The Best Policy


|The most important takeaway from today’s musings is the importance of having a personal Investment Policy to help guide your asset acquisition activities.|

About twenty-five years ago I wrote my first Investment Policy. The intention was to create a document that could help guide financial decision making knowing that my circumstances and goals would change over time. A recent review of that policy (which for a long time I referred to annually; not so much in the last few years) was rewarding and I share a couple of observations here. There were four parts to the original version that have been gently modified over the years. For our purposes today, only the first and second are discussed.

Part one of this investment policy consisted of three sentences intended to be touchstones under any circumstance and have never been changed. It still frustrates me I didn’t grasp the value of these ideas a decade earlier:

  • Spend less than we earn
  • Eliminate and eschew debt
  • Continually increase the value of our assets

Easy to explain the immense worth of these three. First, for most people what they save will be a lot more than what they make with investment speculations. Second, most financial traumas find their origin in debt. Finally, what ultimately matters is having assets that can be monetized when you most need them.

Part two was specifically intended for use when evaluating the merits of specific investments like stocks, mutual funds, and bonds. Later these concepts guided me in acquiring what has become the largest component of my portfolio, real estate (mostly physical but also by proxy in equity markets):

  • Being reasonable
  • The long-term
  • Diversification
  • A global perspective
  • Reversion to the mean

At some point, “Reversion to the mean” was replaced by “Black Swan events” something currently undergoing re-evaluation.

Over decades the equity markets go up more than they go down.

investment-policy-tech-dailyThe actual ratio is up about 60% versus down about 40% of the time. However, this does not hold true for individual stocks. After 50 years, less than 90 of the original members of the S&P 500 are still viable businesses. Over shorter periods of time, the valuation of any given business can vary wildly making it difficult to determine the mean price of any given stock. My frustration when trying to gauge when a stock has gone up too fast (growth) or dropped too low (value) led me to discount the merits of the “Reversion” metric. My heavy involvement in buying and selling rental properties in the half-dozen years before the sub-prime debacle also left me questioning this notion.

Side-stepping the mortgage fiasco of 2008-2009 by pure luck I was able to look (somewhat) objectively at what happened. A personal need to shut down a long-running partnership led to selling an inventory of a dozen rental properties at top prices in 2007 (all but one going sight unseen to buyers in California). This led me to understand very precisely what Nassim Taleb describes as a “Black Swan event.” While continuing to purchase income-producing real estate, I have not and will not re-enter the single-family home rental market.

The conundrum of “Reversion to the mean” versus “Black Swan events”.

So, the conundrum of “Reversion to the mean” versus “Black Swan events” has my mind moving back toward finding more relevance in “the mean” than Black Swans. Mostly due to some challenging reading over the last few years about theoretical mathematics my understanding of how to gauge the mean of a range of numbers has become more nuanced. A Black Swan is by definition unknowable and is best managed by a focus on “Diversification.” In other words, make sure you have a range of relatively uncorrelated assets to prevent a permanent impairment of capital if one of those asset groups becomes unexpectedly worthless. And don’t owe more money than you can repay in a cash crunch.

As for “Reversion to the mean,” it also needs to be understood in terms of “Diversification.” There are many metrics available to assess the value of equity and other investments. Looking just at the stock price (or selling price for real estate) is a risky business. Amply demonstrated by the technology big boys – Apple, Microsoft, Google – price-to-earnings may be a less valuable measure than price-to-sales. Maybe a change in debt level is a better context in which to think about a potential acquisition? When considering if something is worth adding to your asset collection, the exercise of analyzing a mean valuation is worth the effort. 

The most important takeaway.

Yet the most important takeaway from today’s musings is the importance of having a personal Investment Policy to help guide your asset acquisition activities. Without some guiding principles, it can be all too easy to get caught up in the madness of crowds or entangled in the webs of greed. Or, as described once as the lesson Warren Buffett offers us, “The pursuit of unchanging goals through ever-changing means.” Think about it.


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Some Orchestral Miles Davis


|The assertion that Miles Davis was a “musical chameleon” might best be demonstrated by listening to albums, Porgy and Bess and Aura, back-to-back. They are similar without being anything alike.| 

Recently grazing along a shelf with 41 CDs by Miles Davis (double-sets and boxed collections counting as one, and only part of my Davis collection) the 1959 release Porgy and Bess caught my eye. Primarily because I could not recall ever having played the album. It is noted for being both the second collaboration between Davis and Gil Evans as well as one of his best-selling and most critically acclaimed recordings. The composer, George Gershwin had commented over twenty years earlier that jazz, “…is in the blood and feeling of the American people.” I am now listening to it a lot.

Another album catching my attention recently was a 1984 recording, Aura.

