Mazl

Good 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)

To Have and Have a Lot

Youth has never been my cup of tea. During my years as a magazine editor whenever I had the opportunity to interview a “hot young thing” or an icon, no contest. Thus, one balmy afternoon in September I was in a midtown hotel room sitting across from Miss Betty Bacall who was in town promoting a film. Well into her 80s she was more than a little hard of hearing but was remarkably well-behaved and game to answer questions. Her beloved Papillon, who she swore had psychic powers, was nestled in her lap.

Never one for mincing words, Miss Bacall had a few choice ones for the late Frank Sinatra, (a former lover), as well as limo drivers in general, (her backseat manners led both her and her luggage to be left on the sidewalk on more than one occasion by irate chauffeurs.)

Miss Bacall passed away last year and a few weeks ago Bonham’s auctioned her estate. Like that of the late Jacqueline Kennedy Onassis, the Bacall sale reflected variegated tastes and a lifetime of accumulation. (The Yves Saint Laurent/Pierre Bergé sale they were not.)  The lots included sculptures by Robert Graham, (Angelica Huston’s late husband), and Henry Moore, as well as a pair of nut dishes decorated with nibbling squirrels, a brown toga dress from Yves Saint Laurent, and an army of comfy pantsuits.

Judging by the state of Miss Bacall’s apartment in Manhattan’s Dakota building, the lady was less a curator than a pack-rat. And, why not? In most cases she bought things from people she had a personal relationship with and was, no doubt, deeply attached to the pieces.

It’s a little different for investors though. Few of us have “personal relationships” with National Oil Varco or Baker Hughes or any of the other companies in which we may invest. Still, we get attached. These leads us to hang on to our “favorites” long after we should have pressed the ejection button.

When I started investing there were no ETFs and mutual funds came with exorbitant fees. Instead, over the years, I built up a portfolio of individual securities. Each year I find that as the number of securities grows, I wonder if, instead of diversifying, I’m “diworsifying”.

Diversification is an effective way to reduce portfolio risk. By holding securities and asset classes that are negatively correlated with each other, in theory, when one class goes up, the other should do the opposite, thus reducing some of the volatility of returns.

Trouble is we tend to get emotionally attached to our holdings and are reluctant to part with them even when it would be prudent to do so. “Buy-and-Hold” is only one investment strategy and it is by no means a one-size-fits-all. Sometimes it works, other times it don’t.

For me, one advantage of online trading is the relatively low-cost way I can observe my patterns of behavior and attempt to change the unproductive ones. For example, at only a few dollars a trade, I take small positions in promising companies, make small profits (hopefully), and then move on.  This type of dalliance would be much more costly at my full-service brokerage, which is why there, I hew to the “buy-and-hold” philosophy and risk “securities sprawl”.

A bonus of my online trading is it’s making me more disciplined and less emotional when it comes to general portfolio management. I still have my favorites but I’m more inclined to part with them sooner when a better opportunity beckons. As a concession, I keep a watch list with my past holdings, the way someone might keep tabs on a former lover on Facebook. (I wish them well, but not too well!)

In How to Marry a Millionaire, Bacall, Betty Grable and Marilyn Monroe played women who wanted to snag rich husbands. In the end, they married for love. Except that Bacall’s beau was secretly a scion—love & money, honey.

R.I.P. Miss Betty Bacall

Post Taste

One of the most interesting luxury brands is—still—Prada. Unlike the tiresome antics of some other tip-top names like Louis Vuitton, and even Hermes, with their collaborations with artists, Prada is art. Full stop. Love it. Hate it. Can’t afford it. Whatevs.

Next month in Milan Muiccia Prada and her husband and business partner Patrizio Bertelli will launch Fondazione Prada that will focus on contemporary art. The café is designed by American director Wes Anderson, the creator of such indelible and delectable films as The Darjeeling Limited and, recently, The Grand Budapest Hotel. And the opening program will feature Roman Polanski discussing how a Doris Day film influenced the opening of Rosemary’s Baby.

People, what’s not to love?

Michael Rock, author of Pradasphere, writes about the ‘Prada Vision’ and how the brand plays with issues of gender, power, taste, luxury, beauty, vanity and embellishment. But why stop there? The Prada ‘experiment’ could apply to investing.

Referring to their total freedom in creating and running the foundation, Bertelli says, “Looking for consensus is a form of mediocrity, and that is one of the worst of human weaknesses.”

I suppose one could say that the rise in popularity of index-based ETFs represents our human need to cling to the median. There are many fine arguments for investing in index-based ETFs but, obviously, outperforming the index, (or standing out from the crowd), is not one of them.

You see this herd mentality play out on the investing blogs too. (I confess that I spend way too much time lurking on stockhouse.com.) This blog is full of ‘pumpers’ and ‘bashers’ and it seems to take no time at all for posters to clump around a trending narrative for what are typically small, highly speculative companies on the Canadian Venture (or, as some call it, Vulture) exchange. The value of these postings is mediocre at best because outliers, some no doubt with interesting views, are reluctant to be the object of other bloggers’ wrath.

Which brings us to the subject of clashes and conflicts. For me, one of the delights of Prada is the constant friction in the designs. The clothes and accessories are gorgeous. Or are they? They’re beautiful except when they’re ugly. They’re sexy and then not at all. They look expensive and cheap too. It’s all a crazy mash-up, not terribly unlike the markets.

Though there’s a subversive snobbery inherent in Prada, I appreciate the Prada wink. Take it seriously, or don’t. Next season there’s a whole new storyline. Gliding this idea into the markets, one can think of large caps stocks as head-to-toe Chanel. Expensive, good liquidity, universally understood, easy-to-price. Lovely, valuable, yet somewhat predictable. It takes no guts to wear a a quilted 2.55 Chanel on your arm. Good taste, absolutely.

The small caps, or micro-caps. Now that’s a different story. Good taste? Hmmm. Bad taste? Maybe. Post taste? Definitely. Investing in micro-caps is like dressing like Miuccia Prada: lime-green printed dress, short, black ankle socks, masculine shoes, no make-up, and emeralds the size of duck eggs. “What interests me, profoundly, are not certainties but doubts, clashes, and conflicts,” she has said. There is nothing patrician about micro-cap investing. It is the lime-green printed dress worn with black ankle socks—and, if you choose your ponies poorly, forget about the duck egg-sized emeralds.

Many investors cling to one group or another and in doing so miss out on potential gains (and losses too, of course.) The large cap people often hold their noses at the micro-cap types, for example. Yet small cap stocks can be terrific performers and be used to create satellite, high-growth portfolios within a more conservative framework.

Prada makes a case—fashion and otherwise—for mixing high-and-low. For the artists it means showing the rest of us where the world is going. And for investors it means making money, sometimes in “exquisite” taste, other times in “bad” taste.

Welcome to the Pradasphere!