The Curmudgeon

April 01, 2004

The sum of the parts can be greater than the whole-with jelly beans, indexes, or in gaming the Athens Olympics.

"Double, double toil and trouble; Fire burn and cauldron bubble.Fillet of a fenny snake, In the cauldron boil and bake; Eye of newt and toe of frog, Wool of bat and tongue of dog …" -Macbeth Act IV, Scene 1

I love good theatre. But one doesn't have to purchase many before-dinner tickets to learn that the munching of hungerstaving savories in the stalls quickly rouses nearby patrons' ire. Nothing boils their blood more than the rustling of a snack packet and the inevitable crunching that attends the consumption of its contents.

Enter Jelly Bellies, gourmet jelly beans made famous by Ronald Reagan. Political affiliations notwithstanding, one can make a quiet meal out of a pocketful. For example, a blueberry muffin's taste can be approximated by popping one Buttered Popcorn bean into your mouth along with two Blueberry-flavored confections.

Purists disdain such amalgamations, despite the yield of tastes not found in offthe- shelf sweets. So it goes, too, with index products. Many view investing as a purely binary operation-either fully active or passive-without considering the nuances obtained by tinkering. Why accept, for example, the large-cap growth bias of a total market index by purchasing readymade index funds? Why not add extra dollops of small-cap or value exposure, if that's your wont, by mingling the component exposures in a custom-spiced stew? Using its component exposures, you could rebuild the Russell 3000 Index, toning down the large- and mid-cap bits to make room for small-cap value.

Now, if you use index products for your rejiggered portfolio, do you cross over to the active investing side? A tough call; arguments can easily be made for both the 'yea' and 'nay propositions.

Much easier to figure is this timely index combo I call the Olympic SNAFU Portfolio: Short 2 units Athens General Index + Long 1 unit S&P Global Healthcare Index.

The fact that thousands of G re e k General Confederation of Labor members, including those in the construction trade, are now striking for a pay raise is further evidence that Athens is not ready for prime time. Venue-building ahead of the Olympic Games' August 13 opening is again paralyzed.

The International Olympic Committee, rebuking Athens organizers over "severe delays" and "unacceptable laxness," insists that the Games cannot afford to lose a single additional day to building interruptions. Ominously, current predictions call for the main stadium to be completed by July 20, barely three weeks ahead of the opening ceremony.

In a voice reminiscent of Zorba's ("Don't worry, Boss ..."), building contractors and the Athens organizing committee say they're not concerned about the strike. Plenty of time, they claim, to make up lost time (do you hear bazouki music in the background?). The union, for its part, has threatened further action if its pay demand isn't met.

So why this particular index soup? The selling of the Athens benchmark is pretty much self-explanatory-the Hellenes are definitely headed for a financial black eye because of missed targets. As for the long healthcare index position, just think of the sprained ankles earned by tourists stumbling through not-quite-completed sports venues. More important, think of the heart attacks likely to be suffered by the local organizers when they're finally brought to account for this travesty.

Hospitals are gonna clean up.

The author, relying upon his expertise as a former menu consultant for Olympic Airways, offers this "homemade" version of his portfolio for those without access to the above-mentioned index products: "Long one unit ouzo + long one unit Spyro's takeaway spanakopeta."

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