Ringo, Ringo

Chanel Comet Ring

Chanel Comet Ring

Dear Readers, you may have been wondering where I’ve gotten to. No new posts since the end of August? Come on girl!

Well there’s been this-and-that. Among other busyness, I got my certificate in Advanced Investment Strategies and, yes, it was as thrilling as it sounds.

The other night we saw Ringo Starr and his All-Star Band. Frankly, it could have gone either way but I gotta say, it was a rollicking good time. This man is enjoying himself so much you just have to clap along.

The former Beatle’s life is a good reminder to never underestimate  anyone, including oneself. By any measure his early life was shambolic.  A crummy Dad, poverty, severe ill health, illiteracy,  violence, lousy jobs, and a cold, damp, coal blighted climate with only two seasons: “July and Winter”. And yet, with a little luck and a lot of grit, Ringo crossed the wide chasm from have-not to mega-have.

Given his upbringing it should come as no surprise that Starr has some strong opinions about money and investing. As he told Forbes magazine, “…I always bought the house. I always felt good about that. I mean it took a long time till we made enough  money that I could buy a house. I have a business acquaintance who keeps saying “Cash is king,” and just because of where I come from, I like to have some cash. That’s all. Those are the two sort of rules I have.”

Starr’s a great drummer but what about his investing savvy? Anyone who’s come from a turbulent background will be drawn to the apparent security that owning land provides. As long as you can manage to keep the lights on, there’s no one to toss you and your belongings on the street. And, when all else fails, you can rent or sell it to put a few shillings in your pocket.

Some people consider real estate a kind of bond proxy in that it generates a predictable stream of income in the form of rents paid/saved. And, like a bond, its market value varies depending on interest rates, economic growth, and investor sentiment. But where a bond will mature and pay out its face value, a house never “matures”. You can keep it forever.

There are other differences as well. Like precious metals and other commodities, investing in real estate comes with many additional costs. Gold bars need to be transported, insured and stored, while real estate needs to be maintained and insured. It’s not portable and is heavily influenced by, not only the macro environment but also the micro, in other words, what is going on in the immediate neighborhood. Each gold bar is pretty much like the other, yet each property is unique with its own quirks.

Cash is Starr’s second investment pillar. But cash alone, e.g. stacks of bills hidden under the mattress or in a storage locker à la Walter White in Breaking Bad, is not really a smart move. For one thing, inflation erodes its value. The best way to think about cash is as a market hedge. If the stock market melts, those who have “kept their powder dry” can use it as an opportunity to buy depressed securities. It also provides a cushion during panics; you can live on your cash instead of being forced to sell assets to pay your living expenses. For this reason, in retirement, it’s good to have at least two years’ worth of basic expenses socked away in short-term GICs or actual cash.

Starr doesn’t mention other asset classes like equities, art, hedge funds, private equity etc. Cash and real estate alone are not a well-diversified portfolio for the average person, although if you have enough of each, you’re pretty much bullet proof. With a net worth north of $400 million, Starr’s well able to diversify.

Judging by his recent concert here his biggest assets are not the real estate holdings or the wads of cash—although they help. At 75, Starr is upbeat, funny, whippet-thin, fit, happily in love with his wife, surrounded by great talents and good friends, and is doing exactly what he wants to do whether it’s making music, painting, writing, acting or petting the dog.

Baby, he’s a rich man.

Peace & Love Ringo!


Party Pooper

Mao courtesy of Warhol

Mao courtesy of Warhol

Every party needs a pooper. On April 21st the People’s Daily in China boomed that the bull market had “just begun”. Two months later share prices on the Shanghai exchange collapsed by one-third, thereby crushing countless small investors who had bought on margin under the mistaken impression that a rising market was practically guaranteed by the State. Now President Xi’s “China Dream” has turned into a global nightmare sending skittish investors running for cover.

China’s robust economy was good news for over 600 million people who were lifted out of poverty after a torrid four decades of growth that saw the country’s GDP rise 26-fold in 37 years). Now China’s fall is bad news for everyone from small investors to commodity exporters, (“hello Canada!), and to every corporation that’s been jonesing for Chinese consumer demand to fill their coffers. To add to China’s economic troubles, a corruption crackdown has ensnared some of the nation’s high-and-mighty, including more than 100,000—no, it’s not a typo— government officials. And there have been recent reports of shadow-finance companies begging for Beijing to bail them out. In other words, don’t look to China to save the world economy any time soon.

But they say every cloud has a silver lining. What’s bad for Shanghai’s speculators might just be good for…Africa’s elephants and rhinos!

