Posted February 2, 2012 at 2:46 am
Interviewed by Tom Dyson, publisher, The Palm Beach Letter
Tom: Let’s talk about art. You’ve mentioned many times what a great investment it has been for you.
Mark: Are you sure that’s a door you want to open, Tom? I can talk forever about art collecting.
Tom: Yes, let’s hear it. I’m interested to know why art collecting? Why not cars, or antique dollhouses or something?
Mark: Fine art—paintings, drawings, and sculpture—has always held a special place in my heart, so it was a natural choice for me.
My art collection has enriched me in three ways: Buying it is a lot of fun—especially when you know you are buying it right. Owning it is a great pleasure. It enriches your life every time you look at it, and it tells your friends and people something important about you. Thirdly, it can make you richer.
My art collection, as a whole, has appreciated more than a million dollars. I wouldn’t care if it didn’t. I’d be happy if it simply maintained its value. But I made investing in art a hobby, and it paid off.
Fine art, like a number of other historically recognized collectibles, has a lot of the qualities you want in an investment: It’s a tangible asset, so it tends to appreciate during inflationary times. It’s portable, which is a very good thing in case you might want to disappear one day. It’s also private—and by that I mean that you don’t have to report your transactions to the government. And finally, if you buy the right art it can appreciate—sometimes a great deal.
Tom: So what does a novice need to know before collecting?
Mark: The novice needs to know that, from a wealth-building perspective, there are different kinds of art.
First, you have what I call “decorator art.” These are pieces of art that simply fill a given space with color and texture, but will never appreciate. This is the kind of art you see in Las Vegas hotel lobbies and Caribbean resorts. “Decorator art” is a waste of time and money.
Commercial art is what you find in galleries. However, the quality of this art can vary widely—it all comes down to the dealer and his expertise.
While it’s true that some dealers peddle that “decorator art” I was talking about, there are also some fine art commercial galleries that cater to local artists, graduate students, the talented Sunday dauber, as well as fine art by recognized talent. Priced right, these artworks make a very good starting point for the fledgling collector.
Those small local galleries I was talking about is where you want to go when starting your collection. You can find oils, pastels, and drawings that are worth a few hundred dollars. Buying pieces like that is a good way to train your eye.
Investment-grade art is different. It hangs in major museums. The artist is already in the art books. He’s already a serious figure. His art isn’t going to disappear. Nor will its value. It might fluctuate, as all investments do, but the long-term trend is good, and you can be confident that over the long run it will maintain or increase its value.
When buying art for investment purposes, collectors need to understand that appreciation happens over a substantial period of time.
Unless an artist dies or is the subject of a 60 Minutes interview, collectors will cool their heels for a while before selling for a profit. However, studies show that high quality, investment-grade art is one of the top performers in terms of long-term return on investing.
Tom: Okay, so how does someone begin?
Mark: There are two methods. If you are new to art and aren’t sure what you like, you can begin by buying inexpensive art. I’m not talking about decorative art.
It won’t teach you anything. I’m talking about art that you might find at small galleries, local art shows, or antique shops. Buy the stuff you like, but don’t spend any more than a few hundred dollars on any individual acquisition.
As your taste improves—and it will improve—you may find that much of what you once admired is not so wonderful anymore. When that happens, you can sell it (for whatever you can) or give it away. Ask questions of the dealer every time you buy art.
If you meet the artist and like him, make friends. Gradually, your circle of contacts will improve and so will your eye. Eventually you will feel ready to venture into investment-grade art.
Tom: Sounds like a relatively slow process. Is there a better way?
Mark: Yes. You can begin with investment-grade art, but you have to do your homework and be patient. Start by trying to figure out what genres of art you like. Do you like landscapes? Do you like abstract art? Do you like portraits? Sculpture? It doesn’t matter.
Don’t let someone talk you into, say, abstraction, if you prefer portraits. Art and collecting are life-enhancing endeavors, first and foremost. There is investment-grade art of every kind.
The collector needs to figure out his personal tastes before acquiring. That is why museum visits, gallery openings, etc., are so important.
Find what type of art appeals to you. Then figure out what artists you like within that genre. Try to limit your interest to two or three artists to begin with.
