Long ago, in a portfolio far, far away...

The light of the stars stretched out in streaks as we slowed from hyperspace. Suddenly, a red light flashed on the control panels and a dinging noise assaulted my ears. My large, furry friend, Motleybacca, jumped out of his seat in terror, hammering his head into the hard ceiling, causing even more buttons to light up on the dull gray panels.

Motleybacca rubbed his aching head, and I assured him that we were safe from the reaches of the Wise Empire. But my steady voice hid my true thoughts -- for in fact, I was scared out of my wits. No sooner had I pressed the control button than the sound of the mechanical breathing of Darth Mental was heard. A chill went through the cabin.

"Young Foolwalker... stop your feeble long-term investing and listen to my stock picks. Together, you and I can rule the financial universe. Besides, I have an attractive investment opportunity for you..." His voice oozed with menace.

Motleybacca roared in anger. With bile rising in my throat, I cried, "I'll never follow your Wise ways, Mo-Mental!"

"I see that Folly is strong within you, Foolwalker. But you must succumb to the Wise side. It is your destiny!"

The space ship lurched backward. I knew it had to be a tractor beam drawing us into the hideous maw of the Death Star. Darth Mental's evil power grew stronger over me, and as I sank into unconsciousness, I could only hope that my trusted droid Fool3PO would make it to Obi-Wan Foolobi in time...

*

I spun in an unconscious delirium... My brain was seized in a whirlwind of horrid images: vast Imperial armies of armor-clad Elaine Garzarelli-clones marching across the galaxy... whole planets enslaved, their money locked in underperforming mutual funds... the assets of entire civilizations vaporized by stock hype and Wall Street chatter...

When I came to, I was strapped to a table, with only my dialing hand free. Darth Mental was standing over me. "Buy Dull, Inc. [NYSE: ZZZ], Fool!" he demanded.

"Never!"

He smashed his fist on the table beside me. "Buy it, Foolwalker, or you will regret your choice, I assure you."

"Foolishness demands that I never invest in a company about which I know nothing!"

"You must bring your portfolio to the Wise Side, Foolwalker! Dull Inc. is in such industries as mining and steel manufacturing, on planets throughout the Zardak system... now buy it!" He waved his hand and the telephone receiver flew off the table and slammed into my ear.

"Mining and steel manufacturing?" I laughed. "That dying rust-sector industry? I'd sooner bite my light sabre!"

"Foolwalker, you will regret your defiance, for Dull, Inc. is a screaming buy. Although they have no dividend and profits are in a slow decline, they trade at only 10 times earnings. With the S&P 500 trading at a price-to-earnings ratio almost twice that, the price is a bargain."

"I'd never trade on a tip from the likes of you!"

"Dial that telephone, Foolwalker, or die!"

I fought against Darth Mental's awesome control... but with a power beyond my own, my finger extended itself toward the touch-tone number pad. In blazing agony, I tapped out the first three digits of my broker's phone number. I called upon the Folly within me, but it was not enough... I needed more knowledge... I pushed the fourth digit, my muscles straining...

Suddenly, in a hail of laser blasts, the pressure lock blew open, and in strode a bell-capped old man with a white beard and a dark robe.

"Obi-wan Foolobi!" I cried.

"Your ploys are amusing, Mo-Mental, but transparent," he said. "And you, young Foolwalker -- you know the answer. Use the Folly within you, and you will see that what appears to be true actually deceives you."

*How does Obi-Wan Foolobi know not to buy the stock of Dull Industries?*

1) Respectable stocks pay a dividend.

2) The S&P 500 only trades at a price-to-earnings ratio of about 10.

3) Over the long term a company that is not growing will have a hard time making its stock appreciate.

4) Companies in boring industries make poor investments.

Enter your selection in the field to the lower right, and get immediate feedback on the answer!

Closing my eyes, I contacted the power of Folly and could see the correct answer. "It is 3, Obi-Wan Foolobi... over the long-term a company that is not growing will have a hard time making its stock appreciate."

Obi-Wan Foolobi nodded, pleased. "You have chosen Foolishly, young man. Although the market may change the valuation of a stock, it is earnings, over the course of the years, which will drive the price of a stock. Companies that have proven they can grow earnings consistently will often, in addition to stock price growth, see their valuations go up. However, companies that are unable to grow will not only receive no benefits from rising earnings, they most likely see their valuation remain steady -- or even decline. It is therefore no surprise that old-line industries such as mining and steel manufacturing trade at such low multiples. It is for this reason that Dull Industries is probably a poor investment."

With a wave of his hand, I was free.

"Someday I'll get you, Obi-Wan Foolobi!!" Darth Mental bellowed.

All of us laughed, but Obi-wan Foolobi merely rose from his chair and walked silently into a corner. He then said, "May Folly be with you," and melted into the twinkling universe around us.

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