Principled Prosperity In Practice
The trouble with people is not that they don't know –
                                                                                 but that they know so much that just ain't so!   
                                                                                                                                                                                                   Josh Billings

Professionals know their business, investment, and financial decisions are no better than their information. In an economy of
“information” too much mis-information and questionable advice from "experts" goes unchallenged by busy investors and
trusting business professionals.

Granted everyone makes mistakes, no one has a crystal ball, and hindsight is 20 / 20.  But in retrospect, it can be helpful as
well as amusing to see what some of the "experts" had to say about stocks, investing, and the viability of future business
opportunities that would have affected your net worth if you had heeded their advice.

The following material is provided, not to criticize, but only as food for thought, to stimulate an assessment of your information
sources and a review of your investment, financial, and business decision making process.

``I kept (the company) on the buy rating'' to appease the company, said one credit-card analyst who spoke on condition of
anonymity, ``but I told my favorite investors to sell'' to maintain credibility." an investment analyst admitting to providing different
recommendations, one for large investors, than the one provided for the individual investors.

"There is no reason anyone would want a computer in their home." Ken Olson, president, chairman and founder of Digital
Equipment Corp., 1977

How many hours per week do you spend on your investments – and how many on your business?

“Tell your idiot subscribers about how great the stock is, and, like sheep, they will run out and buy it," riffed the message.
"Dump the shares you bought...[on] all of these the stock steadily tank...and laugh all the way to the bank." The
migration of fraud from boiler rooms to the Internet is the most important new trend to hit U.S. markets in years," Richard H.
Walker, top cop at the Securities and Exchange Commission.

When a new opportunity arises, are you the first person your investment advisor / stock broker calls? If not, how many other
investors does he call before you?

According to Gomez Advisors, an online research firm, online investors trade three times more often than their offline peers.
The problem with all of this churning? To put it bluntly: The more you trade the worse you do. Active traders suffer not only
because they pay out more in commissions (even at discount rates) but also because they are not nearly as good at picking
stocks as they think they are. Source: Money, Sept 1, 1999

After studying the records of tens of thousands of customers at a discount brokerage firm, University of California at Davis
assistant professor Terrance Odean discovered that active traders actually did significantly worse in the market than their less
trade-happy peers. Even without taking commission charges into account, the stocks active traders bought under performed
the ones they sold by more than 3% a year.

Research by two Cornell University Psychologists demonstrates that the less one knows about a particular subject – the more
that person thinks he knows about the topic.  Incompetent individuals dramatically overestimate their ability and performance.

Do you read the prospectus on the companies in which you invest?   Do you think your broker or advisor does?

How prevalent is broker fraud?  In the mid 1990's Bankers Trust was the 2nd largest asset management firm. Tape
recordings obtained in litigation discovery revealed:

•        "Fraud was so pervasive and institutionalized that....employees used the acronym 'ROF'-short for rip-off factor, to
describe one method of fleecing clients."

•        "Funny business, you know? Lure people into that calm and then just totally f---'em."

•        "Here's the positive side: I've buried my clients so much that it's going to take me four years to trade them out of this loss."

•        "What Bankers Trust can do for Sony and IBM is get in the middle and rip them off."

If the largest and supposedly most reputable financial firms "rip-off" the largest and most sophisticated companies, what do
you think your "rip-off factor is? What do you think they really think of you as individual investor?

Ripping - off clients is not isolated but rather endemic within the financial industry.

Since 1992, many of the nations most respected banks and brokerages including Salmon Brothers, Citicorp, Chemical,
Goldman Sachs, Bear Stearns and Dean Witter, Pain Webber Sherarson Lehman Brothers, NationsSecurities (a subsidiary of
NationsBank) have been cited for abuses. The SEC announced that their investigations had uncovered constant lying and
phantom records as well as hyping and the creation of crib sheets so that when they lied, they lied consistently.

Although, while the rip-off may not result from intentional fraud or misrepresentation the result is still the same. As one Merril
Lynch broker admitted," We were selling this to people like a bond, I feel I wasn't adequately told the risks, and I didn't convey
the risks to my clients."

William Brady, managing director at Credit Suisse First Boston, acknowledges that some investment bankers unfairly reward
institutional investors at the expense of small fry--but he insists CSFB doesn't.