Study the price history of those artists. Find out what their pieces have sold for in auction in the past. Find out what they are selling for currently. Try to become an expert in their work as quickly as you can.
You don’t need to take any art appreciation courses. Just read books about the artists and the genres you like. You should also visit museums whenever you can and study the work of your preferred artists. When you have studied a thousand paintings, you will have developed your eye. You will know what you like. And more importantly, you will have a sense for quality.
You don’t want to start off spending lots of money. This can lead to costly mistakes. Begin by buying inexpensive pieces such as sketches from major artists (expect to pay $1,500 and upwards) and gouaches and paintings of second-tier investment-grade artists ($2,500 to $7,500). This sort of buying will keep your risk relatively low, so if and when you do make the occasional mistake (like buying a fake or overpaying for a piece), it won’t break you.
When I first got started, one of the things I got involved with was a school of art called CoBrA. CoBrA is an acronym for Copenhagen, Brussels, and Amsterdam. It was a period of art that officially took place from 1948-1952. It had a total of 10 or 12 artists in it, of which there were three major artists: Appel, Corneille, and Jorn. All of these artists hang in the major museums in the world.
I knew their art would never be worthless. This was a good group to begin with because it was small. It took place over a small period of time, it comprised a small number of artists, and each of them was recognizably different.
In other words, it was easy to study. So I began by collecting these three artists. I bought sketches and crayon pieces at first because they were cheap, and afterwards I sold some of them at a profit and “traded up.” Eventually, I was able to purchase a very nice collection of good pieces that have appreciated over 300%.
Tom: Okay, so let’s say I’ve done all that. I’ve picked my genre and my artists, I’ve spent months pouring over paintings and visiting museums. When I’m ready to buy, how do I know what’s a fair price, or how to value a piece of art?
Mark: That’s actually easy. But you have to ignore what the pundits say. Art pundits say that valuing art is impossible because it’s subjective. That is true in terms of the pleasure you get from art but it is not true of the investment value of art.
From an economic perspective, art is valued by the marketplace, just as stocks are. An artist’s work is valuable because important critics at some point decided it was good. Because of that, it went to the big museums. It got into books. It is taught in art courses. And when it goes to auction, people bid it up.
Once there’s a ten- or twenty-year market for a particular artist, the value of his art is unlikely to collapse. By that time, so many people—museums, brokers, and wealthy collectors—are invested in it. None of them, if they can help it, will allow it to collapse.
Who is ever going to say that Rembrandt wasn’t a great artist? Or that his paintings aren’t worth millions of dollars? Nobody. That doesn’t mean he was the best Dutch painter of his time. If you look at paintings by his contemporaries you might think that some of the other Dutch masters (or even a few of the minors) were just as good. But Rembrandt’s values will hold.
Why are his paintings worth a hundred times more than another one that is technically just as good? Because history has decided it should be so. Art critics—experts, people who dedicated their lives to studying art, have decided. The marketplace has put a value on it, and that’s what makes it more valuable.
When you’re collecting art, you’re collecting the history of what art critics have decided. You might disagree with them on an aesthetic basis, but you’d be foolish to disagree with them with your money.
My point is that the value of art, from an investment point of view, is not subjective at all. It is objective. More objective and easier to predict, in fact, than stocks.
You can read the conclusion of this interview here.
Editor’s Note – If you liked this free essay, you’d probably enjoy the private member content of The Palm Beach Letter. You’ll get our latest research on the safest stocks and wealth-building strategies that you won’t read or hear about anywhere else. You’ll also get instant and unlimited access to all of our special research reports. For more information, and to see if this opportunity is right for you, click here.
Posted November 17, 2011 at 3:55 am
by Steven Greenberg
Dennis Anderson never thought that he would be unemployed and then homeless after college. But that’s exactly what happened to him after he graduated in 2005 from Massasoit Community College in Massachusetts.
The only jobs he could find were meager-paying retail ones. And it didn’t look like his employment options were going to get any better. So on a whim, he took his last savings, packed up his car and drove cross country to the West Coast.
