A Dark and Stormy Night in Philadelphia
By Bill "Bones" Barker (TMF Max)

It was a dark and stormy night. A shot rang out. The maid screamed. Suddenly, in the distance, a door slammed. A ghost appeared. Clearly, the prose alone indicated that a horrifyingly trite Halloween offering was about to befall the unsuspecting reader.

The ghost made his way into my room and slumped down onto a chair -- not an especially good idea as it turned out -- for the chair immediately splintered under the weight. The ghost did his best to spring to his feet, no easy task considering his girth, acting as if the whole thing hadn't happened. I turned, irritated at this point that the ballgame I was absorbed in was being interrupted, and addressed the ghost. "Yes, Ben?" I inquired, "I hope it's something important."

"I hate dark and stormy nights," said the ghost. "They've always been bad for me. Great danger of getting electrocuted, you know."

"I suppose so," I responded, "though omitting the kite flying during lightning storms will keep that danger a little bit more at bay. As, by the way, should being disembodied, though I notice you still manage to have a weight problem -- perhaps you can explain that one to me on another night. Dangerous lightning storms or no, you didn't do too badly in the longevity department before shuffling off your mortal coil."

"No I didn't," agreed Ben, helping himself to one of my beers. "Early to bed, early to rise, makes a man, et cetera, et cetera, I always used to say."

"Well, I wouldn't know anything about that prescription," I answered. "The healthy and wealthy parts sound okay to me, but here in the late 20th century it's no great thing to be Wise."

"Mmm... so I hear, so I hear," he responded, a little disappointed. Then suddenly, "Booo!"

"It won't work, Ben. You won't frighten me with that. You'll have to try something a little different -- maybe a scary story. Have you got one? Like, why are you a ghost anyway?"

"Other than being dead and all? Like any ghost, I walk the earth because my soul is not at rest. Actually it's pretty much at rest most of the year but, this being Halloween, I drop by and haunt just for the sake of it. I do have one legitimate gripe."

"Is it that your name has been hijacked to help hock a bunch of underperforming mutual funds? If so, you shouldn't be haunting me."

"No, no, nothing that mundane," the Founding Father sighed. "No, it's that nine billion dollars or so that I left Philadelphia and Boston. I'm still kind of upset about that one. I think that's why my soul is not at rest."

"Nine billion? What are you talking about? You didn't ever have nine billion dollars!"

Franklin adjusted his bifocals and started floating for effect. "As you may know, when I died I left $2000 to both Philadelphia and Boston. My will stated that they were each to invest the money for 200 years, and then, after a full 200 years had worked its compounding magic, the money was to be spent on establishing a school or endowment -- something to teach the practical arts and crafts. Lovely gift. Inspired. Perhaps the best gift ever given by anybody ever. But they blew it."

"What do you mean?"

"It wasn't invested, dare I say it, Foolishly, at all. After 200 years, Philadelphia had only managed to grow that $2000 to about $1.5 million. Boston did a little better, but only managed $4 million or so."

"Hey that doesn't sound too bad," I half-distractedly offered.

"THAT'S TERRIBLE!" he thundered. "That's less than a 4% return per year for each of them! That's not much better than the level of inflation over that time! Why, if either of them had just seen a 6% return on my money for 200 years -- still awful of course -- they would have each had about $230 million. Hey, even at 8% -- no great return if you're talking about stocks over the 200 years from 1790 to 1990 -- they would now have over nine and a half billion dollars. Each."

The ghost was scaring me. I didn't want to believe him. "No, that's crazy talk, Ben. Nine and a half billion dollars, from $2000? Not possible."

"Entirely possible. Actually, not even very good. An index fund would have done significantly better."

"Now, B-B-Ben," I stuttered, the scope of the consequence of this fiscal irresponsibility working its way into my brain and under my skin, "there c-c-certainly weren't index funds all that time."

"No, there weren't. The first index fund wasn't started until 1976 by Vanguard, but the S&P 500 over the last fifty years has averaged 11% returns. Quite simply, if Philadelphia and Boston had been merely mediocre but persistent investors in equities, without question they would each have had several billion dollars in 1990, 200 years after my death. If they had been Foolish investors, Dow Dividend investors, market-beating investors... well, don't even go there -- it's too�"

"Frightening?" I offered. "I agree. But what's the lesson here Ben? Why are you here?"

"Lesson? Hadn't thought about it in those terms, but I believe Poor Richard said it best -- 'Experience keeps a dear school, but a fool will learn in no other.' How will other fools learn the lessons of compounded returns themselves before it's too late? The lesson that a $10,000 initial investment will compound to $1,174,000 over 50 years at a 10% rate of return. Anyway, until the lesson of the value of compounded returns is learned by the general population, my soul will never be truly at rest. Anything you can do about that?"

"Not likely, but I'll see what I can do, Ben. Perhaps, just perhaps, some Fools can learn the lesson outside of the school of experience."