"Wow, This Ointment Makes My Arm Smart." "Well Then, Perhaps You Should Rub Some of It On Your Head."

In one of our earliest posts on this blog ("One Smart Fellow, He Felt Smart"), we discussed how the so-called "smart money" doesn't fare any better in the market than the "dumb money" does.

Recent events have only continued to prove this out. In addition to the people who ran these now troubled companies (into the ground, that is), there are several big-name investors who have been caught up in the mix as well. For example, Texas Pacific Group (TPG), a large, highly-regarded buyout firm, led a consortium which made a $7.0 billion investment into Washington Mutual. When WaMu went bust, was shut down by the regulators and essentially handed over to JP Morgan, TPG lost an estimated $1.3 billion. Granted, TPG manages some $50 billion in assets, so it's still a major player, but that's a real hit.

Yesterday, the Wall Street Journal reported that J.C. Flowers & Co., a private-equity firm founded and run by J. Christopher Flowers (how's that for an amazing coincidence?), has racked up paper losses of about $2 billion, owing, among other things, to a soured investment in Hypo Real Estate Holdings AG, a Munich-based real estate and banking company.

Losses like those will take a few points off of your investment return record...and perhaps your publicly perceived IQ.

But this got me thinking, what makes someone smart? What is the basis upon which we bestow the label "genius" on someone? Or "moron?"

For example, for about eight years, we've been hearing about how dumb George W. Bush is. Is that really true? Or, is that simply a label that's been placed upon him by a bunch of "elitist" liberals, who are bitter about the fact that people other than they and their hairy-armpit, Birkenstock-wearing, hygienophobic friends are actually allowed to vote?

Who's the idiot, the person who is arguably the most powerful man in the free world, or the loser who spends his/her time laboring for a financially failing liberal rag like the N.Y. Times, or for CNN, which at its current rate of viewership decline, might actually become the first channel with negative ratings?

You decide.

In reality, it's pretty difficult to diagnose genius. Like seemingly everything else, however, this stuff was easier to figure out when I was a kid.

I'm not sure where it originated, but in my home, growing up in Queens, we believed that anyone who was mentally ill was really a genius. I don't mean garden-variety depression or anything like that. That's pretty ordinary. But, if someone was a full-blown schizophrenic, he was obviously a genius. Or, so we believed. The thinking was that the guy in question was so smart, that his brain just couldn't handle it, and he "snapped." Sort of like putting a 12-cylinder, 650 horsepower engine in a Chevy. (Wait, that's NASCAR. Strike that. And pass the Skoal, Caleb).

That's another thing we believed. No one was ever born crazy. You just "snapped." And, no one was more susceptible to snapping than a genius. If you became a serial killer, now that was pure brilliance. Why, we were so convinced of this that if we had met David Berkowitz (or his father, Sam) back in the '70s, we'd probably have asked him all of those really pesky questions we had, to which none of the adults we knew could provide satisfactory answers. Then, we'd have called the police.

A real-life case in point was my father's Cousin S. His real name wasn't "S," although that would've been cool. His name started with the letter "s." As I'm referring to a real person here, it wouldn't be polite to use his real first name. I'm sure you're thinking that I've narrowed it down by using the first letter. Well, if you want to spend the rest of the day guessing, go ahead. Knock yourself out, Salvatore. And no, his name wasn't Salvatore.

Anyway, Cousin S. was mental. And not just a little weird or eccentric, either. Rumor was that he had spent time in the loony bin. Creedmoor, to be exact. The Harvard of loony bins (without the $37 billion endowment). Sure, everyone talked about Bellevue when we were kids, but that place was no big deal. Anyone could get into Bellevue. Heck, after three Red Bulls and a bad salami, I could get into Bellevue (no comment, FBB, on any part of that last sentence). Creedmoor was big time.

Every so often, Cousin S. would call the house, asking to talk to my father. Usually, my sister (who is a year younger than me, and whose birthday was yesterday - we're now the same age) answered the phone. Her eyes would get really big, and, holding her hand over the mouthpiece, she'd whisper, "It's Cousin S!" I would do the obligatory, universal "cuckoo" sign, and then we'd get my father. We always watched my father while he spoke to Cousin S. on the phone. It was a real event. My father would speak really, really slowly to Cousin S., presumably so as not to agitate him. Or, for some other reason. I'm not really sure why.

After the conversation ended, and my father hung up the phone, we'd all proceed to talk about poor Cousin S. The conversation always ended with someone saying, "You know, he's a real genius. Absolutely brilliant. He just snapped one day."

Apparently, Cousin S. had an incredible resume. Over the years, we heard that he was a nuclear physicist, a surgeon, had at least 2 Phd.s and was a part-time astronaut.

Once, he came over to visit. Now that was an occasion. My sister and I were thrilled. My mother, not so much. "Who's coming for dinner, Mom?" "I don't know, one of your father's lunatic cousins. He is a genius, though."

As it turned out, Cousin S.'s visit was rather anticlimactic. He acted pretty normal. Must've been sedated, or something. We all had a perfectly nice evening. Hopefully, he didn't notice my sister and I staring at him, mouths agape, for minutes at a time, waiting for him to do something crazy. Never happened. In retrospect, it was more than a little disappointing.

