Dear Diary,
Talk about ringing a bell!
This ring-a-ding-ding comes from the New York Observer:
Sales of contemporary art at public auctions surpassed $2 billion for the first time last year, the Paris-based arts-data organization Artprice said.
The report tallied auction sales between July 2013 and July 2014, and it found that contemporary art sales grew 40% from the previous year. The number of big-ticket items that sold for over 10 million euro ($12.8 million) more than doubled in the period.
Those who follow the art market will remember the record-breaking Christie’s auction in November that saw buyers walk away with the most expensive publicly auctioned piece of art ever, Francis Bacon’s $142.4 million Three Studies of Lucian Freud (1969). That auction also minted Jeff Koons’ $58.4 million Balloon Dog (Orange) (1994-2000) as the most expensive piece by a living artist ever sold at auction.
That’s another bad thing about being rich – you have to live with this stuff.
Even if you don’t own it, your new friends and neighbors will.
Unless you’re autistic – or a savant, like Warren Buffett – you’ll find it hard to avoid. Contemporary art and big, expensive houses are hugely popular among the wealthy elite. And most people are very susceptible to peer influence.
That is what creates investment opportunities, too. The lumpen investoriat – like the lumpen electorate – does not do much serious thinking.
Instead, it reacts emotionally and primitively.
It takes up positions that are too expensive. And then, in a panic, it stampedes away from them… leaving them too cheap. That’s when the bells start ringing.
The Bells Are Ringing in Russia
Monday’s Financial Times, for example, chimed loudly.
It reported on page one that US private equity group Blackstone “calls it a day in Russia.”
This followed a withdrawal from Russia earlier this month by DMC Partners, a private equity group founded by former Goldman Sachs executives.
Further reporting revealed that the European Bank for Reconstruction and Development had “also suspended investments in the country.” And if that weren’t enough, “US group Carlyle has retreated from the market twice.”
Over on page 15, the FT continues to ring the bell, telling us that “Russia’s Gazprom could lose 18% of its revenues as a result of competition from US liquefied natural gas exports.”
On Tuesday, the bell ringing went on. A front page revealed that even the Rockefeller fortune was pulling out of fossil fuels.
“The effort to make oil, gas and coal investments as unpopular as tobacco stocks… gathered momentum…” the paper declared.
Geez, you’d have to be crazy to invest in Russian energy stocks now, right?
Yeah… crazy like a fox. Any time the newspapers give you nothing but reasons to sell, it’s time to buy. You can buy Gazprom for less than three times earnings… with a 5% dividend yield.
“And that’s post-theft,” says Rob Marstrand, chief investment strategist at our family wealth advisory, Bonner & Partners Family Office.
“You don’t have to worry about corruption… or politics… or sanctions,” he says. “It’s all in the price already.”
The news about Russian energy companies is all bad. It’s time to buy.
A Top in Housing?
Meanwhile, what are people almost universally in favor of buying?
A house!
Poor people buy cheap houses. And when they get more money, they believe they should “trade up” to an expensive one.
Both rich and poor:
… take advantage of mortgage deductions…
… lock in low interest rates for the long term…
… build equity…
… improve their credit scores.
All by buying a house. But is it true? Is housing a good deal? Now? Ever?
A year ago, housing was one of our favorite investments. But our lead researcher at The Bill Bonner Letter, EB Tucker, thinks he hears the bell ringing for housing too.
More to come, as our “Homage to Poverty” continues… including a brief look at the “Worst Investment in America Today.”
Regards,
Bill
Choosing the Best Life Possible
This week, Bill has been writing about how the most important decisions in life answered the following questions:
1. What are you going to do?
2. With whom?
3. And where?
I thought that was pretty nifty when I first encountered it. Today, I still think it is practical wisdom wrapped in a nutshell.
At the beginning of each year, we should stop and consider the choices we have made – and can still make, however old we are – so that we can have the best possible lives
What Are You Doing?
It is never too late to ask, “Am I doing what I want to do? Is it giving me all of the benefits I want and need? How close is it to my perfect job?”
Take a few moments now to think about it. It might help to look at this brief list that identifies what – for me – are the most important characteristics of the perfect job.
• I would be happy to do the work I do for free.
• I believe it has value – to me and to the people who pay me for it.
• It is fully challenging. It engages both the logical and the creative sides of my brain.
If you find that the “what to do” of your life is not perfect, don’t panic. If it is paying the bills, it is something. Our first responsibility, as moral citizens of the world, is to support the financial well-being of our families.
But if your work falls short in other areas – if, for example, it doesn’t challenge your intelligence and imagination – you should commit to making changes.
If you are lucky, you may discover an opportunity to slip into your “perfect” job. More likely, you can move toward it step by step by making adjustments, as I did in my career.
The Perfect Partner
I had always considered the question “with whom” to be about one’s spouse. And that is probably its original meaning. But it is also relevant to one’s occupation.
The people with whom you work – your boss, your partners, your colleagues and your employees – determine to a great extent both the satisfaction and the success you will have from your working life.
If you stop to think about the work experience you’ve had, you will realize that much of the pleasure or pain you’ve experienced came from the relationships you had – your interactions with the people with whom you worked.
And you may think that you have no choice in these matters. After all, you can’t hire your boss. But in fact, you can. In choosing the business you work for, you are choosing your future colleagues.
If you find yourself in a toxic work environment (a work environment that is political rather than entrepreneurial), don’t hesitate to look for a better company.
And when it comes time to hire employees, don’t consider only their work skills and talents. Consider also whether or not you will enjoy working with them.
The following characteristics should help you choose the best possible partners:
• He/she respects you.
• You have his/her back.
• He/she has yours.
• You don’t expect him/her to change. You are happy with him/her as he/she is.
These four characteristics may seem obvious, but I managed to ignore them for most of my working life. Gradually, I came to recognize how important it was for me to make good choices in terms of partners. These are the characteristics that, after all of these years, seem most important to me.
The Perfect Place to Live
Where you live and work is important too. The physical environment you naturally prefer very much affects your perfect life. (Do you love the mountains, the plains, the beach? Do you prefer big, bustling cities or tranquil little towns?)
When you are starting out, you must go where the work is. But as you move up the ladder of business success, you will have more choice in the matter. This is especially true in today’s world, where in so many industries one can work remotely.
Consider, also, your commute. Some people enjoy spending an hour or more every day commuting. They use this time profitably to listen to music or books on tape and so on.
Other people – me included – prefer a very short commute. For instance, locating my office a mile from my home has enhanced the quality of my life. I can walk, bike or drive there in less than 15 minutes.
More specifically, the quality of your immediate work environment – your office – affects the quality of your life. Since you are likely to be spending a big portion of your active day in that one place, make sure you like everything about it.
Your office should not be an accidental, junky place that has what you need. It should be a haven where you can work productively and a bit of paradise filled with art and artifacts that give you pleasure.
Putting It All Together
Whether you are young or old, beginning a career or enjoying a retirement job, you can find good answers to all three questions.
Start today by thinking about the three questions I listed at the beginning of this essay. Conjure up your perfect life. And then begin the process of having it.