When he arrived, he had no job, home, family or friends. He did have ambition, which helped him launch and build Oregon-based Anderson Soap Company, which manufactures whipped soaps, and lip balms and other cosmetics.
He now has a home, a family, and dreams for an even better future. Anderson recently spoke about his change of fortune — including how Pabst Blue Ribbon beer and different kinds of foods figure into his success — with Steven Greenberg, CBS radio expert for jobs and host of the nationally syndicated radio program, “Your Next Job.”
Just a few years ago, you hit bottom — you had no job, and you were homeless. How did you turn things around?
I was completely tapped out just five years ago. I didn’t have a place to live or a job, so I filled up my car with my few belongings, emptied my bank account of the $300 I had to my name and used that for gas to drive across country to California. Things were very tough, but I tried to view my situation as an opportunity to do something new, not as a dead end.
Posted October 19, 2011 at 6:31 pm
by Charles Kirk
To conclude my summer interview series, I cannot think of a more interesting, knowledgeable and experienced trader to interview than Peter Brandt!
When I asked members in the mid-year membership survey for recommendations on who to interview next, Peter’s name was near the top of that list. It is obvious to see why – his website has become a trusted resource among many and, like many of you, I have also found Peter’s analysis consistently interesting and insightful.
Peter has shared quite a few gems with us in the following interview and offers keen insight for both new and experienced traders alike. We hope you find this interview helpful to explore some ideas and methods in the development of your own strategy.
Q&A with Peter Brandt
Kirk: Hi Peter. First off, thank you so much for doing this interview and, more importantly, for sharing your perspectives with others in the way you do. For those unfamiliar with you please tell us about yourself.
Peter: First off, let me thank you Charles for the opportunity to present myself to the Kirk Report members. I am a fellow member. I subscribe to very few paid research services, mainly because my own approach is so well established.
The Kirk Report is one of the services to which I subscribe. The Kirk Report is perhaps the best value out there for the price available. I am not really interested in your market opinions, but you offer so much else of educational value. Thank you for the service you provide.
Now, to your questions [continue]…
Posted September 26, 2011 at 2:26 am
by Sean Hyman
A few years ago, I met an extraordinary trader.
He started out in life as a high school English teacher in L.A., where he used to get kids interested in reading, just by talking to them about the markets. (He calls it his own private “Squawk Box.”)
Then after a few years of these unusual teaching methods, he graduated to trading full-time. I met him when he first started out his professional Forex career.
Today, we’re both full-time currency traders. But there’s one big difference that will always separate my buddy and me – he’s a day trader and I’m not.
Over the years, he’s developed his own private trading strategy that allows him to buy and sell currencies in the $4 trillion spot market for a few hours a day – using nothing but “his brain and his mouse.” Yet he falls asleep each night without a care in the world.
Sound impossible? It’s not.
Meet Tom Gregory.
I caught up with my buddy Tom recently for a quick interview. Below you’ll hear, in his own words, how he does it…
Sean: Even with the obvious profit potential here, most traders shy away from day trading. So what are the benefits of this kind of trading that most investors miss?
Tom: In my opinion, day trading is safer than the usual “buy and hold” trading. I’m only trading for two or three hours a day, so I only have my money in the market for a few hours each time. Then I’m done. I’m out of the markets. At the end of the day, I’m always sitting in cash. Then I begin the next day in cash.
Cashing out every day protects me from any unforeseen events in the markets. I avoid all collapses, all overnight risks. If something happens during the Europe or Asia overnight, I don’t have to worry because I’m in cash at the end of the day.
And I can sleep at night because I know that my money is out of the markets waiting to get back in there again.
That’s more important now than ever. We live in a very [continue]…
Posted September 20, 2011 at 12:44 am
from All About Alpha
In recent years, advances in telecommunications, computing capacity and financial software platform capabilities have seen huge growth in the field of High Frequency and Algorithmic Trading (now accounting for over 70% of all equity trades placed on US exchanges and in excess of 77% in the UK).
HFT firms (which can often make more than 80 million trades in a single day) often enter and exit trades in thousandths of a second, and are conservatively estimated to generate at least $21billion in profits every year.