This album I have listened to (and written about) but not in a long time. The reissue from 2000 offers slightly different content from the original as well as one of the most unflattering photos of Davis I’ve ever seen. While visiting Copenhagen to accept a music award Davis agreed to record a European serial style of compositions by Palle Mikkelborg. Like, Porgy and Bess, it also features a longtime collaborator, guitarist John McLaughlin. The opening is harsh, likely why it hadn’t been on my playlist in a while, but is very seductive in its entirety. It is playing as I type this note.

I have commented previously on the generally unappreciated yet brilliant efforts of composers and arrangers like Duke Ellington and Oliver Nelson for their contributions in creating American orchestral music. In these two releases, we hear Davis’s contribution as an interpreter of compositions clearly belonging to the American canon. Granted, Aura was composed by and recorded using mostly Danish players. But Mikkelborg states that after hearing “When Lights Are Low” from the 1952 vinyl Blue Haze the music of Davis had been, “…very important in my life.” During rehearsals, Davis comments to Mikkelborg, “You must have been following [me].” This music is about Miles Davis, and he is as American as it is possible to be.


The four recording sessions for Porgy and Bess took place during the summer of 1958 and included a lot of musicians, but a couple of names are worth highlighting in light of subsequent Davis recordings that ended up overshadowing this album. Paul Chambers’ bass features in all the tunes, as does Cannonball Adderley’s saxophone. Jimmy Cobb and Philly Joe Jones split sessions on the drums. It took a 1997 rerelease for this recording to fully engage critics. That is likely when the CD entered my collection.

Evans’ arrangements offer a sublime version of Porgy and Bess that just doesn’t sound like any other interpretation of Gershwin’s classic musical.

The often recorded and understandably loved “Summertime” remained, for me, unrecognized until it was halfway finished. Even now it is easy to forget how well-known this music is as Davis works his magic. Curiously, this too opens with a harsh sound followed by a lyrical trumpet line over light orchestration. Then it settles into a thoughtful meditation by Davis on Evans orchestration. Gershwin was long dead by the time this album was produced. Still, it would be hard to accept that he would not have enjoyed this music.

Aura, on the other end of the Miles musical spectrum, offers moments that sound like Davis compositions and then veers off into uncharted waters.

Mikkelborg’s classical roots bubble up through the flow of this music offering surprising and quite enjoyable contrasts to the familiar Davis sounds. The liner notes explain in a sort of goofy way how the compositions were composed using a combination of reflections on Davis’ paintings and the ten letters of his name. Neither of which offers much insight into why this music is so interesting. A longtime fan of classical music, Davis is very comfortable with these songs. As he commented in a 1958 interview with Nat Hentoff, classical music set the foundation for Davis’ move toward modal jazz. Frankly, since Aura includes more segments reminiscent of the later electronic albums it will likely not be as enjoyable to fans of the earlier modal Miles heard on the 1950s recordings with Evans as an arranger. 

And yet, this is why Miles Davis mattered sixty years ago and remains relevant, and mostly loved, even today. In the final analysis, the assertion that Davis was a “musical chameleon” might best be demonstrated by listening to these two albums back-to-back. They are similar without being anything alike. 


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Every Picture Tells A Story

Ephemera Sol LeWitt sketch_noir

|There’s a little part of the art world not widely traveled offering a nuanced view of an artist’s oeuvre called Ephemera.|

By definition, ephemera are “items designed to be useful or important for only a short time, especially pamphlets, notices, tickets, etc.” So, in the art market, this includes exhibition posters, announcements – usually postcards – of exhibits in private galleries, rough studies, and notebook pages, privately printed artist’s books, autographed catalogs (especially those with sketches) as well as personal correspondence to friends and family.ephemera Sol LeWitt A&V Mummy 2 1

I happen to spend a lot of time traveling in this space, with my collection of Sol Lewitt ephemera now numbering over three hundred items. There’s also ephemera on my shelves relating to Max Beckmann, Ad Reinhardt, Ed Ruscha, Chuck Close, William Wegman, and many others. My friend in the business, Lawrence, is also smitten by the ephemera bug and has helped to grow my Lewitt collection.

An exciting new addition is a pen and ink drawing inscribed to Heiner Friedrich from 1967. I was intimately familiar with this work for several years before adding it to my collection, though exactly what its original intention was had remained elusive. 

ephemera Sol LeWitt sketch

It had an odd version of Lewitt’s signature – which was discovered to have been in use for only three years during the late 1960s. The grid contained eleven columns – highly unusual for an artist known for his serial work formulas like 3-6-9 or 4-8-12. A serendipitous comparison with another bit of ephemera, a poster from an early Lewitt show at Dwan Gallery, revealed the drawing’s connection to the large-scale piece, Serial Project #1 (A, B, C, D). An analysis of the various equations explained the eleven columns – there were only nine. Finally, the recipient of this drawing had both seen the Dwan show in California and visited Lewitt in NYC on the same visit to the U.S. Friedrich was one of the first gallerists to exhibit Lewitt’s work in Europe the following year.