An unbelievable 37% of IPO buy recommendations made by analysts were reversed within a year.

How much time do you and your current investment advisors spend verifying the information in the investment prospectus?   
How much time do you spend checking out the "risk factors" in an investment prospectus?

Less than one percent (1%) of the recommendations by security analysts are "sell" or "strong sell"

``Often there will be something you want to downgrade, and your firm will say it's not a good time,'' says a financial stock
analyst for one East Coast investment bank. A ``handful'' of his favorite investors, though, will learn how he really feels. He
keeps the group small to prevent his negative opinion from getting back to the company he's rating.

Do you have a written statement of investment goals and performance benchmarks?

The Internet is quickly making on-line services (AOL) obsolete. Barron's, Feb 26, 1996.

The hottest IPOs are usually the worst performers after the initial thrill is gone. The Journal of Finance, has reported that IPOs
that appreciated by more than 60% on day one of trading subsequently performed even worse over the next year than IPO
stocks that didn't rise at all that first day.

When you listen closely, what you hear from Blodget (Merril Lynch's Internet analyst) is that the main reason you should be
buying Internet stocks is because other people buy them. Which is to say, his analysis is itself part of the bubble. Source:
Money, June 1, 1999. "It's something you have to take on faith," says Henry Blodget, Merrill Lynch, Internet Analyst.

Before making a particular investment, do you ask yourself why you're buying it, how long you plan to hold onto it, and under
what circumstances you would consider selling it?

Do you know what "reckless conservatism" is? Does it affect your portfolio?

How do you measure risk? Using six different measures of risks for mutual funds, the fund monitor Morningstar analyzed the
results of 2,340 diversified funds over a five year period and found that only three appeared on more than one list of the riskiest
of funds.

Are you your own worst financial enemy?

IPOs spike up and down that way because some investors have the best information about the market while others have to
guess. The most critical information --(about IPO pricing)--is a secret that only investment banks and favored clients are in on.
What's worse, underwriters set artificially low offering prices even when they know investors would buy many more shares
than are available. They do it to please institutional clients, who buy at the offering price and then sell into the initial run up.
``The underwriters are throwing money off a tall building to their best customers,'' says Dartmouth College business professor
Kent L. Womack, who co-authored a Journal of Finance study. Source: Business Week, March 27, 2000 p110.

A survey of CPA's cited neglect and inflation as the gravest threats to their clients' wealth. CPA's think their clients focused too
much on return and too little on risk- when choosing money and fund managers.

Do investment advisors stretch the truth in their advertising by selecting the time periods that will show the best results?

Are you too smart to get taken in by an investment scam?

The riskier the investment you can be talked into, the higher commission the broker/advisor collects. Typically, a bond sale
earns about 1.5%, mutual funds 4-5% and a limited partnership commission runs 10% or more.

According to Medical Economics, September 11, 1995 Boiler room sales men think doctors are easy prey. According to law
enforcement official, con artists searching for ripe targets buy lists of doctors. The scammers figure physicians are active
investors who don't have time to ask many questions about where their money's going. Additionally, doctors have the
reputation for failing to pursue successful scammers. "If they loose $10,000 in an investment, most busy professionals would
rather forget about the money instead of hiring a lawyer to chase after a shady operator," according to Philip Feigin, Colorado
State Securities Commissioner.

$100 million dollars is way too much to pay for Microsoft." IBM, 1982

Forrester Research predicts online shopping will remain dominated by males who are technology-oriented. While online
shopping will continue to grow, the report predicts that it will not become a mainstream retailing medium. Source: Interactive
Week, May 6, 1996

Who the hell wants to hear actors talk?" H.M. Warner, Warner Brothers, 1927.

"I'm just glad it'll be Clark Gable who's falling on his face and not Gary Cooper”. Gary Cooper on his decision not to take the
leading role in "Gone With The Wind.

"A cookie store is a bad idea. Besides, the market research reports say America likes crispy cookies, not soft and chewy
cookies like you make." Response to Debbi Fields' idea of starting Mrs. Fields' Cookies.

"We don't like their sound, and guitar music is on the way out." Decca Recording Co. rejecting the Beatles, 1962.