Asian demand for ivory trinkets and for herbal concoctions made of powdered rhino horn have led to the slaughter of these animals on a massive scale. More Chinese with more yuan in their pockets have added fuel to the existing demand. Ivory figurines are status symbols in China and Vietnam and medicines made of powdered rhino horn are believed to relieve hangovers, break a fever, cure cancer, and give flaccid ding-dongs a boost. (At best, these medicines give a placebo effect that could be easily replicated with synthetic rhino horn.) Demand has pushed the price of a kilo of rhino horn to over $65,000. And, in case you were wondering, unlike gullible investors, rhinos don’t voluntarily give up their wealth. Poachers have to immobilize them with a tranquilizer, then hack chunks of their faces off to remove the horn. The animals are left to bleed or suffocate to death.

Even though Chinese stocks are mostly held in domestic hands, the country’s problems are now the world’s problems. Given our symbiotic relationship with the Middle Kingdom, why couldn’t the “world” intervene to stop China’s plunder of African wildlife? Developed countries have been too enthralled by China’s growing economic might, omnivorous demand for raw materials, and easily hurt feelings to seriously question its record on their war on African wildlife or, take your pick, human rights abuses, environmental degradation, rampant corruption, unreliable government data, on-going occupation of Tibet…

Beijing’s policy makers are working hard to smooth out China’s market volatility and to “save face” internationally. On the rhino front, a South African firm called the Rhino Rescue Project has devised a way to save rhinos’ faces. The animal is sedated and then two holes are drilled into its horn which is then filled with a toxic cocktail. Since the horn is dead matter, this does not harm the animal. However, should the horn be consumed by humans it will cause side effects ranging from migraines, vomiting and diarrhea to permanent nerve damage. Hey-ho.

Chinese investors succumbed to the illusion that Beijing would guarantee ever-rising markets and that it was practically their patriotic duty to dump their life savings into equities. Likewise, their superstition about the healing powers of rhino horn powder which has never been scientifically proven. People of China, mark these words of Jewish Confucious Woody Allen: “What if everything is an illusion and nothing exists? In that case, I definitely overpaid for my carpet.

China, please leave the elephants and rhinos alone. Thank you and namaste.

Rich Face Folly

photo courtesy of Getty Images

photo courtesy of Getty Images

Who remembers the 1973 film Ash Wednesday starring Elizabeth Taylor as a 50-ish housewife who goes to Switzerland for a face-lift to save her marriage? Taylor, draped in furs and marital sorrows, secretly hoofs it to a ritzy clinic in Gstaad, has the surgery, then eats, drinks, gazes at the mountains, flirts with a fashion photographer, has an affair with a hunky German, stares at reflections of her restored beauty, but, alas, never reconciles with her husband, played by Henry Fonda, who’s still boinking a much younger woman. The film is notable in two ways. First, it stars the incomparable Taylor, who is watchable in any old schlock; and, second, it marks the first time that plastic surgery came out of the closet, complete with stomach-turning scenes of an actual surgery.

The film is terribly quaint by today’s standards when practically everyone is getting shot-up with Botox and hyaluronic fillers, or sandblasted with lasers and chemical peels. The latest trend, “richface“, is especially popular with millennials.  It involves extreme dermatological procedures meant to proclaim affluence, if not common sense. Selfies of swollen lips, a la Daffy Duck, puffy cheeks or pneumatic mammaries are posted quick-as-a-bunny for comment and applause.

Far be it for me to frown on the pursuit of beauty through personal grooming. No one would accuse me of being low-maintenance in that department (or any). But hyper-grooming is a risky business subject to the law of diminishing returns. (Exhibits A: Melanie Griffiths, Joan Rivers (RIP), any TV Real Housewife…)

Insecure millennials and reality-show celebrities are not the only ones who would benefit by leaving well-enough, or mediocre-enough, alone. Investors, too, are a restive lot prone to over-grooming, or in this case, excessive trading. This proves costly, both in the short-term (frictional costs of trading and taxes), as well as in the longer-term through poor market timing and weakened compounding benefits.

In his book The Single Best Investment, Lowell Miller makes the distinction between investors and traders. He states that long-term investing is about character, depth of vision and the cultivation of patience. By contrast most “investors” are whipsawed by the drone of economists, stock-pickers and other pontificators who populate the airwaves and provoke the “Three Sirens”: greed, fear, and conformity.  This compels us to constantly tweak our portfolios, jumping from one investment to another. Market liquidity, especially for mid-and-large cap stocks, and ETFs, makes trading as easy as a few keystrokes. This is a different kind of liquidity trap and one that I’ve fallen into more often than I care to admit. It’s also why I found Miller’s book such a welcome relief. It provides a counterpoint to investment industry hysteria.

