Monday, April 14, 2014

Bull, Bears and Bucks

Bull and Bear at Frankfurt Stock Exchange
Mark Forsyth in his Times column finds poetry on Wall Street: "Pump and dump. Rank and yank. Short and distort. Trash and cash."

The financial world is a veritable zoo, Forsyth observes: dogs and pigs (who get slaughtered) and penguins and black swans and, of course, bulls and bears.
A 1490 edition of Aesop’s Fables contains an extra story never seen before. It’s about two guys who make a deal to sell a bearskin to apes, before having actually obtained a bear. They reckon that bear hunting must be easy, but when it’s time to hunt they both flee in fear, one climbing a tree and the other playing dead.

The moral of the fable: Don’t sell the skin till you have caught the bear. Any financier, though, will recognize the principle of the naked short. This maxim was so well known in the 18th century that those who sold speculatively were known as bearskin jobbers, and then simply as bears
Our founder, Merrill Anderson himself, pointed out that nest eggs are fake. Forsyth concurs:
The nest egg that we’re taught to store away? It is a perfectly real thing among chicken farmers, who insert a fake egg into a nest. The hen won’t leave until the egg hatches, and in the meantime she lays a bunch of real eggs of her own. Thus the nest egg is the capital, the real egg’s the interest.
Like to make a few bucks? "The only reason that anyone has ever made a buck," Forsyth writes, "is that Native Americans had no interest in coins or checks, and preferred to be paid in buckskins."

Sunday, April 13, 2014

The Art of Saving Sales or Use Tax

At Business Insider, 9 Pieces of Good Advice From Notorious Business People reminded me of Tyco's former CEO, Dennis Koslowski, and his tax evasion conviction.

To avoid New York State sales tax, Koslowski had paintings that he or his wife purchased for his New York apartment (the one with the $6,000 shower curtain) shipped to his New Hampshire home. The shipments turned out to be empty boxes.

Even if Koslowski (who recently finished his jail term for his misbehavior at Tyco) had been a New York resident who purchased art in another state, he would have been subject to NY use tax. Today's art collectors  are luckier.

As The New York Times reports, collectors have discovered a "send it out of state" strategy that works. See Buyers Find Tax Break on Art: Let It Hang Awhile in Oregon.

To avoid use tax, purchased artworks are shipped to museums in Oregon or other tax friendly states (New Hampshire qualifies) on loan. After a period on exhibit, the purchases drift home tax free. The Times diagrams it for you here.

Marketing Wall Street to Mad Men

As Mad Men begins its last season (actually, its penultimate half season) brush up on the era with three ads from April, 1969.

By 1969 growth stocks had become a craze. So-called Gunslingers frantically traded speculative go-go stocks, creating avalanches of paper that overwhelmed brokers' back offices. Merrill Lynch ran this apologetic ad. "Paperwork, we've got it …. And, quite frankly, service problems, too."


The surge in growth stocks reflected real economic progress. Many a Salaried Man, including those in advertising and network TV, went from entry-level affluent to investment-management prospect. Merrill Anderson produced this ad for U.S. Trust, featuring a clever John Northcross illustration.


Not everyone approved of members of the Greatest Generation who became salaried men. Where was their get up and go, their entreprenurial spirit? Happily, many did launch businesses and some succeeded beyond their expectations. They were the target market for this Chemical Bank ad:

Saturday, April 12, 2014

Today the blog begins its tenth year

The first post was nine years ago today.  We've had nearly 2,500 posts, of which I'd guess at least 80% must be credited to JLM.  Certainly, all the best posts, the ones that have attracted the most hits for the blog, are his, according to Google Analytics.  His post at the end of March on Paul Krugman and estate taxes had 120 page views within a week.  Sure, the Instapundit does that in an average minute, but he's writing for the whole universe.  My posts take years to break into three figures for page views.

Thanks again, JLM, for sharing your thoughts and your wisdom!

