Monthly Archives: January 2015

Showtime

Carol Channing

In my misspent youth of taking everything way too seriously, I finally cracked and spent one fabulous summer studying acting in New York. A lark to be sure, yet to this day, those six short weeks of training at The Neighborhood Playhouse eclipse any formal schooling I ever got.

In another world, one in which successful actors could be home-bodies and shuffle around in t-shirts, sweat pants and thick woolen socks, drink way too much hot milky tea, and call it a night by 10pm, then, yeah, I would take a shot.

One thing I learned is, acting is a lot harder than it looks. It’s relatively easy to ACT. Think of the great over-actors like Jack Nicolson or Al Pacino chewing up the scenery. Watching their films today, it’s like, ech, that’s a bucketful of acting there fellas.

At The Playhouse we studied the Sandy Meisner technique. This involved sitting across from another student in the middle of the room and repeating the same words to each other.

“I’m hungry.”

“I’m hungry?”

“I’M hungry.”

“I’m HUNgry!”

Trust me, it’s as crazy-making as it sounds. But it’s a great technique for deep listening, and for building something—word-by-word— out of nothing.

Last week, The New York Times ran a Q&A with Emma Stone and Eddie Redmayne, both Academy Award nominees. Stone recalled working on a scene with the Australian actress Toni Colette some years’ back. After an hour, Colette asked Stone to take a look at the playback. What Stone saw gave her a shock. She suddenly realized why she was not getting film work. She was flat-out, googly-eyed ACTING. The best acting advice she got was, “teaspoons, not buckets.”

“Teaspoons, not buckets.” That’s damn fine counsel for just about any endeavor, not just acting. So often we go for the max, not realizing that the extra effort doesn’t translate into greater returns; it may even diminish them.

This “buckets” approach is prevalent in investing. Most retail investors, and even a few professionals, want to make a big kill. This is reflected in macho investment lingo. There are doubles, and ten-baggers. No one ever talks about the twenty-five-percenters. But, I mean, if you got a twenty-five-percent return on your investment, wouldn’t that be great? By comparison, official inflation is running at around two-percent, and long-term equity returns come in around seven-percent.

I think the average investor should take the teaspoon, not buckets approach to their portfolios. Instead of sticking their necks out, either by taking on outsize risks in highly speculative investments, or by holding on to winners too long, hoping for that last bit of price increase, they can miss out on the impact of teaspoons of positive returns.

You may have noticed that investment analysts are quick to advise what to buy. They are less forthcoming on what, and especially, when to sell. They leave that important part up to you because they don’t want to publicly diss a company and risk being cut-off from the juicy commissions that come with financing deals. Keeping the “teaspoons, not buckets” approach in mind, will give you the discipline to not be so greedy and to crystallize profits before they vaporize.

You don’t have to play to the back of the room. Just hit your marks by picking your exit price before you buy.

And the winner is…

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Match Point

Lord and Lady Grantham

It’s an open secret that Lord Grantham married Cora for her money. Those great British houses, Downton Abbey in this case, are big and drafty and burn through cash like nobody’s business. When you’re unskilled, with no job history, and not the sharpest tool in the shed, (Lord Grantham nearly blew the family fortune on a Canadian railway stock), bartering title for cash seems perfectly reasonable.

This month’s Town & Country has a feature story on another love match also involving a vast fortune. J. Seward Johnson Sr., heir to the Johnson & Johnson pharmaceutical dynasty, fell hard for Basia, a Polish art history student-cum-cook-cum-maid-cum-wife. Roundly accused of being a gold-digger—taking in their amorous behavior on a corporate jet, a J&J executive remarked, “The screwing that he’s getting now is nothing compared to the screwing he’s gonna get”—it was a love match that lasted 12 happy years until Seward succumbed to prostate cancer.

In 2013 Basia herself passed leaving a fortune estimated at $3.6 billion. Equally as incompetent with money as Lord Grantham, Basia had the misfortune of lacking the good counsel of friends and family to help her keep the ship on course. She spent money on one folly after another, starting and never finishing most projects and acquiring enmities along the way. There was never any shortage of individuals—from dubious art dealers to minor royals like Prince Albert of Monaco—to relieve her of her funds.