So, here’s my best guess. After visiting Virginia Dwan’s eponymous gallery in Los Angeles and seeing the exhibit that put Lewitt on the art world’s radar, Friedrich visits Lewitt in New York on his way back to Munich. Lewitt gives Friedrich one of his working sketches from the sculpture then on display at Dwan. Their meeting in NYC becomes a catalyst for Friedrich’s gallery to participate in Lewitt’s first series of shows in Europe. 

And then there is the equation on the upper left that was later corrected (appears to use a different pen) on the right side closest to the grid. Turns out if you count the horizontal sides of eleven connected squares (equation on the left) there are, in fact, twelve lines (equation on the right). A possible reason for Lewitt to hire a mathematician while designing the incredibly complex incomplete cube series? Yeah, another bit of ephemera in the collection.

ephemera Sol LeWitt Incomplete cube

Most visitors prefer Lewitt’s bright prints of color bands in squares and rectangles. No one has commented on the goofy sketch hanging in the midst of my Lewitt collection. Yet, like so much of its fellow ephemera, the drawing reveals a fascinating insight into the world of Sol Lewitt.


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A Life of Ideas

Sol LeWitt 2

|Lary Bloom isn’t in the art business, he was a friend of LeWitt, and as such this biography is more about the man than his art.|

There were several curious aspects to my purchase of an original pen and ink drawing by Sol LeWitt from his incomplete cube series. A work long coveted, when one came onto the market in the middle of the financial mayhem of late 2008, I set aside caution and bought it. After making a deal with a highly regarded gallery in NYC, I was asked to send a personal check directly to the consignor of the work as no commission was being charged, “The sale is being handled as a favor to a long time and very dear customer.” Included with my check was a personal note of thanks, describing my longstanding admiration for LeWitt and a promise that the drawing had found a home where it would be enjoyed and not be resold.

Before the drawing was delivered, I received a phone call from a person who did not immediately identify themselves, and due to age, was somewhat difficult to understand. During a one-sided conversation, I listened to fascinating stories of the New York art scene during the 1970s. Finally, Mimi Wheeler thanked me for my kind note and said she was glad that someone who could appreciate Sol’s drawing now had it. She apologized for not taking better care of it, “…but you know he just had so many of them.”

“Obviously a drawing of a person is not a real person, but a drawing of a line is a real line.”

Sol LeWitt, Life of Ideas, Lary BloomSo, my surprise was profound while reading in a recent biography of LeWitt, A Life of Ideas, by Lary Bloom from 2019, that Mimi Wheeler (interviewed in the book) was more than a friend of LeWitt, as she had described herself to me. They had an intense romance and having lived with Lewitt from 1969 to 1972, she certainly knew just how many of those drawings he had.

While this may seem a long-winded way of starting a book review, it dovetails nicely with what makes the book so interesting. Bloom isn’t in the art business, he was a friend of LeWitt, and as such this biography is more about the man than his art. As a professional writer as well as a family friend, Bloom is in a unique position to talk about LeWitt, a man who had very little to say about himself publicly. In fact, the artist Lawrence Weiner while emphasizing his respect for LeWitt also makes clear that “…socially, Sol had a lot of warts.” This tension comes through in Bloom’s book where the mixture of praise from those who didn’t know LeWitt well but enjoyed the beneficence of a man who could be amazingly generous contrasts with stories from friends who could find themselves thoroughly frustrated with LeWitt.

Born in 1928, and raised around Hartford, Connecticut, and later attending Syracuse University, LeWitt lived a relatively nomadic life. Joining the army, LeWitt spent time in San Francisco, Japan, and Korea. In 1953 he rented an apartment in New York City to pursue a career as an artist. He later chose to spend many years living in Spoleto, Italy where both his daughters were born. Finally, LeWitt and his family settled in Chester, Connecticut. Overlay a listing of all the exhibitions and shows, and it is striking how much travel LeWitt managed over his lifetime. While he tended to avoid the opening receptions, he enjoyed seeing his work on-site, especially later wall drawings that were mostly executed by others. Artist Jan Dibbets joked that an important lesson he learned from LeWitt was that the gallery or museum should always provide a ticket for the artist to attend the exhibit, “No tickie, no showie.” Just as LeWitt moved from idea to idea, this feels mirrored in his tendency to move from place to place.

Far from a cold, calculating intellectual, as less rigorous writers often describe not just LeWitt but many artists obtusely classified as Minimalist or Conceptual, Bloom shows us that LeWitt was very much human. His was not the life of a rarified Brainiac, but of a man who experienced all of the pain and joy that falls to all of us. In the final analysis, LeWitt simply managed to express our all too human foibles in so many inspiring and beautiful manifestations. That new works have continued to appear since his death in 2007 demonstrates clearly that the ideas can survive beyond life.

