Wal-Mart (NYSE: WMT), a retailer that competes with companies such as Target (NYSE: TGT), Sears (NASDAQ: SHLD), and Costco (NASDAQ: COST), issued what I thought was a decent Q1 report. Sales may have been affected by currency effects, but overall, the giant chain seems to be holding up reasonably well.

Revenues dipped 0.6%. The company earned $0.77 per diluted share. No, the bottom line didn't do great in terms of earnings growth. Last year at this time, Wal-Mart made $0.76 per diluted share. That extra penny does not connotate excitement, I can tell you that. But shareholders can comfort themselves by the fact that Wal-Mart came in at the high end of its own guidance. Wall Street analysts pretty much agreed that the business would make about that much.

The perceptive and common sense-rooted Ben Stein, in a business column in The New York Times, has weighed-in on the credit crisis, and for market absolutists, it's an argument they probably don't want to hear.

Stein, like many of us, has pondered how the massively well-paid men and women of Wall Street could create such a catastrophe. How did some of the smartest, talented executives, Stein ruminates, generate such immense losses that "they made banks clam up on lending -- at great risk to the economy?"

Compelling questions

Stein asks: Where were the fail-safe devices? The government watchdogs? The ratings agencies? A speech by Greenlight Capital hedge fund manager David Einhorn at a Grant's Interest Rate Observer event, provided the answers -- the unfortunate truths of the recent housing/credit boom -- which Stein summarized:

Most reasonable people -- even the most laissez-faire among us -- accept that excessive executive compensation completely out of line with performance is a serious problem in America.

Too often though, this gets debated as a populist issue with congressional hearings and rants from union activists. But at its core, excessive compensation is a corporate governance issue and the ones getting screwed over are the shareholders.

In a great column in the Sunday New York Times, Ben Stein explains the real root of this problem: supine boards of directors, motivated by cushy relationships with CEOs, perks based on kissing asses instead of creating value, and no real skin in the game.

The solution to this should be pretty simple, and it has nothing to do with protests, newspaper columns, or passionate (and televised) congressional hearings. What we need are more activist investors, rigorous enforcement of laws requiring that institutional investors vote their shares in the best interests of their fiduciaries, and for the SEC to improve proxy access rules, making it easier for shareholders to unseat under-performing directors. Unfortunately, the SEC under Republican leadership has backed the interests or entrenched -- and lousy -- executives and directors, not the interests of shareholders. That's wrong.

As Randy Cepuch wrote in his book A Weekend with Warren Buffett, the notion of corporate democracy is "pretty much a myth." That's going to have to change, or our country's competitiveness will be seriously jeopardized.

Talking about raising taxes is a tough way to attract votes, no matter what party you're in. But given our federal budget nightmare, conservative Republican Ben Stein is saying that taxes do need to be raised. And remember, this is a guy who wrote speeches for Richard Nixon.

In a column in the Sunday New York Times, Stein delivers a pointed rebuttal to the Laffer-curve inspired voodoo economics that have controlled the Republican Party for decades: the notion that cutting taxes increases economic productivity to the point where tax cuts pay for themselves. If you don't believe me that this hasn't worked, check out the national debt clock.

In a column directed at Republican Presidential candidate John McCain, Stein writes that "The first step toward putting our house in order, once we are past the seemingly looming recession, is much higher taxes on the truly rich and serious enforcement to prevent offshore tax evasion."

Ben Stein is right -- as he usually is. The notion that we should continue sending more than $1 billion a day to pay interest on the federal debt to avoid raising Warren Buffett's tax rate by a few points is nuts.

But here's the political problem: people are optimistic and a lot of people think that they will one day be in that upper tax bracket -- kind of like how 90% of people think they're above average drivers and take risks accordingly. We may be mortgaging our future out of concern that we'll have to pay slightly higher taxes when we are rich.

Ben Stein generated some controversy with his column a few weeks back, alleging a conspiracy between Goldman Sachs' (NYSE: GS) economist and the firm's shorting of the mortgage market. Herb Greenberg called it "classic take-no-prisoners, grumpy Ben Stein."

