In no particular order Ben Stein has been a speechwriter for Presidents Ford
and Nixon, an actor, the host of "Win Ben Stein's Money," an economist, a
columnist specializing in corporate fraud for Barron's, a novelist, a
screenwriter, a trial lawyer, a poverty lawyer, a professor, and this
guy. The man is a walking bucket list.
His latest book is "What
Would Ben Stein Do?" Breakout being a financial show, I started asking him
what he would do with his money. Specifically, what would Ben Stein do if he
were 30 years old and trying to build a nest-egg in a world where stocks have
been dead money for as long as anyone can remember and there's a growing sense
that the financial world is rigged in favor of Big Money?
"If I were 30 I'd put a third in short-term Treasuries, very short-term," he
tells me in a voice I can only describe as Ben Stein-ish. "Then I'd put
two-thirds in the broadest possible index, which would be the VTI, the Vanguard
Total World Stock Market Index (VTI) and I'd just add to it
every month, even when people were in deep fear."
Buy and hold?!? Dollar cost averaging? Dump more money into this ticking time
bomb of a financial system? Stein is ready and more than able to debate every
point of the erosion of the global economy, but his trump card for owning
equities is simple: "There's no alternative." No, gold bugs, he doesn't think
being long commodities is a long-term solution, either. He's actually terrified
of gold.
Noting that investors who bought gold as long ago as 1978 would still be
"licking their wounds" on an inflation-adjusted basis, Stein says it'll likely
be the Chinese who pull the rug out from under gold this time. If and when the
Chinese realize hoarding the barbaric metal has been a mistake "that will be the
end for gold."
So we're back to stocks as the only place for real savings but it's hard to
be very happy about it. I've spent most of my adult life in the markets and even
I find it disturbingly frenetic lately. I frankly can't understand why anyone
who didn't already have money to spare would be comfortable buying and holding
an asset as volatile as equities.
Stein doesn't entirely disagree, saying volatility "is going to crush the
stock market as a vehicle of investment for the ordinary citizen... at least for
a while." Regardless, he still thinks investors are stuck with equities if they
want real returns.
That being the case, Stein would spread his portfolio of stocks "across asset
classes, geographically, industries, sectors; the broadest possible
diversification." He'd try to minimize his correlation to any specific market
and put away 10% of his gross wages every month. "Tithing for yourself," if you
will. The goal is self-reliance in your old age, and as Stein sees it, the
stakes couldn't be higher.
"Human beings are not that nice," says Ben Stein. "You don't want to have to
rely upon them for survival in your old age. You want to rely on money. Money is
sometimes cruel, sometimes nice, but don't try to rely on people. Rely on what
you've got saved up."