After you have read Bloom’s biography, watch Sol LeWitt, a documentary by Chris Teerink from 2012, supposedly the first-ever documentary about his life and work. Here, LeWitt’s artistic output can be placed in a context that follows the narrative of the biography. From drawings to paintings to photographs to sculpture to prints and works built using cement blocks, the breadth of LeWitt’s work is made plain to see. Additionally, the video is filled with scenes from the overwhelming MassMOCA exhibit of LeWitt’s wall drawings located in a three-story building that once housed a textile mill. With 105 of the over 1200 wall drawings LeWitt created on display in North Adams, MA the effect can be dizzying.


LeWitt Picture 1As for my drawing, it arrived – ink on vellum and identified as 10/5 in pencil at the bottom left. LeWitt’s signature was also in pencil, on the bottom right and dated 1974. His artist’s book, Incomplete Open Cubes was printed in 1974 and with the aid of a magnifying glass, it is easy to discern that my drawing was not the one used in his artist book featuring the entire series of 122 drawings and photos of the sculptures. The sheet is not quite square, being clearly cut from a larger piece of vellum. The cube is an isometric rendering that almost touches the edges at the top and bottom. It matches both photos of other drawings from the series, as well as printed descriptions in catalogs, almost perfectly. The drawing is in front of me now, hanging above my desk and will likely remain there until…


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Chick’s Tunes


|Chick Corea was on my turntable decades before I knew who he was. Albums like The Leprechaun and Romantic Warrior have been staples of my jazz soundtrack since critical listening became a treasured habit.|

A keyboard player who worked with all the greats and pretty much played it all, Corea has spent the last couple of years revisiting bands and compositions from across a full career. This article is far from comprehensive, limiting discussion of his vast output and talking about only a handful of his music. Having seen Corea play live in numerous settings, most of the albums reviewed here have been savored both at home and in concert.

Kicking off his career in the early 1960’s Corea played across jazz genres; Latin, straight ahead, west coast. His debut album as a leader was released in 1968 (actually recorded in 1966). At the same time, he began recording and then touring with Miles Davis until 1972. A couple of free-jazz albums followed as Corea simultaneously began recording duets with vibraphonist Gary Burton and started the ensemble Return to Forever. By the time The Leprechaun was released in 1976 Corea already had a full catalog of albums both as leader and sideman.

Okay, during his early years as a leader I didn’t catch any concerts. In fact, much of this music from the 1970s still doesn’t do much for me. But The Leprechaun did, and it is only recently that I began to appreciate why. In the liner notes Corea says making this recording was, “…a way of working that was unusual for me at that time.” It is more than just a tuba and cello mixed with Moog synthesizers that shine on this jazz album. It is a surprisingly coherent blend of the many influences Corea had been exposed to over the first decade of his career.

Another release from 1976 was Romantic Warrior by his band Return to Forever. Granted, I didn’t see Return to Forever live until just a few years ago at the Portland Jazz Festival. But the original band – Corea, Al DiMeolaStanley Clarke, and Lenny White – played the entire album and it sounded wonderful. Yet Romantic Warrior is distinct from The Leprechaun and the follow-on albums for Polydor that have been described as “belonging together.” In contrast, albums by Return to Forever, both preceding and following Romantic Warrior do not form a cohesive sound.

Herein lies the magic of Corea’s oeuvre; much like Miles Davis, Corea is a musical chameleon whose compositions cannot be constrained by traditional labels. His art needs different forms of expression, a variety of musicians, and distinct themes. Whether derived from the formal, lowkey sound of Crystal Silence duets with Burton, the bombastic recasting of books by L. Ron Hubbard, or the classical jazz sound on Like Minds with an all-star cast of jazz giants, Corea is a consummate tour guide of very different musical landscapes.

I have seen Corea and Burton perform live on two occasions. Corea on the piano (mallets bouncing off metal wire) and Gary Burton on the vibraphone (mallets bouncing off metal plates) with this instrumentation creating a sound unlike any other. Crystal Silence (1973), Duet (1979) and Native Sense (1997) are all thoughtful albums. Crystal Silence is a special favorite, with its cerebral, lyrical music. Like Minds from 1998 is another remarkable recording with Pat Metheny, Dave Holland and Roy Haynes joining Burton and Corea, and features original compositions by both. Here we have more strings – guitar and bass – with one of the hardest working men in jazz keeping the beat. To my ear, this album is neither traditional nor contemporary, but simply timeless. A must-listen for any fan of any of the band members.

The Ultimate Adventure from 2007 is a very good album, but it was the live performance that caught me by surprise and upped my appreciation. The flamenco dancing was a particularly entertaining segment of a show filled with visual surprises. Jazz shows as a theatrical enterprise are not something I’ve much encountered (Jason Moran’s tribute to Fats Waller being another outstanding example). Along similar lines, and my preference of the two albums, To The Stars featuring Corea’s Elektric Band, is also based on an L. Ron Hubbard book. As Corea has reportedly said, Hubbard was a very good science fiction writer, and these albums do a great job of describing the narratives musically. Both remind me of The Leprechaun, a sound of summation after much experimentation.