Thursday, April 10, 2014

Life and Taxes in Mad Men Days

Mad Men starts its last season Sunday. Heralding the event is a poster by a real Mad Man, Milton Glaser, still active at 84.

Times Machine, the new, improved portal to New York Times archives going all the way back to the 1800's, offers subscribers an easy way to relive Mad Men days. I'm struck by how the ads tell you as much about the era as the articles.

Here, for instance, is an offbeat Volkswagen ad from tax time, 1969.


 The Consumer Price Index had increased by less than 2% a year from 1958 through 1965, so the 4% rise in 1968 was cause for alarm. These days, believers in growth through inflation might welcome it.

Tuesday, April 01, 2014

How Low Should the CFPB Stoop?

From American Banker, How the CFPB Seeks to Shape the Message.
Some of the actions the CFPB makes, like late night embargoes, are also strategies frequently employed by banks…. But that, say critics of its public relations tactics, is precisely the point. The CFPB should be held to a higher standard….

Saturday, March 29, 2014

"Traust!" Or As We Say Today, "Trust"

Photo: Alex Lentati
In 1014 Vikings ruled England. The British Museum marks the anniversary with a blockbuster exhibition, Vikings: Life and Legend, featuring the remains of a 121-foot Viking ship (imagine a low-slung superyacht with lots of oars).

One of the most reassuring words the English could hear from a Viking invader was "traust." It indicated the giant on one's doorstep did not have rape and pillage on his to-do list. He was offering protection and support.

"Traust" passed into English as "trust." By the early 1400s it gained a legal meaning: "confidence placed in one who holds or enjoys the use of property entrusted to him by its legal owner."

Trust Acronyms. Enough Already?

In his Wealth Matters column Paul Sullivan delves into the mysterious world of trust acronyms and trips only once, referring to CRATs as CLATs.

What do you say, tax planners? Time for less argot, more clarity?

3/31 Update: Sent Sullivan an email pointing out he hadn't quite made it unscathed through the thickets of trust acronyms. This morning he thanked me for my note, which may have been the friendliest he got.

 "As you may recall from your years of writing about trusts, get one thing wrong and a swarm of t&e attorneys attacks you like a hive of angry bees."

Friday, March 28, 2014

Paul Krugman Wants to Tax Estates

Theodore Roosevelt, 1915
What this country needs is a good old estate tax, like Teddy Roosevelt advocated. So writes Paul Krugman in his New York Times column.

 We already have such an estate tax, on paper. Actually, when compared with the estate tax imposed on decedents who got ridiculously rich in the Gilded Age, today's estate tax looks like a heavy hitter.

In 1924, when the top estate tax rate first reached today's level of 40%, that rate applied only to estates over $10 million, equal to about $137 million today.

Our current estate tax takes 40% of everything over $5.34 million.

But not really. As estate planners have claimed for generations, paying estate tax is largely optional. Taxable values often can be sheltered or discounted. Truly wealthy individuals may transfer billions tax free during their lifetimes. Closing loopholes created by stratagems such as GRATs, defective grantor trusts and perpetual dynasty trusts might net the U.S. Treasury more than lowering the estate-tax exemption or raising the rates.

But let's not knock "inherited wealth." If the Mars candy enterprise had not remained in family hands, for example, Snickers and Milky Ways would no longer be worth buying.

Photo via Wikimedia Commons.

Thursday, March 27, 2014

Can You Spot a Trust Company?

As they liked to say back in the age of print, you can't judge a book by its cover.

Optima Bank and Trust, despite its name, offers no trustee or investment services.

Glenmede, despite its ad logo, is of course a trust company.

Takeaway: Use "trust" in your name if you wish your personal banking services to sound upscale. Eschew "trust" if you want to be seen as a forward-looking wealth manager.

Hey, we don't make the marketing rules. We just report them.

Sunday, March 23, 2014

Money Makes the World Go 'Round

As investing grows more global, so does the flow of money. International migrants sent $529 billion in remittances back to their home countries in 2012, according to the World Bank.

