to give your vote to the people who are paying themselves enormous bonuses. Either that or you can travel to the corporation’s annual meeting (held in Indonesia this year) and stand up in the back and ask shrill questions like some Ralph Nader nutfudge. You rarely buy common stock for the dividend and almost never (unless you’re buying 1,000,001 shares) for the voting rights. You buy stock because you have one of those opinions mentioned earlier. You think other people will think this stock is worth more later than you think it’s worth now. Economists call this—in a rare example of comprehensible economist terminology—the Greater Fool Theory. Speaking of folly, you can also invest in the commodities market. This is where you buy thousands of pork bellies† and still don’t know what you’re going to have for dinner because, in the first place, you’re broke from fooling around in the commodities market and, in the second place, you’re not completely insane. You didn’t actually have those pork bellies delivered to your house. What you did was buy a “futures contract” from a person who promises to provide you with pork bellies in a couple of months if you pay him for pork bellies today. You did this because you think pork-belly prices will rise and you’ll be able to resell the delivery contract and make out like a . . . perhaps “make out like a pig” is not the appropriate simile in this case. Of course, if prices fall, you’ve still got the pork bellies, and won’t your spouse be surprised? The reason you go broke in the commodities market—or die from the cholesterol in sausage—is because you’re betting you know more than the actual producers and consumers of the commodity. Take the less-risible example of feed-cattle futures. Ranchers have a pretty good idea of how their cattle raising is going: They can count the calves. If it looks like a good year, the ranchers will sell cattle futures early so they don’t suffer from weak prices when all that beef comes on the market at the same time. Burger King has a pretty good idea how the hamburger business is going. And they know how many cattle it takes to make all their burgers (about two). If it looks like a bad year for Whoppers, Burger King will put off buying cattle futures to take advantage of the coming beef glut. This leaves you to buy high and sell low.‡ The producers and consumers of a commodity know a lot about that commodity’s market, and you know your investment portfolio is filled with rotting meat.
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