The latest addition to my collection is Chinese Butterfly, a double album from Chick Corea & Steve Gadd in 2018. Gadd has recorded with Corea for decades and appears on a couple of the albums listed above. One of the best journeyman drummers, and a true jazz gadfly who can play smooth, straight ahead, Avantgarde and all jazz in between, Gadd is joined here with a group that includes guitarist Lionel Loueke, sax man Steve Wilson and even former Earth, Wind & Fire vocalist Phillip Bailey. Hopefully, there’s still time to catch this one live. A playful album full of surprises, Corea is still the chameleon 50-years after his first recording as a leader.

Finally, check out the DVD Miles Electric; a different kind of blue. Released in 2004 it features the live performance of Miles Davis and band at the Isle of Wright Festival from 1970 in front of an audience estimated at 600,000 people. While Corea is featured playing electric keyboards during the performance, more interesting is the interview he gave. All surviving band members of the concert performance were asked to talk about their time with Davis while sitting with/at/around their respective instruments.

In the early 1980’s I was heading to a concert and spotted Chick Corea crossing Broadway, also on his way to the venue where he would shortly be playing. I pointed him out to my friend Paul, who had joined me for the show. Seeing us point in his direction from the opposite side of the street, he raised his eyebrows, then made a break for the theatre entrance. That’s as close as I ever got to being able to tell Corea just how much joy his music has brought me over so many years. No hard feelings, but it would have been nice to tell him personally.

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The Investor’s Edge

|Let’s take a more nuanced view and talk about individual stocks and not the markets since the word “average” doesn’t seem to apply right now.|

Not much new here. Markets are more manic than normal, though these are hardly normal times. Investor sentiment by most measures remains skeptical and cautious. And yet day trading is back. Almost 25% of the S&P 500 market capitalization now consists of just a handful of technology stocks heading skyward like rockets while most equities are down or flat for the year. From the lowest unemployment rates on record to some of the highest in a century in a matter of weeks. All this notwithstanding,  talk of “bubbles” is getting louder. So let’s take a more nuanced view and talk about individual stocks and not the markets since the word “average” doesn’t really seem to apply right now.

Today’s thought starter, “Should you buy a stock whose price is at a 52-week or all-time high?” And does this really matter to someone looking to invest for the long term? Some very smart investors take opposite sides of this debate.

It has been argued that the overall trend of the market is the key driver of short-term gains or losses.

When the market is moving up, even mediocre stocks can enjoy an uptick in stock price (“the trend is our friend”). Conversely, when the market is moving forcefully down, even good investments can take a hit (“what the hell happened in April?”).  This also means that outside forces can make a questionable investment look better than it is, and still leave good investments available at favorable prices.

Somewhat connected to this line of thought is that over longer periods of time, “reversion to the mean” should be expected. Maybe not. Put another way, stocks that go up too fast should tend to come back down, while stocks that drop precipitously usually bounce back. All of this is, of course, based on the premise that a pop or drop in an equity is not caused by an outlier event like accounting fraud or sudden product failure. But today we’re seeing record numbers of business that won’t ever revert to anything because they are gone. Thousands of companies are reinventing themselves, their operations, and business. New will not look like old.

The conundrums are bountiful here and often contradictory.

It might make sense to purchase stocks at high watermarks when the market is moving up and avoid trying to catch what may turn out to be a “dead-cat bounce” buying stocks not moving with the upward flow. Or, when the market is trending down it might be best to purchase equities at new highs because that should be a sign of additional strength. Does pride come before a fall in price for stocks too? Avoid purchasing a stock on the rebound when the overall market trend is up because this can hide weaknesses? You could just buy an index, but as the S&P 500 makes strikingly obvious right now, a few big winners can hide a lot of companies struggling mightily.

In the final analysis, the basics remain.

The key is understanding what a company does, how it makes money from that activity, and what does it do with profits. Ditto for EFTs and mutual funds. How do they invest, how (or when) will they make a profit and how do they reinvest (or share the money). I typically follow an ETF or individual stock for several weeks, or even months, before taking a position. This allows for time to learn about the investment, fully understand the underlying strengths and weaknesses while also thinking about what might trigger unit price movements. My preference has typically been to buy on weakness, or adverse news (value investing). But reading some of the thoughtful commentaries that suggest purchasing on strength (momentum), has me reconsidering this traditional viewpoint. The golden mean is sounding good these days, 60% value and 40% momentum. I’ll let you know how that works.

No answers here, just something to think about.

Even when considering stocks for the long haul, it makes sense to acquire a position in an equity investment when the odds favor maximizing the long term returns. But short term we should be mindful that for many of us, a serious impairment of capital may not be something we will have time to recover from. As stock prices move over varying periods of time – some because of macro events (pandemics come to mind), others because of events specific to the stock (Elon Musk, whoa!) – the investor should always be looking for an edge. Especially the edge of a cliff.