Disillusioned by America and European high-society, toward the end of her life Basia returned to Poland. She was reported to be seen pacing her garden with her small dog and muttering, “What was all this for?”

Indeed, what is it all for?

On the recommendation of Bob Odenkirk, soon to be seen in the spin-off to Breaking Bad, Better Call Saul, (you’re welcome Bob), I’m really digging that hippie classic Das Energi by Paul Williams. The premise being the entire universe, including us, is just a mass of energy. Or something like that.

There are many philosophical systems that work with energy but the one I’m familiar with is medical qi gong. For optimum health one needs to create a balance between purging stale energy and acquiring healthy energy and then circulating it inside and outside the body.

It’s not a big leap to think of money management in similar terms.

In qi gong, one must be grounded before doing anything else. Basia had a a tremendous amount of energy, (her inherited fortune), but she was ungrounded. Lacking perception, she was vulnerable to her own idiosyncrasies, as well as to the unscrupulous individuals drawn to her. She made poor investments and dissipated the money. Would practicing qi gong regularly have helped her? We’ll never know.

But to help answer Basia’s question, “What’s it all for?”, maybe it’s not about some magic number and, instead, it’s about evolving our understanding of energy and then using it, sometimes in the form of money, in meaningful and productive ways? Just an idea.

The Great Escape

Courtesy Tribeca Films

Courtesy Tribeca Films

Pleased to see Wes Anderson’s film The Grand Budapest Hotel just received nine Academy Awards nominations. I loved the film, in part, because I love hotels. The grander the better. And better still, staying in one in glorious solitude.

You see it’s very noisy out there. Then it gets noisy inside my head. One thing about top hotels: they’re very quiet. They allow the busy body and mind to exhale.

It’s been estimated that each day we’re exposed to the equivalent of 174 newspapers’ worth of information. This has increased five-fold since 1986. Every sixty minutes, there are 5,999 new hours of video posted. (Yes those kittens and puppies are adorable but…) We’ve become so unaccustomed to being alone with our thoughts that it’s a novelty—and for many, an unwelcome one.

Perhaps by temperament writers seem to have a higher tolerance and need for solitude than other folk. When I recently read Andrew O’Hagan’s ode to his 48-hour staycation at Claridges in London in T Magazine, and then followed it up with Ann Patchett’s encomiums to the Hotel Bel Air in Los Angeles in This is the Story of a Happy Marriage, I felt a yearning that some women feel about babies: “I want one.”

Still, those who seek refuge from the jibber-jabber are in the minority. A recent study in the journal Science, shows that most of us make a great effort to avoid introspection. After reviewing 11 different experiments involving more than 700 people, the researchers concluded that the average person finds it depressing and unpleasant to be alone with their thoughts for more than 6 minutes. In one experiment, 64-percent of men, (compared to 15-percent of women), self-administered electric shocks to distract themselves. The comedian Louis C.K. does a great riff about driving and texting, saying that we would rather risk lives than be alone with our thoughts for a few minutes.

All of this busy work has serious implications, not only on the quality of our lives and our relationships—I can’t tell you the number of times I end up speaking to the top of someone’s head because their eyes are glazed on their mobile phones—but also on our decision-making abilities.

Nobel prize winning economist Daniel Kahneman wrote about two modes of thinking in his bestseller Thinking Fast and Slow. Type-1 is fast, instinctive and emotional and Type-2 is slow, deliberate and logical. The more we use our minds, the more fatigued our brains become and the more liable we are to use Type-1 shortcuts to making decisions, often with poor outcomes.

Sifting through the equivalent of 174 newspapers’ worth of information would tire out even the most robust brain, and that’s not counting the kitten videos,  Facebook updates and all the other inputs that roll up on our doorsteps every minute. And don’t even get me started on the financial press. Keeping up with business and investment news can be a 24/7 job.

Hence, the hotel retreat. It’s the perfect way to unburden yourself. One tiny satchel takes care of it. The hotel supplies the rest, and the rest.  You get to experience lightness of being, instead of relentless doing.