"Heavier-than-air flying machines are impossible." Lord Kelvin, President, Royal Society, 1895.

"Professor Goddard does not know the relation between action and reaction and the need to have something better than a
vacuum against which to react. He seems to lack the basic knowledge ladled out daily in high schools." 1921 New York Times
editorial about Robert Goddard's revolutionary rocket work.

"You want to have consistent and uniform muscle development across all of your muscles? It can't be done. It's just a fact of
life. You just have to accept inconsistent muscle development as an unalterable condition of weight training." Response to
Arthur Jones, who solved the "unsolvable" problem by inventing Nautilus.

"Drill for oil? You mean drill into the ground to try and find oil? You're crazy." Drillers who Edwin L. Drake tried to enlist to his
project to drill for oil in 1859.

"Stocks have reached what looks like a permanently high plateau." Irving Fisher, Professor of Economics, Yale University,

"Airplanes are interesting toys but of no military value." Marechal Ferdinand Foch, Professor of Strategy, Ecole Superieure de

"Everything that can be invented has been invented." Charles H. Duell, Commissioner, U.S. Office of Patents, 1899.

"Louis Pasteur's theory of germs is ridiculous fiction". Pierre Pachet, Professor of Physiology at Toulouse, 1872

"The abdomen, the chest, and the brain will forever be shut from the intrusion of the wise and humane surgeon". Sir John Eric
Ericksen, British
surgeon, appointed Surgeon-Extraordinary to Queen Victoria 1873.

"640K ought to be enough for anybody." Bill Gates, 1981

"X rays are a hoax." -- Lord Kelvin, physicist, c. 1900

MARTIANS BUILD TWO IMMENSE CANALS IN TWO YEARS -- New York Times headline, 27 Aug 1911

"The radio craze … will die out in time." -- Thomas Edison, 1922

"While theoretically and technically television may be feasible, commercially and financially I consider it an impossibility." Lee
DeForest, inventor of the audio tube, 1926

[By 1940] the relativity theory will be considered a joke." -- George Francis Gillette, American engineer, 1929

"50 years hence … [we] shall escape the absurdity of growing a whole chicken in order to eat the breast or wing by growing
these parts separately under a suitable medium." Winston Churchill, 1932

"The Bomb will never go off, and I speak as an expert in explosives." -- Admiral William Daniel Leahy, advising President
Truman on the U.S. atom-bomb project, 1945.

"The cloning of mammals … is biologically impossible." -- James McGrath and Davor Solter, writing in Science, 14 Dec 1984.

"But what ... is it good for?" Engineer at the Advanced Computing Systems Division of IBM, 1968, commenting on the microchip.

"This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is
inherently of no value to us." Western Union internal memo, 1876

ISDN will be ubiquitous by 1985. Irwin Dorros VP ATT 1981

"The wireless music box has no imaginable commercial value. Who would pay for a message sent to nobody in particular?"
David Sarnoff's associates in response to his urgings for investment in the radio in the 1920s.

"The concept is interesting and well-formed, but in order to earn better than a 'C,' the idea must be feasible." A Yale University
management professor in response to Fred Smith's paper proposing reliable overnight delivery service. (Smith went on to
found Federal Express Corp.)

"If I had thought about it, I wouldn't have done the experiment. The literature was full of examples that said you can't do this."
Spencer Silver on the work that led to the unique adhesives for 3-M "Post-It" Notepads.

"So we went to Atari and said, 'Hey, we've got this amazing thing, even built with some of your parts, and what do you think
about funding us? Or we'll give it to you. We just want to do it. Pay our salary, we'll come work for you.' And they said, 'No.' So
then we went to Hewlett-Packard, and they said, 'Hey, we don't need you. You haven't got through college yet.'" Apple Computer
Inc. founder Steve Jobs on attempts to get Atari and HP interested in his and Steve Wozniak's personal computer.

"Computers in the future may weigh no more than 1.5 tons." Popular Mechanics, forecasting the relentless march of science,

"I think there is a world market for maybe five computers." Thomas Watson, chairman of IBM, 1943

"I have traveled the length and breadth of this country and talked with the best people, and I can assure you that data
processing is a fad that won't last out the year." T he editor in charge of business books for Prentice Hall, 1957