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Don’t Let the Gold Bug Bite

Gold-Don’t Let The Gold Bug Bite copy

As it tends to do in tumultuous times, gold is once again shining brightly.

There was a sort-of Mea Culpa recently by one of my favorite financial authors, Jason Zweig, in the Wall Street Journal. Reflecting back on a comment made five years ago disparaging gold as an investment, he admits that the 10.5% annual return has since enjoyed made a hash of that prognostication. And while still urging caution he also offers up some valuable insights. Most important is a reflection on how diverse – and often contradictory – theories on why gold is being recommended at any given time.

Gold - Jason Zweig - copyAt the opposite end of the “why buy gold” spectrum today was exemplified by a recent note from a less informed and more fanatical newsletter writer suggesting Now is the time to buy gold. As it tends to be in these politically extreme publications, the lack of logic is stunning. In the middle of July, a warning is sent about a bill introduced into the House of Representatives in March but now “redacted” (the correct word is “retracted”). But the bill could be reintroduced at some undefined time in the future, and if passed could cause the dollar to crash in value: so, Buy Gold Now. Why was there no recommendation to buy gold in March at less than $1,500 an ounce when there was actually a possibility of the bill passing? Why Buy Gold Now at $1,900 an ounce with that threat/justification gone?

“You can buy stock in companies that mine gold, or companies that sell gold. You can buy futures contracts and gamble on the direction of gold prices without ever taking ownership of anything physical. And, of course, there are mutual funds and exchange-traded funds – some own real gold, others just paper proxies and still others holding both.”

More worryingly over the short term is the simple statistic that one year ago exchange-traded funds held $118-billion in assets and today those same gold ETFs hold $215-billion. That represents a lot of new gold owners buying at a time of record-high prices. Now, just for grins, I offer up a couple of paragraphs from an Invest-Notes blog post on August 4, 2014, discussing some thoughts around asset allocation. This was prior to Zweig’s disparaging comments on gold as an investment:

Perhaps the easiest way to demonstrate this concept is gold.

You can just buy physical gold as bars, coins, or jewelry. You can buy stock in companies that mine gold, like Newmont (NEM) or companies that sell gold, like Tiffany’s (TIF). You can buy futures contracts and gamble on the direction of gold prices without ever taking ownership of anything physical. And, of course, there are mutual funds and exchange-traded funds – some own real gold, others just paper proxies and still others holding both.

However, when gold finds itself out of favor, all of these “diversified” assets will decline in value. In the last ten years, the price of an ounce of gold has been as low as $400 and as high as $1850. Gold has lost nearly a third of its value in the last 18-months. TIF was clearly an outlier in the list above, yet it has seen its share prices move between $19 and $100 over the same time.”

(A quick update; last ten-year pricing for an ounce of gold $1000 to $1,900. For TIF the stock price has been $38 to $138.)

Gold is simply a diversifier that can easily fit into most portfolios in a number of different forms but should be kept to a single-digit percentage of your overall holdings. Personally, I’ve got a couple of dozen gold coins purchased over the last twenty years, and there’s usually a junior gold mining stock somewhere in my equity portfolio. In fact, gold coins like the $20 Saint Gaudens are gorgeous as a physical object and could be classified as either a commodity or an artwork – depending on how specific you get with your asset allocation preferences. More important is knowing that successful portfolios tend to be built over time and rarely by making big additions (or sudden reductions) based on the latest shout-out from the crowd.

Finally, for your consideration, in Investnotes #5 from November 13, 2007:

One of the most successful family dynasty’s of all time, the Rothschild’s, have followed a very simple formula for diversification that has proven robust for over 400 years. There is a benefit to working with this model, even if just as a mental exercise, because it allows for considering the bigger picture. It is too easy to look at a stock portfolio or collection of rental houses while overlooking the many other things of value that are owned, or that can help create a truly diversified collection of assets.

  1. One-third in cash; this includes equities, bonds, mutual funds, foreign currencies, certificates of deposit, and pretty much everything else represented by paper.

  2. One-third in real estate; this includes a primary residence(s), vacation home(s), income-producing property, and raw land.

  3. One-third in art and antiquities; this includes not just paintings and Greek pottery, but jewelry (think gold, precious gems, wedding rings, and wristwatches), furniture, fine china and flatware, and pretty much any object that has a market value.”


Useful Links:

Gold - On Prognostication - copyGold - Historical Prices of Gold by the Ounce copy


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Bridget Riley

Bridget Riley - Arts-Notes

|“Those who understand art only by what it looks like often do not understand very much at all.” -Sol Lewitt|

In 1965 Bridget Riley made a trip to New York City to participate in a show titled, “The Responsive Eye.” Her black and white works were already well known with one having been purchased by a dressmaker who just happened to be on the board of the Museum of Modern Art. He used the painting as the basis for a dress design, other designers quickly followed and suddenly Riley’s work was not only on dresses but lampshades and sofas. She was equally surprised and appalled by this use of her work – and received absolutely no compensation. Returning to her home in England, Riley assumed it would be decades before she would be taken seriously again. Fortunately for us, she was wrong.