Pew Research has turned the World Bank data into an interactive world map. The clip below shows where remittances flow from the U.S.

Friday, March 21, 2014

How Can Bankers to the Rich Earn Their Fees?

Top banks and trust companies charge real money for wealth management these days, according to the WSJ.
Annual fee for managing $5 million: $46,500
For managing $20 $30 million: $201,000
To earn such generous compensation, says the Journal, a wealth manager needs to do more than allocate assets. No surprise there. More than three decades ago, when Daniel Davison ran US Trust, the bank depicted the breadth of its services by commissioning Winston Churchill's granddaughter to create a sculpture of a trust officer walking a client's dog.

Though wire houses and banks still dominate the high net worth market, the WSJ graphic shows independent advisers are nibbling voraciously at their business.


Corrected 3/26

Thursday, March 20, 2014

Has Investing Reached a Fork in the Road?

Within living memory, investing has evolved in three stages:

 SS
 Stock selection was the key after World War II. Fifty years ago Shearson boasted of its stock-picking
task force: "Last year they traveled more than 350,000 miles, studied more than 10,400 annual reports and held more than 5,400 interviews with company executives."

Then efficient market theory came along, All that analytical work, it seemed, was pointless. On average, stock pickers produced only average results. And that was before commissions.

AA
Asset Allocation reflected the finding that investment returns depended mainly on how funds were deployed among different asset classes. Selection of  specific securities was secondary. Thanks to index funds, followed by similar ETFs, asset allocation became simple, efficient … and deadly dull.

Efforts to spice up AA by creating dozens of asset sub-classes ("I'm tweaking my Chinese midcaps and dumping Irish micros.") didn't help much.

II 
Irregular Investments – less alliteratively, alternative investments – avoid the shortcomings of both SS and AA. Markets are less efficient in the II world, and private equity deals appeal to investors who want to feel they've entered the big leagues.

"Hedge funds, private equity, and private debt are being extolled as some of the best ideas for wealthy investors' portfolios in 2014," according to this Barron's cover story. (I gained access; results for other nonsubscribers may vary.) As shown here, Goldman Sachs is putting 14% of clients' money into private equity. GenSpring puts a full quarter of client assets into hedge funds.
 
As an investment method for the 1%, irregular or alternative assets are winners. Clients feel special. Wealth managers harvest hefty fees. But for lesser investors, a competing approach is gaining ground.

CC
Cost Control. Even if most funds and portfolios typically produce more or less average returns, investors can gain a sure-fire edge by lowering their costs. Jack Bogle, of Vanguard fame, has proselytized for cost control for years. His latest salvo: The Arithmetic of “All-In” Investment Expenses.

Even one-percenters can be tightwads when confronted by today's investment fees. Stuart Lucas, for example, believes investors should focus on what they net after expenses and taxes.
Stuart E. Lucas, chairman of Wealth Strategist Partners, which manages about $1 billion for a small number of wealthy families, analyzed state and federal taxes along with management fees to argue that if 50 percent of your return went to someone else, then you should reconsider the investment.
Index funds and most mutual funds are under the 50 percent line. Hedge funds are always above it for a taxpaying individual. Private equity investments are on the line.
 Will pricey Irregular Investments prevail as hedge funds seek to expand their customer base beyond the 1%?  Or will the 1% decide hedge funds are so yesterday and boost their returns by cutting expenses? We'll be watching.

Monday, March 17, 2014

Can You Make a Valid Will When You're All Thumbs?

You probably can, especially if you're texting in a state that's adopted The Uniform Probate Code.

Texting Your Will.

Saturday, March 15, 2014

Your Wealth Is Your Health

The old saying, "your health is your wealth," needs rearranging. And Star Trekkers should learn  to say,"Prosper and live long."

Where Incomes Are Higher, Life Spans Are Longer.

How will longevity reshape wealth management and estate planning?