In his latest take-no-prisoners, grumpy screed, Stein discusses Wall Street's massive breach of fiduciary duty: "The biggest of the big names were among the most aggressive in betraying their clients' trust, as I see it. Some of the biggest names were selling securities that they -- apparently -- barely understood themselves. In so doing, they exposed their buyers, and their stockholders, to immense losses. (Think Merrill Lynch, Bear Stearns, Lehman Brothers, and many others.) Other major players, including Goldman Sachs, were aggressively shorting the very same sort of products they were underwriting."

Of course, everyone makes mistakes -- and selling billions of dollars worth of securities you don't understand at all is a pretty big one.

But the problem as I see it as that these Wall Street firms that messed up badly aren't taking responsibility where it counts -- the pocketbook. Note to Stan O'Neal: a $160 million severance package isn't accountability. Wall Street bonuses soared this year, even as stock prices plummeted for most financials, a sure sign that, on average, Wall Street bonuses are not a reflection of value creation.

That's a big part of the problem that had led to massive unchecked risk-taking: No one making the bad decisions stands to lose much if they backfire.

"Heads we win, tails our bonuses still rise 14%" is not the way to run a public company, and investors should be outraged.

In a New York Times column dripping with sarcasm, the brilliant Ben Stein wonders whether we should give top hedge fund managers some taxpayer dollars to manage:

Supposedly, a number of wizard managers consistently earn more than 40 percent a year for their hedge funds. Yes, I know that this conflicts with every bit of investment and market theory -- or almost every bit. I know that such a thing should be impossible. But, supposedly, magicians like Steven A. Cohen, founder of SAC Capital in Stamford, Conn., can regularly earn 40 percent a year -- often more -- on their capital.

But why waste our time on envy or disbelief? Let's put Mr. Cohen to work for the greater good. Let's have the federal government issue about $10 trillion in Steven A. Cohen National Debt Retirement Fund Bonds. After interest is paid on the bonds, if Mr. Cohen makes 40 percent on the money, the fund will return 36 percent a year. That means that in only two years, he will have made roughly $10 trillion for the taxpayers, with which he can pay off the entire United States federal debt.

The doomsayers are coming out of the woodwork after last week's market downturn, but Ben Stein remains bullish in his latest column for The New York Times. More Americans own their own homes than ever before, and most people who want jobs have them.

But as Stein points out, the subprime mess that has enveloped some of the top investment banks has brought to our attention a more serious problem: Corporate governance in America basically doesn't exist: "Those at the top can blame anyone they like for their companies' imprudence, but they are ultimately responsible. Why are they still in their jobs? Not one C.E.O. of a major commercial or investment bank has lost his job despite some staggering write-downs. Why? Is this the board of directors' old buddy system at work? Sure looks like it."

And he complains, as I have been too lately, that the SEC doesn't appear to be doing much in the way of going after these banks which appear to have engaged in accounting that could be characterized as aggressive at best.

So yeah, the economy may be fine. And if you're a long-term investor, you shouldn't even think about selling your index funds now -- history has demonstrated amply that market timing doesn't work.

But we should be concerned about what the most recent scandals have taught us about corporate governance and corporate ethics. Enron ain't as far behind as we perhaps thought.

With their latest book Yes, You Can Get a Financial Life!, the team of Ben Stein and Phil Demuth has written its best, and most important, book yet.

Using an innovative financial planning software called ESPlaner (available online for $149) and data from multiple sources about the financial life of the average Americans, they have plotted a life cycle personal finance strategy that can lead any reasonably intelligent reader to a life of relative financial ease. The focus is on keeping consumption as constant and high as possible, and then varying savings over the course of the life cycle to achieve an amount necessary to maintain the same standard of living in retirement.

With chapters like "Saving and investing in your 20's" and "Single 30s", the authors discuss the financial issues that people are likely to go through at various stages, and provide a no-nonsense plan for financial success.

In addition to an extremely useful personal finance book, we also get some musings on business, politics, and life from Ben Stein, one of the great minds of our time. Writing about college for instance, he says that "There are no competence-based standards for graduation that would offer future employers any reason to take college diplomas seriously, although they still do."

Some of the advice is also off-beat, and very different from what many personal finance books would offer: Send your kids to private school if you can, but don't help them pay for college.

