1. Flying Off the Handle

Believe it or not, we at the Five Dumbest Things Research Lab are what you might call cockeyed optimists.

So when we received a planeload of email regarding our report last

week about the employee stock ownship plan at United Airlines parent

UAL

(UAL) - Get Report

, we looked on the bright side: Gosh, look how many United pilots read Five Dumbest research reports! Isn't it sweet they all took the time to write?

Yes, we chose to ignore the downside of the correspondence: Every single one of these pilots hates our guts.

The lab is forced to admit that though we never make mistakes, the UAL ESOP article we published last week perhaps required, uh, supplemental research.

Perhaps you recall the

relevant item, though we're betting that if you're a UAL pilot, it's burnt into your memory like a searing wound you will never -- nay, can never -- forget.

We reported that the United pilots' union chief was complaining about ESOP trustee

State Street Bank's

(STT) - Get Report

plans to sell 20% of the UAL stock in the ESOP's portfolio.

Boy, did we wax scornful. Hadn't that guy, we wondered, ever heard of Enron or WorldCom? Was it really "irresponsible," as he put it, to put everyone's retirement nest egg in the same basket? With UAL's bankruptcy more than a theoretical possibility, wasn't a few bucks in the hand better than watching the stock drift to zero?

Well, after plowing through all the UAL-related email we received last week, we no longer feel like super-heroic crusaders against Dumbness here on Wall Street. No, we feel like a policeman who has walked into the last five minutes of a

Halloween

movie and arrested mean ol' Jamie Lee Curtis for beating up on Michael Myers.

Yes, we may have overlooked a few important elements, such as the fact that the UAL ESOP was never meant to be the retirement kitty along the lines of a WorldCom-laden 401(k). And since UAL's stock had already lost about 95% of its value over the past three years, employees could only scoff at the measly take they'd make from the sale. If somebody was going to be speculating on the recovery of UAL, shouldn't it be the employee owners, not some Wall Street sharpie swooping in at bargain prices?

This was pretty much the gist of the reader mail we received on this one, though we haven't quite done justice to the emotional tone of the missives. Suffice it to say that there's a lot of anger out there among United employees, and a good bit of it piled up at the doorstep of the research lab.

About all we can say is that we at the research lab know that you have a choice when it comes to reading about Dumb Things on Wall Street. We thank you for reading the FDTOWSTW, and we hope that when your plans next involve Dumb Things, you'll choose to join us again. Bye bye!

2. Kneed Like a Hole in the Head

In all that excitement about UAL last week, we missed our chance to kick another employee while he was down: New York Knicks forward Antonio McDyess.

Yes, last week Knicks owner

Cablevision Systems

(CVC)

said it would match previous 2002 guidance of $90 million to $95 million in cash flow at Madison Square Garden, as long as one excluded newly disclosed items such as a $12 million charge "related to the terms of a Knick player's contract." In other words, that's how much it's costing Cablevision to clean up after McDyess' season-ending knee injury, suffered last month in just his third preseason game after being acquired in a trade.


We wouldn't even bother bringing this up were it not for the fact that Cablevision's visibility sportswise is beginning to look as poor as the Knicks' prospects victorywise. Why, it was only this May that the research lab was discussing how the New York Rangers'

semipredictable failure to make the Stanley Cup playoffs had prompted Cablevision to cut 2002 MSG cash flow guidance from $100 million. And it was a year ago this week that Cablevision took a

$50 million charge for Knicks contract buyouts -- with most of that money presumably going to the back-injured Larry Johnson.

Talk about a company where employees feel investors' pain.

3. Prancing on the Ceiling

Since the TV set in the research lab lunchroom is always tuned to CNBC, we've become big fans of some of the consumer electronics ads that

Philips

(PHG) - Get Report

has been running this past week.

What choice do we have? After all, those ads have been running at the rate of 55 per hour.

