Full Disclosure

Diving into the minutiae of documents sometimes uncovers wonderful details and flashes of humanity.

Mutual Fund disclosure statements are the usual dry blah-de-dah boilerplates but The Wall Street Journal Moneybeat column digs out this chestnut from the go-go dotcom days before the crash.

Plain Language Risk Disclosure

First of all, stock prices are volatile. Well, duh. If you buy shares in a stock mutual fund, any stock mutual fund, your investment value will change every day. In a recession it will go down, day after day, week after week, month after month, until you are ready to tear your hair out, unless you’ve already gone bald from worry. It will insist on this even if Ghandi, Jefferson, John Lennon, Jesus and the Apostles, Einstein, Merlin and Golda Maier all manage the thing. Stock markets show remarkably little respect for people or their reputations. Furthermore, if the fund has really been successful, you might be buying someone else’s whopping gains when you invest, on which you may have to pay taxes for returns you didn’t earn. Just try and find somewhere you don’t, though. Dismal.

While the long-term bias in stock prices is upward, stocks enter a bear market with amazing regularity, about every 3 – 4 years. It goes with the territory. Expect it. Live with it. If you can’t do that, go bury your money in a jar or put it in the bank and don’t bother us about why your investment goes south sometimes or why water runs downhill. It’s physics, man.

Aside from the mandatory boilerplate terrorizing above, there are risks that are specific to the IPS Millennium Fund you should understand better. Since most people don’t read the Prospectus (this isn’t aimed at you, of course, just all those other investors), we thought we’d try a more innovative way to scare you.

We buy scary stuff. You know, Internet stocks, small companies. These things go up and down like Pogo Sticks on steroids. We aren’t a sector tech fund, we are a growth & income fund, but right now the Internet is where we think most of the value is. While we try to moderate the consequent volatility by buying electric utility companies, Real Estate Investment Trusts, banks and other widows-and-orphans stuff with big dividend yields, it doesn’t always work. Even if we buy a lot of them. Sometimes we get killed anyway when Internet and other tech stocks take a particularly big hit. The “we” is actually a euphemism for you, got it?

We also get killed if interest rates go up, because that affects high dividend companies badly. Since rising interest rates affect everything badly, we could get killed even worse if the Fed raises rates, or the economy in general experiences higher interest rates beyond the control of those in control, or gets out of control. Whatever.

Many of the companies we buy are growing really fast. Like, 50% – 100% per year sales growth. Many of them also don’t make any money, although they may be relatively large companies. That means they have silly valuations by traditional valuation techniques. We don’t know what that means any more than you do, because we have never seen anything like the Internet before. So we might overpay for these companies, thinking we are really smart and can get away with it because they are growing so fast. It doesn’t take a whole lot for these companies to drop 50% or more, because nobody else knows what they are worth either. Received Wisdom can turn on a dime in this business, and when that happens prices fall off a cliff.

Even if we were really smart and stole these companies, if their prices run way up we are still as vulnerable as if we were really dumb and paid that high a price for them to start with. If we sell them, you will get pretty irritated with us come tax time, so we try not to do any more of that than we have to. The pole of that strategy, though, is that if we are really successful, you will have a lot of downside risk in a recession or a bear market. Bummer.

Finally, if you haven’t already grabbed the phone and started yelling at your broker to sell our fund as fast as possible, you should understand the shifting sands of technology. It doesn’t take billions of dollars to start a high tech company, like it did U.S. Steel or Ford Motor. Anybody can do it, and everybody does. Many of our companies are small, even though they dominate their market niche. It’s much easier for a new technology to blow one of our companies out of the water than it was in the old days of canal, mining, railroad and steel companies.

Just so you know. Don’t come crying to us if we lose all your money, and you wind up a Dumpster Dude or a Basket Lady rooting for aluminum cans in your old age.

If you like that, check out other bits of brilliance that I’ve highlighted in the past:

 

How to write a good set of Community Guidelines

Writing the Community Guidelines for an online social network is an art. Next to on-boarding and FAQs, the community guidelines are an important document that helps set the tone for the site and the people that use it. You need to be clear and firm but also treat those that use your site as humans that can think for themselves.

I can’t tell you how to write a good set of guidelines as each community is different and the voice that you choose to address the community needs to come from you as a unique reflection of your values. I can point you to some of my favorites and point out choice snippets.

Get Satisfaction

As a corporate service, Get Satisfaction needs to strike the right balance between fun and engaging but also covering all bases for those corporate buyers (more likely the corporate lawyers) that might not be comfortable with loose language. While the language is pretty straightforward, the titles of each section let slip a little personality. “Be your awesome self” and “No trolls!” have personality but for those that are not sure what they are getting at, the details are explained.

The Guardian Participation Guidelines

For a mainstream media site, The Guardian has a refreshingly crisp set of guidelines that are clear and easy to to understand.

We welcome debate and dissent, but personal attacks, persistent trolling and mindless abuse will not be tolerated.

I’m not a legal mind but I would say that such a phrase is open to interpretation but the guidelines make clear that the Guardian owns the platform and takes responsibility to curate the conversation and keep it civil for everyone.

flickr

As a photo sharing site, the flickr community managers have been inspirational for their balanced approach to weaving the line between one person’s form of expression and another’s sense of morals. Their community guidelines are as much an ice breaker as an appeal to all of us to be human. Included are such gems as:

Don’t be creepy. You know the guy. Don’t be that guy.

Tumblr

Who ever wrote these guidelines (you can see a working draft on github) sure was having a lot of fun. Sprinkled throughout are gems such as:

Harm to Minors. . .Being a teenager is complicated enough without the anxiety, sadness, and isolation caused by bullying.

Sexually Explicit Video. . .please don’t use Tumblr’s Upload Video feature to upload sexually explicit video. We’re not in the business of hosting adult-oriented videos (and it’s fucking expensive).

Username/URL Abuse or Squatting. . .Don’t squat, hoard, amass, accumulate, accrue, stockpile, rack up, buy, trade, sell, launder, invest in, ingest, get drunk on, cyber with, grope, or jealously guard Tumblr usernames/URLs.

Spam. . .don’t tag a photo of your cat with “doctor who” unless the name of your cat is actually Doctor Who, and don’t overload your posts with #barely #relevant #tags.

Confusion or Impersonation. . .Don’t impersonate anyone. While you’re free to ridicule, parody, or marvel at the alien beauty of Benedict Cumberbatch, you can’t pretend to actually be Benedict Cumberbatch.

Lastly? Check out the original TOS for Blogger. Most of it is what you expect but then you get to section 12E which helpfully states:

IF YOU HAVE READ THIS FAR THEN YOUR EYES PROBABLY HURT. ALL CAPS, WHAT WERE WE THINKING? HOWEVER, WE ARE NOT LIABLE FOR THIS OR ANY OTHER OCULAR MALADY.