To get under the skin of the world of high frequency trading, AllAboutAlpha.com interviewed Arzhang Kamarei. Mr. Kamarei is a Partner at Tradeworx, a quantitative investment management firm with expertise in high-frequency and medium-frequency equity market-neutral strategies. He co-founded Thesys Technologies, a Tradeworx subsidiary, in early 2009 to address the growing technology needs of high frequency traders.
AAA.com: What is the principal investment strategy behind High Frequency Trading?
Arzhang Kamarei: The majority of US Equity HFT is employed in the strategy of liquidity provisioning, also known as electronic market making. Historically, such a service was provided by NYSE specialists and NASDAQ market makers but, with the advent of decimalization, human specialists and market makers were no longer able to keep up with the liquidity demands of investors and automated technology became necessary for this function.
To implement electronic market making strategies, HFTs use passive orders, which are limit orders that do not cross the spread, but stay on a limit order book until they are filled or cancelled.
This allows HFTs to profit from capturing rebates and the bid-ask spread. These profits offset losses incurred by providing liquidity to informed traders or large traders who drive stocks directionally (i.e., adverse selection or inventory risk).
Without the rebate and spread capture employed by passive trading, the majority of HFT strategies would be unprofitable. HFT strategies that are based on actively crossing the spread and consuming liquidity are rare, although active orders are occasionally necessary for inventory or loss management. HFTs do not typically have enough alpha to make “all-active” strategies profitable.
A key goal in providing liquidity passively is to be on the top of the bid/offer stack, otherwise known as being at the “front of the queue” for the order book.
The rationale for this is very simple: adverse selection is lower for passive orders at the top of the stack than for passive orders at the bottom of the stack.
For an intuitive understanding of why, consider the following [continue]…
Posted September 15, 2011 at 2:18 am
from Jet Set Citizen
It is hard for most people to imagine what it is like to constantly travel. Most imagine that great riches are required, but from my own experiences and those I have interviewed, a travel lifestyle is probably much easier than you imagine.
Digital nomad, James Clark of NomadicNotes shares his story of creating a life of constant travel in this interview.
By keeping his expenses low, he is able to fund his travels through various advertising driven travel related websites.
My first trip abroad was a brief holiday to Hawaii which activated the travel bug. I took some annual leave holidays after that, but I found that even saving up 2 months of leave from work wasn’t enough time to explore in a time frame I wanted.
My long term travels began in 1999 when I moved to London on a 2 year working holiday visa, where I used London as a home base for travels around Europe. So far my travels have taken me to over 40 countries across North America, Europe and Asia. I still have much of the world to see, but I am not in a hurry to tick off a list of countries.
I wouldn’t say that my nomadic lifestyle was a decision, rather it has been [continued]…
Posted July 27, 2011 at 3:26 am
by Brian Sylvester of The Critical Metals Report
via The Gold Report
As uncommon as they may be, rare earth elements are all around you—in your laptop, your cell phone and your flat-screen television. But despite their frequency in our everyday lives, investors still have a lot of false preconceptions about these 16 elements. In this exclusive interview with The Critical Metals Report, Luisa Moreno, a senior analyst with Toronto-based Jacob Securities, delves into the unique challenges rare earth miners encounter and how those can be opportunities for investors.
Companies Mentioned: Avalon Rare Metals Inc. – Frontier Rare Earths Limited – Lynas Corporation – Matamec Explorations Inc. – Molycorp Minerals – Montero Mining and Exploration Ltd. – Rare Element Resources Ltd. – Ucore Rare Metals Inc.
The Critical Metals Report: Japanese explorers discovered a massive rare earth element (REE) deposit on the floor of the Pacific Ocean earlier this month. Will this discovery impact the REE sector in any tangible way in the near term?
Luisa Moreno: Any major news like that is likely to have some impact on mining stocks. However, when news of the discovery first surfaced, the media entertained the idea as though it could be a viable and significant discovery. I don’t think it is. I tend to believe that it would be cheaper for the Japanese to invest in one of the most advanced rare earth projects outside China rather than pursuing a project 3-6 km. down on the ocean’s surface. I can’t imagine how that can be more economical relative to other ongoing projects right now.