Anyway, we're particularly fond of the one in which the mod couple in their spacious apartment -- not that Philips ads ever feature anything but mod couples in spacious apartments -- wander around wondering where to place their flat, widescreen TV. After a test-drive on nearly every spacious wall in their mod apartment leaves them vaguely dissatisfied, they happily decide on The Perfect Spot for the Philips Flat TV: the ceiling above their bed, so they can lie down and watch the screen without even having to lift their heads up.

All very wonderful, except for the tiny message briefly displayed at the bottom of the screen: "Professional installation only. Ceiling placement not recommended." As in, the consumer electronics equivalent of "Professional Driver on a Closed Course."


We called up Philips Consumer Electronics to ask why they'd show an ad climaxing with people putting a TV on the ceiling if you're not supposed to put a TV on the ceiling. Is it OK, or not? "If you're interested in putting it on your ceiling, you need to discuss it with your installer," said a spokeswoman. "But Philips doesn't recommend that you do that." Well, why? Will it hurt the screen? Is it like, say, a coffee maker, in that you can count on bad things happening if you tilt it the wrong way? "It's like putting anything on the ceiling," she replied. "It's a gravity issue." Well, does she know anybody personally who has put a Philips TV on the ceiling? "No," she said, laughing as if that were the silliest question she'd ever heard.

Well, it isn't. Someday we will get to the bottom of this issue. Or the top of it, as it were.

4. Not Worth a Bucket of Warm Spitzer

Yup, it must have been some fun Tuesday for all the analysts at the dinner for this year's

Institutional Investor

All-America Research Team.

You see, in an exquisite bit of after-dinner theater, the folks celebrating the equivalent of the Oscars for brokerage industry analysts got to listen to a speech by New York State Attorney General Eliot Spitzer.

Sort of like inviting a member of the Taliban to a pool party at Ozzy Osbourne's.

Anyhoo, Spitzer didn't disappoint. He said the

II

rankings were certainly of value to "

institutional

investors" (emphasis his).

But, he added, they were a lousy predicter of what brokerage firms have been using them for: an implied seal of approval of analysts' buy, sell and hold recommendations. "That message is simply deceptive," said Spitzer, according to a draft of the speech published on his Web site.

In fact, points out Spitzer, a study of the All-America Research Teams over the past three years indicates that only about 20% to 30% of top-rated analysts are among the top-five stock pickers for their category. More than 40% of top analysts were less-than-average stock pickers.

Spitzer's findings follow

II's

own findings that a majority of the buy side

doesn't trust sell side research at all.

"We agree that there should be sunshine and transparency," says

II

editor Mike Carroll. "And we agree that brokerage firms should not misrepresent what these rankings stand for."

Gosh. At this rate, an

II

ranking will soon be as desirable as a Hamptons-based car service operated by Lizzie Grubman.

5. All I Ever Needed to Know About Wall Street I Learned in Applying for the 92nd Street Y Pre-Kindergarten

Speaking of Spitzers and Grubmans in the news, you have to feel some sympathy for former Salomon Smith Barney analyst Jack Grubman.

In the kind of odd story that even a sociopathic liar wouldn't dare concoct, the papers reported Thursday a new theory as to why the Spitzer-hounded analyst made a fateful upgrade of

AT&T

(T) - Get Report

in late 1999.

No, it wasn't to get AT&T's investment banking business. And no, it wasn't even an obscure part of a power struggle waged by Grubman's ultimate boss,

Citigroup

(C) - Get Report

pasha Sandy Weill.

What was really going on, according to the latest theory, was that Grubman did it in return for Weill helping to get Grubman's kids into a New York preschool.


All the parties allegedly involved in this scenario are denying it.

But wow. Speaking as New York parents who have sweated over our own kids' admission to preschool, we feel a newfound bond with Grubman.

Yes, his annual salary may have been $20 million more than ours. But just like us, he's at the mysterious mercy of preschool admissions officers. He's got a human side. We don't care what mean things we may have said about him before. He's one of us.