A fluffy robe, chilled Champagne, and an empty diary page. Let the introspection begin.

Water Sign

Courtesy of Habitually Chic

Courtesy of Habitually Chic

Happy New Year from everyone at Luck& Gravity! We (that’s me) wish you a joyful and prosperous 2015. And what better way to signal a year of plenty than this charming photo of a happy, wealthy couple: Elizabeth Taylor and Mike Todd at La Fiorentina in Saint-Jean-Cap Ferrat.

Some years ago when I was making yet another heartfelt attempt to learn French, I went to a school on the Cote D’Azur. (Bien sûr.) Villefranche-sur-Mer is a low-key little town compared to its flashier neighbors Monaco and Nice. Yet, in its day, it had seen plenty of shambolic goings-on, courtesy of rock stars like Keith Richards, who recorded Exile on Main Street here, as well as from the Euro trash that flock to the Cote D’Azur like crows to leftover canapés.

On week-ends, I took jaunts to nearby towns including the Saint-Jean-Cap Ferrat. Here were palatial villas set behind lush tropical gardens. They could only be glimpsed by pressing oneself against the imposing iron gates—or not at all if the guard dogs were on-patrol. Occupants included newly-minted Russians and, before the great crash of ’08, the lucky Irish. Each week-end I set out for Cap-Ferrat in search of the Queen of the Villas: La Fiorentina.

In 1967 Taylor and Todd rented La Fiorentina for the summer. Every morning Taylor, born under the water sign Pisces, swam lengths in the long pool that overlooked the shimmering Mediterranean. The photo above shows Todd surprising Taylor with a suite of diamond-and-ruby jewelry after one of her swims. I think it was Tuesday. Ain’t love grand?

In astrology, the water sign Pisces is not renowned for financial acumen. (Long story so the short version: Pisces is associated with the 12th house of dissolution and endings, thus is not considered auspicious for wealth accumulation. In Vedic astrology Taylor was an Aquarius, a whole other kettle of fish. But not here.) Yet, there is also wisdom in water as it can be used as a metaphor for navigating through life —and investing.

The following is the New Year’s message from of Ven. Samu Sunim, the founder of the Zen Buddhist Temple. (The italics are mine.)

Water always flows downhill. “Learn humility”.
A common mistake investors make is believing their gains are based more on skill than luck. Learning humility allows us to ask for help when we need it, and be willing to change our habits when they no longer serve us well.

Water always meanders around obstacles. “Learn wisdom.”
Flexibility is necessary to invest well. For example, blindly following a buy-and-hold strategy could cost us greatly if we disregard changes in sector dominance.

Water does not refuse dirty water. “Learn inclusivity.”
Investment wisdom is everywhere—and so is dross, unfortunately. Keep your eyes, ears and mind open to great investing ideas. They can and do come from anywhere.

Water adapts itself to any situation. “Learn adaptability.”
Good times/Bad Times. Always try to keep at least one-and-half years of expense money in a money market fund. This way market gyrations or unexpected setbacks will have less of an effect on your state of mind. If you are retired, this amount should be adjusted upwards to at least 3 years.

Water is patient and endures.”Learn perseverance.”
Once you have made an investment, it rarely pays to get twitchy. Unless there has been a negative material change, you must stick with your plan for several years to benefit. Do not become a victim of volatility. In an accumulating portfolio, use it to your advantage. In a distribution portfolio, see previous note. 

Water is not afraid of throwing itself off a cliff. “Learn grit and courage.”
Investing always involves some risk. If all your money is under the mattress, that is a different kind of risk. What is the optimum level of risk/reward?  When you’re taking risks with your money, ensure that the risk premium is appropriate. In other words, don’t overpay.

Water travels ceaselessly to reach the ocean where it becomes one with the ocean. “Learn the way of the Budhha in ocean Samadhi.”
Money is a manifestation of energy. Like knowledge, it loses its value when hoarded. Use the energy of money wisely to lift yourself and others up. Spend your wealth for good.

P.S. I did eventually find the sign pointing me in the direction of La Fiorentina but the dense foliage around it foiled me from seeing it. (For more photos and a short history of the property, click here.)