Thursday, March 13, 2014

Boomer Inheritance Boom Fizzles, But Wait Until 2031!

Some wealthy parents of Boomers are still around, and those that aren't seem to have favored philanthropy – or dynasty trusts – rather than outright transfers of wealth to the next generation. See The New York Times: 
The top 1 percent of households owns about 35 percent of American wealth, more than the entire bottom 90 percent does. But at least at the moment, growing inequality has not resulted in a big boom in inheritances. Since the 1980s, the value of inherited wealth has only drifted upward slightly. In fact, wealth transfers as a proportion of net worth have fallen, to 19 percent in 2007 from 29 percent in 1989.
Maybe the Boomers' heirs, the Gen X and Gen Y crowd, will be luckier. Starting in 2013, the consulting firm Accenture forecasts, "10 percent of the country’s total wealth will change hands every five years through inheritances, estates, gifts and the like."

What do you think? Will Boomers conserve and pass along the family wealth? Or will they joyfully spend the kids' inheritances?

Friday, March 07, 2014

Ads From the Growth Stock Era

"Stocks yield more than bonds because stocks are riskier." That folk wisdom prevailed for the first half of the twentieth century, wavering only in 1929. You know what happened then.

By 1964, however,  the new era of Growth Stocks had kept stock yields lower than bond yields for half a decade. Chase Manhattan's nest egg ads responded. No more beating around the bush with loss leaders like custody. This March 1964 ad makes a simple pitch for investment advisory service.

Personal note: The old pumper is from my old home town.


Also from March 1964, this ad from a Greenwich, Connecticut trust company. Putnam was a classy wealth manager in its day. Bank of New York Mellon acquired Putnam in the late 1990s.


In 1964, the Putnam ad tells us,  the most expensive residential property in Greenwich was priced at $450,000. Today the most expensive is the waterfront estate we showed you here. Then offered at $190 million, the 50-acre waterfront property is now available for $130 million.

A bonus March 1664 ad: This Irving Trust message didn't enable Irving to succeed as a major commercial bank, but it sure looked good.

Wednesday, March 05, 2014

Could GRATs Lose Their Tax Magic?

Estimated wealth Sheldon Edelson has given his heirs using more than 30 GRATs
Estimated federal gift tax Edelson has saved by using GRATs
Grantor Retained Annuity Trusts have certainly drawn Bloomberg's attention. (Check out the video.) And GRATs again receive attention in the President's budget proposal, as Deborah Jacobs reports. Unlike the pro forma call for a return to harsher estate taxation, the proposed crackdown on GRATs, Crummey trusts and dynasty trusts shouldn't be dismissed, Jacobs believes.
Don’t expect thoughtful estate tax reform — we’re talking congressional horsetrading, perhaps done incrementally. (Heads up: watch those transportation funding bills.)
Richard Covey, the father of high-speed GRATs, estimates his brainchild has saved donors more than $100 billion in taxes since 2000. Could the end be nigh?

Monday, March 03, 2014

Undue Influence in Paradise

Be sure to click through to the Daily Mail article Gerry Beyer spotlights here. You'll probably see the fictionalized version on Season Seven of Downton Abbey.

Friday, February 28, 2014

How Bipartisan Tax Reform Went Bye-Bye

A year ago the near-impossible task of tax reform seemed to gain a bit of traction. Then all politics broke loose.

"The saddest part," writes Dana Milbank, "is that it probably didn’t have to be this way. There is a bipartisan appetite for something very much like what Camp proposed — coupling lower tax rates with an end to tax loopholes and giveaways to the well-connected, all without reducing the progressivity of the tax code."

East Is East and West Is West. Art Is Art and Money is . . .

Image via Newyorker.com
Remember the case of the dropped million-dollar vase? The vase wasn't worth anything like a million. And dropping it was sort of the theme of the exhibition. Ben Mauk explains.

Takeaway: In an age when "even gallery employees cannot distinguish between art and garbage," contemporary art may not be the ideal alternative investment.