As a 6th-degree black belt in Aikido, it should come as no surprise that Miller abides by a Spartan code in investing. Hold your ground. Become neither overly excited when your portfolio is up, nor excessively gloomy when it’s down.

Feel your feelings, but don’t feel you need to act on them!

Miller is a strong proponent of investing in high dividend-paying companies, with good cash flow, and growing dividends. You’re unlikely to make a killing with them but, on the other hand, you’re unlikely to get killed. Over time, as the power of compounding takes effect, these investments show their superiority over fixed-income, such as bonds or T-bills.

Alas, time is the friend of the dividend portfolio but not of the human who owns it. Warren Buffett is fond of saying that his holding period is “forever” but he tweaks like everyone else. What’s the sweet spot? Aim to tweak somewhere between Buffett and any one of the Kardashians.

Bye-Bye Birkin

photo courtesy of Telegraph UK


Some years ago at a hotel press luncheon, a distinguished silver-haired gentleman from Hermes boasted to the assembled fashion journalists, “At Hermes we are highly selective about the skins we use for our leather goods. We can even identify which particular calf supplied the hide by its unique markings.”

Given the Hermes’ reputation for quality control and that ole-time, artisanal approach to manufacturing, it’s more than a little surprising to see that their public response to accusations of animal torture at the farms that supply “exotic” skins for the famed Birkin bags—costing upwards of $220,000— is a Gallic shrug.

The style was created for British actress and singer Jane Birkin in 1984 after a serendipitous meeting with Hermes chief executive Jean-Louis Dumas during a flight from Paris to London. However, recently, after seeing brutal footage of the cruel slaughtering practices, Birkin has requested that her name be removed from the bags. Hermes says they have no business connection with the reptile farm, despite years of swirling rumours long before the actual videos turned up.

It’s been a bad week for animal killers. Take Walter Palmer, a dentist from Minnesota, who paid $55,000 to maim and murder Cecil, a protected lion in Zimbabwe. (Palmer has a criminal record of illegal hunting.) The discovery of Cecil’s skinned and decapitated body has sparked a global outrage. A whiz with a bow and arrow, the good dentist seems to have momentarily misplaced his courage.  Zimbabwean police have issued an arrest warrant for illegal poaching and now Walter’s closed his practice, River Bluff Dental in Bloomington, folks, and is on the run. Long may he be.

Hermes, on the hand, can’t hide. They have an obligation to address these allegations promptly and in an honest and forthright manner. One of the implied benefits of making purchases from a respected European manufacturer who charges full freight and then some, is the assumption of responsible and humane behavior toward employees and community, as well as animals and the environment. (The discussion about whether any animal should be made into a handbag, wallet, carpet or umbrella stand in the first place, is an important question but beyond the scope of this piece.)

Just like I disbelieve Walter, who, when he realized the wrath of the world was against him, whimpered that, had he known Cecil was so beloved, he never would have killed him. Rubbish. He knew exactly what he was doing and to whom when he lured Cecil away from the protected area by dragging an animal carcass off the back of a truck as bait.

Ditto for Hermes. Knowing the firm as I do and the inordinate pride they take in controlling every facet of the manufacturing process, I cannot believe they didn’t know about the appalling mistreatment of animals at the Texas farm. After all there are long waiting lists for these bags and most people who buy them don’t give a toss how the skins are obtained, they just want the status symbol on their arms. Despite the artsy la-di-dah of their marketing, Hermes, like every other manufacturer, is in business to make money. They have no great interest in stopping the flow of exotic skins—unless it becomes bad for business.

As painful as it is to become aware of animal suffering, casting the perpetrators out of the shadows is the first step to stopping the misery.

As for me, I’ve just saved myself $220,000.

Luxurious Solitude

Armani and friend

Armani and friend

I’m just old enough to remember when Armani was it. The 1980s. A new luxury mall had just opened up in town with boutiques from most of Italy’s heavy-hitters like Versace, Ungaro, and, of course, Armani who was showing women’s shorts that season. All this and an indoor-skating rink too. It was a flop.

Fast forward.

On my way to Milan to interview Armani, of course I packed my one and only Armani item, a black-and-white satin blazer (Black Label, hello), to be worn with black slacks and white shoes. I suppose it was a small mercy that my luggage got lost at the Milan airport otherwise I would have looked like a waiter. The carousel went round-and-round. By the time I slipped into the back seat of the sleek black limo waiting for me and manned by a former Armani model—my personal driver for the week—I was wearing the only clothes I’d have during the whole trip. What’s that saying, ‘hubris, then nemesis’?

