuation between hot and cold streaks the money goes back and forth between gambler and house, until a point when the house has all the money. Then gambler calls it a night. Gambler Ruin may be more responsible for Las Vegas's profits then the small advantage of the typical table game.

 

[Avatar74]

Interesting post Avatar.

By working capital, I assume you mean capital that is being put to work. So a big factory owned by a company is part of their working capital. The more normal use of that term, I think, is the cash companies keep on hand for day to day expenses. But I got what you are saying there.

Close... Property, plant and equipment is part of operating capital. Working capital is also part of operating capital, but it represents operating liquidity... current assets minus current liabilities, or assets that can be converted to cash within 12 months or less. In the manufacturing business, this is primarily inventory.

Since I tend to side with Buffett by looking at working capital (because an office of 5000 square feet can generate more money than an office of 30,000 square feet - e.g. General Reinsurance's 30 people do billions more in float than all of GEICO's 25,000 employees; both are Berkshire subsidiaries), I look at it this way:

1. Working capital represents the engine that creates operating cash.
2. Operating cash flows are created by the engine, and help fuel the continued operation of the engine.

So, in my Discounted Cash Flow derivation of Enterprise Value, I start with Net Working Capital and add future expected OPERATING cash flows discounted to net present value. the reason is simple: Any company can dispose of certain assets or issue debt to raise capital (cash generated from financing and other activities) and offset shortfalls on operating revenue, but the real measure of a business's competitive moat is what it does uniquely through operations (what are they selling?) better than other companies do.

Another clarification. I don't think you use the term Gambler's Ruin the way I understand it. Gambler's Ruin is a probability reality that a gambler's holdings will go up and down over the course of playing a game of chance. But the Gambler will generally not leave the table until they have lost a lot or all of their money. In essence, the game continues until the Gambler is busted. On the flip side, the Casino can in practice never get busted, so it can always continue to play the game which is just every so slightly tilted in their favor. So with fluctuation between hot and cold streaks the money goes back and forth between gambler and house, until a point when the house has all the money. Then gambler calls it a night. Gambler Ruin may be more responsible for Las Vegas's profits then the small advantage of the typical table game.

There's a psychological element to the gambler's ruin though, and that is a lack of patience. The gambler, or the speculator, unlike Graham's definition of the investor, behaves as though tonight is the only night he has to play. He'll play until he wipes out his wallet. A person with unlimited patience will never play until he wipes out his wallet, because he has the unlimited resource of time... and scales his investments to his capacity for risk. Tomorrow is another day, and my pile of cash to play with will be larger while doing absolutely nothing... while not selling a single share.

That's where day traders go wrong: They'll repeatedly expose more principal to risk in less time than it takes for them to earn it back through a day job.

but they don't understand this. I've had this argument with young day traders who view their risk like this:

If they trade $25,000 on 4:1 margin 100 times to make a total $50,000 gain, they think they've made a 1000% return.

Their warped math for doing this is they used $5000 of their own money and made $50,000.

What they didn't do is account for risk, that is:

They exposed $5000 of their own money to risk 100 times.

They also exposed $20,000 of someone else's money to risk, and bore all the liability for it... 100 times.

100 times they created an unnecessary situation in which they could have lost $3 more they didn't have for every $1 they did.

The sum total of their ACTUAL cost basis? $2.5 million ($25,000 * 100)

Their actual net return? $50,000/$2.5 million = 2%

Tons of leverage, tons of risk for a return no better than a short term fixed yield with ZERO risk.

 

[TallManNY]

What they didn't do is account for risk, that is:

They exposed $5000 of their own money to risk 100 times.

They also exposed $20,000 of someone else's money to risk, and bore all the liability for it... 100 times.

100 times they created an unnecessary situation in which they could have lost $3 more they didn't have for every $1 they did.

The sum total of their ACTUAL cost basis? $2.5 million ($25,000 * 100)

Their actual net return? $50,000/$2.5 million = 2%

Tons of leverage, tons of risk for a return no better than a short term fixed yield with ZERO risk.

Interesting way of looking at it. I always thought that day traders were doomed because they can never get their transaction costs down low enough (unlike professional market makers sitting on the exchanges who are doing basically the same thing, while taking a small cut). Maybe they are doomed because eventually they will get stuck in some catastrophic investment based on the number of investments they expose themselves to.

 

[Avatar74]

Interesting way of looking at it. I always thought that day traders were doomed because they can never get their transaction costs down low enough (unlike professional market makers sitting on the exchanges who are doing basically the same thing, while taking a small cut). Maybe they are doomed because eventually they will get stuck in some catastrophic investment based on the number of investments they expose themselves to.

You're right, as well. Given the number of times they trade, their cumulative transaction costs are very high. Then factor in all the time it takes to work out these miniscule gains on a Schedule D when it's tax time. My turnover as Graham-Buffett-Dodd style value investor is extremely low, so my "management expense", let's call it, is very low.

But yes, each time you roll the dice you're taking another risk... especially if you're engaging in speculation, and daytrading is basically nothing but pure speculation. And it's the worst kind of speculation: Reading the charts to predict the charts, while ignoring the inputs that put the upticks and downticks where they are. To me, that's basically waiting for the movement to have already occurred... and doing it in extremely short intervals that are not meaningfully predictable (no matter what any self-appointed daytrading guru tells you).

Personally, I see no reason to expose myself to loss of principal for a pathetic return when it's far easier to acquire a bunch of underpriced securities, and then sit and watch very predictable events happening at time intervals that give you the ability to self-insulate as well as make course corrections well in advance of a catastrophe.

Here's an exercise.... go to any day trading message board. Then go there a year later. Notice that nobody ever seems to stay there for more than a year or two? It's because their principal gets wiped out, and then it's time to get a real job. But there's always a new batch of fools ready to replace them for the next year...

"I knew that technical analysis was flawed when I turned the chart upside down and didn't get a different answer." - Warren Buffett