TCMR: Mining rare-earth elements is more complex than other mining because of the need to separate the different elements from one another. Investors often receive conflicting information about REE. If you could clear up any misconceptions about REE mining, what would it be?
LM: As you mentioned, there are 16 elements. It’s important to understand that each element has different uses, target markets and prices. We can’t talk about rare earths as one product or one material. For instance, the magnet industry in North America is not very strong. It’s far stronger in Japan and Korea. Companies trying to target that market will need to go to Asia to find partners. The catalyst market is far broader in North America. Companies that want to sell cerium for catalyst applications will find a lot of potential partners in the U.S.
The other aspect is metallurgy. Most of the projects are dealing with minerals that have not been processed commercially. In that sense, they are early stage and it’s a bit like a science project. It’s important for investors to track the progress of the metallurgy. For instance, Avalon Rare Metals Inc. (TSX:AVL; NYSE.A:AVL; OTCQX:AVARF), which has complex mineralogy, delayed their feasibility study by an additional four months to improve its metallurgical process, however other companies are only in the initial phase of their metallurgical testing. Compare that to Molycorp Minerals (NYSE:MCP), which has a well-understood metallurgy and has processed rare earths for many, many years.
When mining does actually commence, investors should expect to see variations not just in grades but in actual distribution of the 16 elements. Small variations will likely be common, but there may be occasions where unanticipated changes in rare earth distribution would significantly impact revenues and even costs.
Furthermore, the price correlation between the 16 elements is not very well understood and variations in price trends are likely to affect mine economics.
TCMR: There are also deleterious elements in there, like thorium or uranium, that can make disposing of the tailings a difficult task.
LM: That’s definitely another consideration: the environmental impact. There are guidelines in place to properly dispose of uranium, thorium or any other radioactive materials that might be present in a deposit. But the consideration right now is that deposits that have a high percentage of radioactive elements will probably have to endure a more comprehensive permitting process that could cause delays. Also, the companies that deal with those radioactive elements will likely face higher operating costs associated with handling and disposal of these elements.
Posted July 7, 2011 at 2:50 am
via International Man
In today’s interview with privacy expert Paul Rosenberg, you’ll discover how to protect your information from online hackers, nosy businesses and intrusive government. Essential reading for all who use the Internet and especially for those who have internationalized and use the Internet as a way to manage their affairs across borders.
Xavier Calendar: Tell us a little bit about yourself and how you got into the privacy business.
Paul Rosenberg: I have a construction industry background and am originally from Chicago. I’m a long-time “freedom advocate”, for a lack of a better word.
I got into this business in kind of a cool way. In 2002, I wrote a novel called The Lodging of Wayfaring Men, which was a big hit with the crypto guys [computer professionals who study cryptography and related topics]. One of them turned out to be a very special guy. He contacted me in a roundabout way and said he wanted to get to know me. We happened to be living not too far apart at that time, so we ended up getting together and taking a long road trip. Somewhere towards the end of the trip he said, “Okay, here is what I want to do, and here is why it has to be done. This needs to be done and I want you to do it with me.” I said “yes” and that become Cryptohippie.*
XC: Great stuff. Now, before we get into some of the nitty, gritty details, can you take us on a brief private internet history lesson? How did we get to the point that we are today?
PR: That’s a really good question.
Privacy wasn’t really built in to the original Internet. It’s also important to remember that the worldwide use of the Internet was a surprise to everybody. One or two sci-fi guys and a few other people saw it coming, but very few.
As soon as the Net became popular worldwide in the mid-90s, the threats started popping up.
The first one was the usual criminal problem—people trying to scam other people to get something out of them. Because the Internet is nothing except information, they began to learn how to steal information and how to use information against people.
The other problem was the State. The Internet was a surprise to almost all of them. The ability to encrypt data, which I’ll talk about that a bit later, slipped out. Encryption makes it possible for people to hide whatever they want from anybody else, including income. So the State, for a variety of reasons but certainly one of them being income, had to try to bring this thing under control. Over the years, they’ve been steadily working on it. However, because the Internet is inherently decentralized (though not as much as people think), controlling it is very difficult.