This is definitely well worth the price and makes a terrific, and more serious, companion to Stein's also excellent How to Ruin Your Life series.

if Ben Stein is right that people who are worried about the subprime mortgage crisis are being "chicken little," then there will be plenty of clucking going on following yesterday's announcement from Capital One Financial Corp.(NYSE: COF) that it was shutting down its GreenPoint mortgage unit.

As the Wall Street Journal (subscription required) points out, Capital One bought this business as part of its $13.2 billion acquisition of GreenPoint Financial Corp. The company now is shutting 31 locations, firing 1,900 workers and taking a charge of $860 million, or $2.15 per share. To top it off, Capital One is slashing its 2007 guidance by $5 a share.

What's scary is that GreenPoint didn't even sell subprime mortgages. It sold loans to people who lacked sufficient documentation to qualify for the best rates.

When the dust clears, it will show that the real estate boom was fueled by rampant mortgage fraud. People got loans that they couldn't afford and are now paying the price. Congress needs to take action to make sure this doesn't happen again.

It's only a matter of time for the next shoe to drop.

The entire investment community has been in awe of the market's recent gyrations: Why is it going down and why is it so volatile? Is the value of the Dow really oscillating up and down 1% per day, or is there some sort of mass hysteria work?

Ben Stein seems to think it's the latter:

... the fears and terrors about subprime mortgages have helped knock off 6.7 percent of the stock market's value in recent weeks. This amounts to about $1.1 trillion, or more than 30 times the losses so far in the subprime market. In other words, these subprime losses are wildly out of all proportion to the likely damage to the economy from the subprime problems.

Stein goes on to point out that sectors and stocks that are tied to subprime are being beaten down completely out of proportion to their actual exposure. Meanwhile, stocks that have no subprime exposure are also getting it handed to them.

Stein predicts that "smart, brave people" will make a lot of money buying right now, and he's one of the few pundits worth paying attention to.

More on Ben Stein:
Ben Stein sees through hedge fund lobby's baloney
Ben Stein blasts Supreme Court for failing to protect shareholders
Ben Stein outlines his perfect portfolio and gives more sage advice
Ben Stein: Sit back, relax, and enjoy the dips

Ben Stein is generally seen as a fiscally conservative Republican (something about writing speeches for Richard Nixon ...), but even he thinks the insanely favorable tax treatment that hedge funds receive is outrageous. Referring to the extraordinary compensation many hedge fund managers receive:

Somehow, by some alchemy of brilliant tax lawyers, these people are paying long-term capital gains rates of 15 percent on their compensation (even though much of their pay is tied to trades with holding periods that last seconds). Doctors and lawyers and writers and actors pay about two times that amount.

That's it. End of discussion. Why should private equity and hedge fund managers receive such special treatment when they are making such an enormous amount of money. In the words of Johnnie Cochran, "It does not make sense!"

Stein then makes another brilliant proposal:

Why don't we just have a tax holiday for people who are fighting in Iraq and Afghanistan for five years after they get back? ...

Let's keep it real: Congress can take notice of a mammoth inequity in taxation during wartime and make the tax on private equity and hedge funds approximate the treatment of other highly paid people - or it can continue down the road to the Bastille.

Brilliant as usual, Mr. Stein. Why isn't this guy running for office? Oh wait, he actually makes sense.

More from Ben Stein:
Ben Stein blasts Supreme Court for failing to protect shareholders
Ben Stein outlines his perfect portfolio and gives more sage advice
Ben Stein: Sit back, relax, and enjoy the dips

Ben Stein is my hero of tell-it-like-it-is commentary on all things, and he had some pretty harsh words about the Bush Administration's refusal to file a brief in an extremely important case that is before the Supreme Court. The Supremes will decide whether shareholder can collect damages from investment banks, accounting firms and other companies that "merely aided and abetted" securities fraud. Treasury Secretary Henry Paulson (A frequent target of Mr. Stein's columns) even went so far as to urge the solicitor general at the Justice Department not to file the SEC's amicus brief in the case.