Riley was asked about the earliest paintings, “Were you an angry young woman?” She responded, “I don’t think it was so much that.”

Today these early works – mostly synthetic emulsion on board then soon after simply oil on canvas – are too quickly labeled as Op Art. But Riley’s intention has never been about visual tricks to entertain spectators. In fact, Riley has described her early work this way, “I think they were beautifully aggressive.” When one of the grand old men of art criticism, E. H. Gombrich, inquired about her use of ‘the pure physics of the behavior of light’ Riley simply replied, “I haven’t studied the pure physics of the behavior of light.” The paintings are primarily intended to stimulate the brain, not the optical nerves. Her work is instead grounded in the long history of painting. In Riley’s intelligent conversations concerning artists, she has studied and admired we hear the importance of Titian, Poussin, Delacroix, Seurat, and Mondrian, among others. Her observations are quite sophisticated, “Titian takes two blues and an off-white from the colors in the sky – the farthest distance – and moves them down into the foreground as a skirt, a cloak, and a dress.

“… color is wholly relative. Every hue throughout your work is altered by every touch you add in other places…” John Ruskin

Riley also discusses her progression as an artist by reflecting on the decision to move from black-and-white, to gray and then on to the color paintings for which she is now best known. She mentions the shift from black-and-white to gray was far more challenging than that when moving to color. Interestingly, many of the color paintings retain visual forms similar to some of those early black-and-white works. Despite the similarity in design, the color works have a startlingly different impact on this viewer. A trip to Egypt inspired both paintings and prints where the organization of colored stripes would influence later colorwork. Like her observation of how Titian uses colors to create “air” and cohesion in his works, Riley is very thoughtful in how she uses color in hers. Whether simple vertical stripes or wavy horizontal lines, these compare favorably to the later works featuring a mash-up of curves fragmented and interlaced diagonally.

Bridget Riley - - Work Transition

“If you think of a square, or a circle or triangle, no matter what size it may be, you know exactly what form you can expect to see. But if you say red, yellow or blue you do not know at all what shade of colour you will be looking at.” Bridget Riley

The relationship between music and painting is another interesting topic Riley discusses. She said the impact of Stravinski’s lectures from 1939 that she read in book form became a sort of ‘bible’ to her (her word, her quote marks). Kandinsky also played in this space, but on a more esoteric level, “…we see the color green in the Key of D, only less dogmatically”. Again, for Riley color is more than something to stimulate the visual cortex. Like music, color can create feelings and emotions that are physical. Classical music, like classic paintings, can be studied across a spectrum of ideas and concepts.

“To treat them as historical documents or evidence of past concepts is wrong – they are particular solutions to continuing artistic problems…” Bridget Riley

bridget-riley-dialogues-on-artA recent review in the Wall Street Journal (1-7-2020) was effusive in praise for an impressive Riley retrospective at London’s Hayward Gallery at the end of 2019. Yet, there remains a tendency to emphasize the visual over the cerebral. Over the top comments in the review included: “walking into a snail shell and discovering a turbulent seascape”; “the furious waves of Cataract 3” and; “the furious Indian reds” (are we allowed to use the word furious twice in one review?). It was a stunning show, but more because of the ideas and art history her paintings embrace, not just the optical effects. Today Bridget Riley is still making artwork that is more cerebral than visual, more lyrical than literal.

A series of interviews originally recorded in 1992 and reprinted in 1995 have been collected in an excellent new book, Bridget Riley Dialogues on Art, 2019. Most of the quotes here – hers and others – came from that book.

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Don’t Forget to Breathe

Investment-Strategy-Abstract 2

|A real investment strategy is not a document or a forecast, but a viewpoint about how to respond to the forces at work around us.|

I am often admonished by my boxing trainer to breathe. Trying to control my footwork and find a proper response to an attack and put my punches in a logical sequence my brain can over-load and I forget to breathe. Time to back-up, clear the mind, regain focus and…breathe. While it is always a challenge to manage our investment portfolios, exceptional times add even more pressure, often leading to poor decision making. Or, just as often and just as bad, a refusal to make any decision. As the old saying goes, “Many a false step was made by standing still.”

So, we’re going to look at some ways to look at our portfolios and do some strategizing (which sounds a lot cooler than ‘financial planning’). Dislocations like the ones we’ve been experiencing during the pandemic suggest previous assumptions may no longer make sense, or even be viable. Time to review our financial performance measurements, think about our biases, make sure our plans (dreams) remain clearly in focus and…breathe.


Step one is to have an investment strategy.

A real investment strategy is not a document or a forecast, but a viewpoint about how to respond to the forces at work around us. A financial strategy simply answers the question, “What does my desired future look like?” What do you want? What do you want to achieve, do or have? And don’t make small plans or aim for easy goals – these do not have the power to push us to achieve the greatness we are capable of.