So they have done the next best thing. They started surveilling everything and trying to identify every user of the Internet. If they can’t control the Net itself, they’ll try and control the users. It seems they prefer the driver’s license model and every now and then some of their people try to introduce a new program like that. They have all sorts of names for it such as “Computer Health Certificate” but it’s all a variation on the same theme. But some sort of universal Internet ID is essentially the model.
Such programs would allow them to “get in” and basically access anything they would want about anyone. That brings up encryption.
Posted July 7, 2011 at 12:55 am
by Adam, from ChrisMartenson.com
Chris spoke to Eric Sprott, founder of Sprott Asset Management and famed investor. In this wide-ranging interview, he shares his insights on the precious metals markets — specifically what investors need to be aware of in terms of the way the markets are currently managed (maniuplated), the macro outlook for the economy (grim) and the true value of gold and silver (very underpriced; particularly silver).
Eric sees the current “extend and pretend” intervention by world governments and central banks to prop of a fundamentally flawed banking system, particualrly the vast money printing efforts of the past few years, as a ruse that is losing it’s influence.
Once enough people ask “Why have your money in a bank earning nothing? Why not have it in something that might at least maintain its purchasing power?”, the captial flows into the precious metals will dwarf current levels, sending bullion prices much higher.
By reading the interivew transcript, you’ll learn about Eric’s insights on:
Posted July 1, 2011 at 2:11 am
Jim Rogers, the natural-resources-investing guru, is more bullish than ever on commodities. The thesis he laid out in his 2004 book “Hot Commodities” has even longer legs, partly because investments in new capacity were put off after the market collapse of 2008-2009. Rogers told IndexUniverse.com Managing Editor Olivier Ludwig that he continues to be exceedingly bearish on the U.S., predicting that shorting long-dated U.S. Treasury debt will be one of the great secular plays of the coming years.
Ludwig: People are talking about you being long the dollar. Why?
Rogers: Mainly because everybody is so bearish on it—including me—I decided to go long the dollar. What I’ve found over the years of investing is that when everybody is on one side of the boat, you should go to the other side, at least for a while. So, I’ve gone to other side of the boat—I own the U.S. dollar, and we will see. I’m a very bad market-timer; I’m a horrible trader, so I’m sure I’m wrong. I shouldn’t even be trying it, but there I am.
Ludwig: Apart from being long the dollar, can you refresh me as to why one ought to be bearish the dollar, longer term?
Rogers: Well longer term, the U.S. dollar is a disaster. The U.S. is not just the largest debtor nation, it is also the largest debtor nation in the history of the world. And, throughout history, when this sort of thing has happened, no country has resolved this sort of challenge itself without a crisis or a semi-crisis. Politicians are certainly not going to solve the problem. No politician who understood the problem could even discuss it with the American public. So, until the crisis comes—or the semi-crisis—and something may get better for a while, we have serious problems facing the U.S. dollar and the U.S.
Ludwig: Can you give me an update on how you view the commodities spike you foresaw more than a decade ago and wrote about in your book “Hot Commodities,” particularly in view of the recent pullback?
Rogers: Well, all markets, bull or bear, have contractions, consolidations, corrections—call them what you will—and it looks as though that’s happened to some commodities now. It’s also happened to some stocks and some currencies. It’s the way the world works. If you look at oil, for instance, it has gone down over 50 percent three or four different times since 1998. That’s what markets do, and they will continue to do that. I would expect we’re going to see many more periods like this in the next decade. I hope we do. Anything that goes straight up you know turns around and comes straight down eventually.
Ludwig: So, what you’re telling me is that the commodities boom that you foresaw 12 years ago is basically intact?
Rogers: Yes. I do not see any major new sources of supply. We know that the known reserves of oil continue to decline worldwide. We know that there are huge shortages of agriculture developing. I don’t know if you knew this, but the average age of farmers in America is 58 years old. In 10 years, they’re going to be 68, if they’re still alive. Throughout the world, we have serious, maybe even catastrophic developments in agriculture, which is going to hurt us all over the next couple of decades. There will be setbacks and corrections along the way, but we have serious problems facing us in nearly all commodity areas.