Armani was launching a woman’s fragrance, Sensei, with his new business partner, L’Oreal. They pulled out all the stops. Dinner at Nobu, discounted shopping sprees at Armani boutiques, an free night’s stay at the hotel, and a personal driver to get around Milan or anywhere else the mood might strike. (Lake Como, please and thank-you.) The fragrance was a flop.

I was shadowing make-up artist Pat McGrath backstage as she was prepping the models for the fashion show. Armani would appear and disappear, like a cat. Poof! He would bring a model to Pat, request a change here and there, and then, poof, gone.

Ahead of a group interview, his public relations attaché informed us that Armani had a birthday coming up in a few days’ time and he was in an uncharacteristically good mood. He must have been because one of the Italian journalists started her query with, “Mr. Armani, you’ve obviously had plastic surgery…” The PR-woman went limp. “Now, if I had had surgery, would my nose look like this?” Armani said with a smile. Still, it felt like we were on borrowed time and the interview wrapped up soon after.

By now I had been awake for over 48-hours and still in my original duds. After the fashion show, there was a simple buffet luncheon. I thought if I could just eat a few bites I might be able to keep standing for a few more hours. For insurance, I took my plate and leaned against a pillar. I hoped that when I lost consciousness I could simply glide down the pillar like a petal.  My back touched the cool marble. My eyelids closed. The thrum of the room began to fade.

“Bongiorno.” He was standing in front of me. I blinked hard. “Bongiorno,” I replied. Armani immediately switched to French and began to ramble about “Russe” this and “Russe” that. Naturally I assumed he was complimenting me on my red hair. I nodded vigorously and threw in some “Oui!” After a few long minutes, he shuffled off. Dang, if only I had my Armani jacket, that could have done the talking.

So funny to think that this fashion mogul started out as a window dresser but was fired because  his employer thought he was a daydreamer. Armani is one of the shrewdest businessmen on the planet. He owns the buildings that house his boutiques; he has expanded his brand to home decor, cosmetics, luxury hotels, yachts, chocolate, and now that most of it is manufactured in China, his pockets are even more flush. This is one savvy cat.

Armani never looks more miserable than when he’s hobnobbing at the Met Ball—and never happier than at home with his cats, or on his yacht with his cats, or on his island in Pantelleria—with his cats.

You know you’ve made it when you’ve got luxurious solitude. Hold the cats.


Celine Fur Shoes

Celine Fur Shoes

While visiting Paris recently, I was sipping café au lait and munching on lightly toasted Poilâne bread with butter and apricot jam at my favorite breakfast spot on Rue Cherche-Midi when I came across this breaking news: Cannes Red-Carpet Ban on Women Wearing Flat Shoes.

Well, there goes my chance to gate-crash the Croisette. Flat shoes are the tops for me. What started out as “troubled” feet, gradually, with time, jogging, and far too much footwear-inflicted abuse, morphed into end-stage arthritis. A good day means walking the dog—or the winding, cobblestone streets of Paris—without wincing with each step. A bad day, (scratch that, a very bad day), would be being forced to walk in high heels—or, in other words, not walking at all.

It so happened that my career in fashion magazine publishing coincided with a vexing trend in women’s footwear. Designs veered into the realm of S&M with spiked-metal studs and thigh-high, stiletto boots. Nicknamed “limo” or “taxi” shoes, the only way to get around was to hobble into a waiting car. A limited few rose to the occasion, the rest were fashion roadkill. Let’s just say that with my flat, lace-ups, I stood out in a fashion crowd.

But there’s always an upside. My limitation means that I can walk into any shoe store and immediately eliminate 90% of the offerings, so decision-making is faster. In a city like Paris, with great shoe boutiques on practically every corner, this means more time to visit museums and to eat and drink.

On the 8-hour flight home I read The Einstein of Money, a terrific book on Benjamin Graham, the father of value investing. Graham’s rules for disciplined investing have inspired millions, including legends like Warren Buffett and Charles Brandes, and other “superinvestors”.

Graham developed screening methods to assess the intrinsic value of a company based on such metrics as size, earnings growth, dividend records, and ratios of price-to-assets, and price-to-earnings. This allowed him to know whether a company was a bargain or overpriced. Unlike others who base investment decisions on predictions of price movements, Graham peered into the income and balance sheet statements to discern value (not price).