My next brush with genius came when I was a teenager. The high school I attended employed a few Polish immigrants as custodians. They didn't seem too bright, but sure enough, a rumor started that these guys were really smart, and that they had been respected professionals back in Poland. However, upon coming to the U.S., they had no choice but to find work wherever they could, even if it meant being janitors. Given that this took place in the early '80s, perhaps it was just some Reagan-era Cold War bravado on behalf of us ugly Americans. Unable to compete with the talented American worker, even the most skilled and intellectually sophisticated people from eastern bloc communist nations were fit for nothing more than menial labor in the U.S. Back then, that's the kind of thing we wanted to believe. Our national pride was at stake. Or, maybe it's just that we heard about it from the 12th graders. Those guys knew everything.

One of the janitors in particular, Vlodek, was said to be the most educated of the bunch. Back in Poland, we were told, he was a doctor. There seemed to be two different schools of thought about this. He was either a medical doctor or a PhD. Either way, he was brilliant.

The funny thing is, he didn't really seem all that smart. But, when you're convinced that someone is a genius, you can explain away everything he does as being really astute. (Sort of how we treat Warren Buffet, T. Boone Pickens, Kirk Kerkorian, Steven Schwartzman and Carl Icahn nowadays). Sure, he had a hard time putting garbage bags into the garbage cans, but hey, those things can be slippery. As for the time(s) he got stuck in the phone booth? Well, those folding doors aren't as easy to navigate as you think. Plus, in Poland, phone booth doors fold outward, not inward, as they do in the U.S. It's easy to get confused. Even for 10 minutes at a time. Imagine trying to drive a car in one of those countries where they drive on the left side of the street. You'd have trouble with that, wouldn't you? Given that I was only about 14 at the time, and couldn't really imagine trying to drive on either side of the street, I just let it go.

There was no arguing the point. Vlodek was brilliant. He had been a doctor back in Poland. Case closed.


The ketchup incident changed everything.


One day, I was hanging around outside during recess, and a classmate came up to me, and breathlessly said, "Come inside. Quick. You gotta see this!" I wasn't buying it, so without looking at the guy, I replied, "Yeah, sure, no problem. Be right there."

He said it again, only this time, even more insistently. "No, really. You gotta see this. Come now, or you'll miss it!"

Now, I'm no sucker. And this was clearly a sucker play. So I just said, "Yeah, sure. You go first, I'll be right in."

By now, my friend was practically jumping up and down. He pulled out his trump card, and slapped it onto the table with a flourish.

"Vlodek's eating ketchup. Straight. With a spoon!"

I said, "What? Where? I'm on my way!"

We ran to the dining room, where a small crowd of onlookers had already gathered, watching from a distance of about 10-15 feet, trying to remain inconspicuous. As we stared with a mixture of amazement and horror, Vlodek our physician (or physicist, depending on which version of the story you subscribed to)-cum-custodian friend was spooning ketchup out of a small plastic container into his mouth. Vlodek was eating ketchup! Straight up!

Upon further inspection, we noticed that he had an empty plate next to him, along with several other empty ketchup containers.

Vlodek was eating ketchup! Straight up! A lot of it! For dessert! On a Wednesday!

Now, lest you think I just threw in that last clause, let me explain. The Polish workers typically were paid on Friday, and within a couple of hours spent most of that money at the liquor store two blocks away from our school. Most observers of such behavior would conclude that these guys were really dumb, but of course, as mentioned above, we were always able to justify their behavior. You see, when they were growing up in Poland, these guys experienced rampant, runaway inflation. Much like in Weimar Germany, workers would immediately spend their wages out of fear of losing a significant amount of their purchasing power overnight. (We hadn't yet learned about the price control schemes that were in place in Communist economies. We were only in 9th grade. Those 12th graders, with their superior knowledge, were really taking advantage of our economic naivete. Darn you, 17-year old knights of knowledge!)

As to the whiskey consumption, that was something that had been ingrained into their culture as a way to prepare their bodies for the bitterly cold Polish winters. So, you wouldn't have known it if you just saw them stumbling around on a Friday evening, but these guys were really advanced.

Anyway, had Vlodek been eating ketchup on a weekend, we could've attributed it to the influence of the alcohol. But here he was, on a Wednesday, eating ketchup. With a spoon. Straight up. For dessert. While flat sober.

As we continued to witness Vlodek's grotesque feast, we heard something in the distance. It was the sound of our illusions, shattering forever. Vlodek was a cretin.

After a short while, a couple of us began to voice our feelings.

"That's fascinating."
"That's the most disgusting thing I've ever seen."
"He's really an idiot."
"Actually, I heard that back in Poland, he was a doctor of great renown, who once operated on Lech Walesa."

At this point, we paused to drag the person who made this last comment into the hallway, whereupon we began to vigorously pummel him about the head and shoulders.

Looking back, the whole thing was rather disappointing. We had wanted to believe that our custodian was really a genius in disguise. Unfortunately, that wasn't the case.

Of course, we still maintained a cordial relationship with Vlodek. After all, there were about eight doctor's offices within a few blocks of our school. We didn't need any more doctors. What our little village needed was an idiot. And we had one.

A few of my classmates continued to hang around Vlodek, and he taught them some rude Polish words. These guys would take great delight in coming up to a bunch of us and shouting something like, "You guys are just a bunch of (insert Polish profanity here)!" Needless to say, cursing someone in a language he doesn't understand really has no effect at all.

We would ignore the guy for a couple of seconds, then one of us would pretend to make a phone call, and say aloud, "Yes, hello, Mr. and Mrs. Zerr? We've got your son Lou here. Perhaps you should come and pick him up from school. He seems to have come down with a severe case of the dweebs."

As to our would-be insultor, I'm not sure what benefit he derived from learning Polish. Then again, it could be helpful, if he ever moved to Poland.

And became a doctor.