Next, think operationally.

What needs to be done to achieve success? What allows us to determine if the things we are doing supports our investment strategy, moving us closer to our goals? For any goal related activity, assign a probability of its value, and be honest about it. One way to think about tasks that don’t offer an obvious outcome is to admit, “I am not sure, this is why I am not sure, and this is roughly how unsure I am.” If you can’t convince yourself, or put the odds of success above 80%, then move on to the next idea.



How are you going to operate? How are you going to execute the tasks required to reach your financial goals? Bank (cash and certificates of deposit), brokerage (equities, fixed income, and debt instruments), realtor and/or property manager (real estate), or safe deposit box (gold and jewelry)? Do you want a support team, an investment advisor or are you a lone wolf? Regardless of your choice, there will be a cost involved, just accept that and move on. Remember, the biggest expense will likely be the mistakes you make, including not taking advice from people you are paid for guidance. While most of these types of decisions will only need to be made once, or twice, they can have a big impact on how hard it is to achieve your goals – if at all.


Finally, what are you going to do to limit your downside losses?

Every truly successful investor in the public eye will admit to worrying more about losses than profits. Making a profit on an investment is a possibility, but not certain, and is unlikely to be the result of anything you can influence. The risk of losing money on an investment is a reality and will happen, often because of something you do (or don’t do). If you are risk-averse and find yourself making quick decisions based on emotion or fear, how you answer the questions in the previous paragraph is critical. Investing in stocks and bonds is not a requirement for long term financial success. Saving is far important than investing and most financial problems are caused by debt.


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The Classical Roots of New Jazz

|The last couple of years has witnessed some very good music standing on the corner of Jazz and Classical.|

When the riot broke out on May 28, 1913, during the first public performance of Igor Stravinsky’s Rite of Spring in Paris, it’s hard to believe the spirit of the new jazz music in America wasn’t standing backstage in the shadows. Charlie Parker was a big fan of Stravinsky and his Rites, and it just might be that Salt Peanuts found inspiration in its vicinity. The dissonance we associate with seismic shifts in the landscape of 20th-century music can be clearly heard in compositions and performances of both men. Yet as we have discussed here on several occasions, the intersection of jazz and classical music has found fertile ground even among more straight-ahead jazz players.

“We cannot observe the creative phenomenon independently of the form in which it is made manifest.” Stravinsky

The last couple of years has witnessed some very good music standing on the corner of Jazz and Classical. What might be most interesting about the albums mentioned below is that each includes a current mainstay from the straight-ahead jazz scene. More so than other jazz/classical works discussed here at Jazz-Notes, the classical influences of this younger generation are clearly heard in these songs. This can be partially explained by their having been trained as classical musicians before embracing jazz.

Let’s start with the well-known string quartet Brooklyn Rider and their collaboration with tenor great Joshua Redman (one our favorites here at Jazz-Notes). The album Sun on Sand was released in 2019 and is singularly successful in blending genres. First, the Riders can hold their own whether acting as a rhythm section or “solo” voice. Second, Redman also moves smoothly through both roles, as comfortable behind the band as fronting it. Finally, all tunes are original compositions of Patrick Zimmerli who is well regarded in both classical and jazz circles.


The opening number, “Flash”, does not immediately play to either side of the jazz/classical divide. Likewise, the slightly tremulous “Starbursts and Haloes” manages the same feat of being neither fish nor fowl. But the album’s closer, “Between Dog and Wolf: Reprise”, might just be the closest we’ll ever come to hearing echoes of what that collaboration between Stravinsky and Parker could have been.

The latest release by pianist and composer Victor Gould, “When Thoughts Become Things, also includes a string quartet, as well as trumpeter Jeremy Pelt (whose powerful 2019 release, The Artist, pays tribute to sculptor Auguste Rodin). The title cut that opens the album sways back and forth between strings and piano, without staking a claim to preference. Likewise, the piano solo-track, “Brand New” finds Gould in a contemplative mood that carries through in his piano/trumpet duet with Pelt on the classic jazz number, “Polkadots and Moonbeams”. This is a thoughtful and contemplative sounding collection.


Finally, Meg Okura’s 2018 release, Ima Ima, featuring the Pan Asian Chamber Jazz Ensemble may offer the most curious blend of jazz and classical sensibilities. With help from another Jazz-Notes favorite, trumpet player Tom Harrell (whose 2015 release, First Impressions, includes compositions by Debussy and Ravel) Okura creates a wide-ranging sonic spectrum full of interesting sounds. In fact, the musical flourishes that appear around the edges of the music create atmospheres as varied as theatrical soundtracks, angelic choirs, classical chamber music, and straight-ahead jazz – and all this just in the song “A Summer in Jerusalem.” Even after repeated listens it feels like I hear something new every time Okura’s music plays.

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