One of the most common arguments against allowing shareholders to recoup damages through class-action lawsuits is that the added risks and costs for the companies make U.S. financial markets less competitive. Mr. Stein trashes that argument pretty effectively:

That same old whining about how poor, poor Wall Street, where high-ranking officials can make only $50 million or $60 million a year and where hedge fund managers can make $1 billion-plus a year, might be hurt if stockholders were actually protected from sneak attacks by investment bankers.

Poor, poor Wall Street, where the Champagne flows like water and the players get billions for helping the rich get richer. We had better protect them instead of the widows and orphans who were wiped out by the fraud at Enron.

Stein's exactly right. These guys are paid way too much money for what they do not to be held financially accountable if they mess up or act in bad faith. And if a judge can sue a dry cleaner for $54 million for losing his pants, shouldn't shareholders be able to seek restitution from investment banks in cases of securities fraud?

Here's a good rule of thumb for people who care about their finances: Whenever Ben Stein talks or writes, listen. His recent interview with Fortune provides some interesting thoughts in response to reader questions. He gives a great, bare-bones, low-expense, low-maintenance portfolio that would probably do just fine for almost any investors:

What I generally recommend for the noncash portion of your portfolio - and this has been unbelievably successful - is a mix of various index funds and exchange-traded funds [ETFs], with roughly 25 percent in an S&P 500 index fund from Vanguard or Fidelity; 25 percent in a Vanguard or Fidelity total stock market fund; 25 percent in EFA, which is an ETF for developed overseas markets; 15 percent in EEM, an emerging-markets ETF; 5 percent in ICF, the ETF for real estate investment trusts; and 5 percent in XLE, which would be your energy fund.

He also said that he's not a fan of bonds, and says that if you can a return of 5% or more on your cash through a savings accounts (such as EmigrantDirect), that's the best choice.

He also had some harsh words for management-led leveraged buyouts: "Management buyouts. They're just another form of looting. There are some buyouts that are not a form of looting, but I think in general they're a form of looting the stockholder. They have to pay the stockholder less than the corporation is worth, or else the deal won't work."

Stein's ability to distill complex financial issues into everyday language and common-sense makes him one of my favorite financial commentators on the planet.

Ben Stein, one of my favorite financial writers, took a look at the issue of liability for investment frauds in his latest piece for the New York Times. In 1994, the Supreme Court inexplicably ruled that investment banks, accounting firms, and similar institutions could not be held liable for aiding and abetting securities fraud. Sound stupid? It is.

Fast forward to Enron. Last month, a three-judge panel in New Orleans ruled that a class-action lawsuit against investment banks involved with the company could not proceed. According to Stein, "The panel held that although its ruling might prevent justice from being done and satisfaction from being had, the acts of the investment bankers were at most aiding and abetting, not direct acts, and therefore not actionable under 10(b) as construed in the Central Bank case."

The case is now destined for the Supreme Court, and Ben Stein and I hope that they will do the right thing and hold banks accountable for participating in schemes that dupe investors. Given that most companies are insolvent after their collapses due to fraud, the banks and accountants are pretty much investors' only hope of getting some money back.

Wednesday's Wall Street Journal has a piece that will probably scare the bejesus out of anyone who has read Traders, Guns, and Money or considered Warren Buffett's definition of derivatives as "financial weapons of mass destruction." What's scary is not the new crop of funds that advertise that they use derivatives, but the fact that many seemingly ordinary funds are using derivatives too -- wolves in sheep's clothing.

Granted, in most of these cases, the derivatives will not be the recipe for disaster they can be when used speculatively at many hedge funds. Writing covered calls is considered a nearly risk-free way to lock in decent profits. But what gets me is this:

And with more than 8,000 mutual funds on the market, many managers believe it's not enough to match a market index. They want to beat the market -- and derivatives often help.

Ben Stein's great book How to Ruin Your Financial Life gives readers a list of tactics for destroying their financial futures. These include "Don't bother to learn anything at all about investing" and "Spend as much as you want and don't be afraid to go into debt." But probably the worst piece of advice he gives is "Carve it in stone: 'Average' returns in the stock market aren't good enough for you."

The point is, investors shouldn't feel pressured to seek above-average performance from their mutual funds, because most mutual funds deliver below-average performance. Stick with index funds and your average performance will be well above average indeed.