Starting out as a bond salesman, at which he failed miserably, Graham eventually became a financial analyst. In 1916 he strongly recommended to his boss Alfred Newburger that the firm make a substantial investment in a company called Computer-Tabulating-Recording, Corp. that was selling at $45-per-share but whose intrinsic value Graham had estimated at closer to $130. His boss told him, “Ben…I would not touch it with a 10-foot pole.” In 1926 that firm changed its name to IBM.

Graham’s strict investment guidelines meant that he missed many hot stocks and gains through momentum investing. Yet, I admire his ability to eliminate thousands of potential investments into a select few that were highly likely to be “sure bets”, particularly if one was patient enough to let the market eventually weigh a company’s true value.

Today, like a woman shoe shopping in Paris, an active investor has an infinite number of decisions to make. Even product categories like ETFs and mutual funds that should, in theory, simplify investment selection, have exploded in recent years. When I began investing 25 years ago, ETFs didn’t exist and mutual funds were very costly so I began to cobble together a portfolio of individual equities. The process is stimulating and rewarding but can be very time-consuming, and quite harrowing when you add global, and emerging market equities into the mix. Lately I’ve been wondering if there aren’t better uses of my time—like learning French or writing a book?

Though I’m not ready to pull the trigger on my individual holdings, after reading The Einstein of Money, I know what Graham would do. Simplify the selection process.

Oh, and if you have troubled feet and happen to be in Paris and want to simplify your shopping, here are some brands to try: Accessoire Diffusion, Fausto Santini, Gelati, and Prada Sport. Then, with all the time you’ve saved, treat yourself to a glass of Chablis at Café de Flore and watch the pretty people.


Diamond-District-New-York-47th-Street-014Good fortune came my way this morning with The Sunday New York Times feature entitled “Kitty With The Gee”, in which two of my favorite subjects— diamonds and Yiddish—intersected.

The diamond district in New York is located on 47th Street between Fifth and Sixth Avenues. It’s literally chock-a-block with sparklers. The endless rows of expertly-cut carbon make privates’ (retail shoppers) eyes bug out, but for those who ply this trade, it’s business as usual. Like all professions, selling loose diamonds has its own codes, in this case heavily influenced by Jewish culture, and Yiddish and Hindi expressions.

I’ve only once visited the Diamond and Jewelry Way, as it’s called. A former boyfriend had bought me a luxury watch and, much like the relationship, despite my best efforts, it was perpetually out-of-sync. My ex had made a tidy sum on a business deal and decided that my trusty Timex needed an upgrade.

“What about this one?” I said, pointing to a simple gold Blancpain watch with a yellow strap.

“Oh, this is a very special watch,” said the salesman. “It’s made in Switzerland. Everything by hand. Exceptional timepiece.”

“So it must be very accurate, then.”

“Actually, because it’s an artisanal watch, it’s always off by a few seconds.”

In my real life I ran for the bus each morning to get to work. But in my fantasy life—where I spent most of my time—there was no running for the bus, or anxiety about being on time. I figured if one was an aristocrat, the “right time” was when one arrived.

The watch never kept time. At first it was slow by a few minutes, which I could work around. But soon the gap grew to over twenty minutes or more, forcing me to do mental calculations, or to ask strangers to tell me the time even though they could plainly see I was wearing a watch.

After the relationship cratered I had even less patience for the watch. But, like Eliza Doolittle, I was now in limbo. I had crossed over and couldn’t go back to the pedestrian Timex; I had to make the Blancpain work.

“Mazl” means good luck in Yiddish. It may be an acronym for the three elements of luck: makom (place), zman (time), and limmud (learning). The Blancpain gave me no mazl.

I happened to be in New York on business and went to a vintage watch boutique on Madison Avenue. The owner looked at the Blancpain and the papers of certification, noted that the gold was scratched and offered me $750.00. When I balked, he suggested I take the watch to the 47th Street and gave me a name. It didn’t take long to locate my guy. In a matter of seconds he appraised the watch and offered me a slightly higher but still uninspiring amount. Defeated, I brought the watch back home.

One day I was reading a New Yorker article about a woman who loved the look of her grandmother’s diamond Cartier watch. After wearing it for years, it has conked out for good and she didn’t know what to do until someone suggested replacing the entire mechanism.

Eureka! This was mazl in action, where place, time and learning converged.

Right Time: It was time to let go of the parts of my life that were no longer working (the emotional attachment to the relationship; the crappy watch).

Right Action: The article in the New Yorker showed me what was possible.

Right Place: Joe, the watch expert in my home town,  was willing to take the Blancpain parts as payment for putting in the Movado movement.

Moral of the story: Like the Blancpain watch, you can’t rush mazl.

Mazl Un Brokhe (Good luck and a blessing)