Thursday, February 27, 2014

The Tax Reform Act of 2014

That's the working title of the Camp tax reform proposal, even though legislation has yet to be marked up.  A few highlights for high-income taxpayers gleaned from Tax Notes:

• The mortgage interest deduction is retained, but capped at $500,000 for new mortgages.  Seems fair.
• The deduction for state and local taxes is eliminated, because it is a tax subsidy to the big government states, at the expense of the small government states. Sounds great, very fair, even though I live in super-high tax Connecticut.
• The charitable deduction is retained, but only to the extent the donation exceeds 2% of AGI. I would repeal this deduction, but this is a good start.
• The special maximum tax rates for long term capital gains are eliminated, replaced by a 40% exclusion from income.  The 3.8% Obamacare surtax on net investment income is, according to JCT, not affected by this change.  Does that mean the exclusion is added back to AGI for high-income taxpayers for calculating that tax?
• There are two individual brackets, 10% and 25%, plus a 10% "surtax" that applies at the income levels that have a 39.6% tax rate now.  Why not just have a 35% bracket and be done with it? Because the definition of what's taxable for the surtax is different from "taxable income."
• In a far-reaching change, tax-free muni bond interest would be subject to the 10% surtax.  So, the implicit subsidy would be reduced, that tax benefit is capped at 25%.   President Obama has already proposed capping the benefit at 28%.  Still, there's going to be furious pushback on this one, because it will increase costs for new state and local borrowing. Which is the right result--maybe they'll do less of it.
• No changes at all to estate and gift taxes.

I like the Camp proposal more than I expected.  I hope that it's analogous to the Kemp-Roth Tax Act proposal that Carter rejected and Reagan campaigned for, which led to  the Economic Recovery Tax Act in 1981.  Because we really could use another economic recovery right now.

Wednesday, February 26, 2014

Are Women Investors More Timid?

Via Felix Salmon come these charts. Woman appear more risk averse when they're young. But women and men accept essentially the same risk level once they reach age 50 or build a net worth of $1 million or more.

Is Harvard Too Rich For Charity?

Kenneth C. Griffin, billionaire hedger, has pledged $150 million to Harvard, mostly for scholarships. Griffin's gift is the largest the university has ever received.

Does it make sense to give that kind of money to Harvard, an institution already half as rich as Warren Buffett?

No, opines this Bloomberg Businessweek columnist. He points out that Harvard's existing endowment could pay every student's tuition, room and board – about $60,000 – for many, many years.

Tuition, however, does not begin to measure what Harvard and other Ivy League schools spend on their students. According to these estimates, Harvard's annual expenditure per student exceeds what the average student pays by over $50,000. At Yale, over $95,000.

In a world where hardship and poverty remain widespread, donations to wealthy organizations inevitably draw criticism. (When I read that Harvard was naming its admissions office after Griffin, I thought they were kidding. Apparently not.)

Griffin Court, Chicago Art Institute
Previously, Griffin's most noted philanthropy was $19 million toward the magnificent new wing of The Chicago Art Institute. Some believe the money would have been better spent on efforts to reduce Chicago's murders and rampant drug addiction. Others assert that a splendid building, housing great art, enlightens and elevates the residents of the Second City more than another dozen anti-poverty programs. By most accounts, Chicago folks do like the new wing.

Tuesday, February 25, 2014

Tax Reform Breakthrough?

The Democrat heading the Senate Finance Committee has announced that the Congressional Budget Office is now willing to "actually score pro-growth tax reform as generating revenue."

The Republican heading the Ways and Means Committee has introduced a tax reform plan, three years in the making, that would reduce income tax rates to just two, 10% and 25%, for almost all taxpayers. The plan aspires to revenue neutrality.

In theory, tax reform could awaken from its coma.
Recognizing that government can be a beneficiary from pro-growth tax reform makes it possible for Mr. Obama to get more revenues without Republicans having to vote for a tax hike. This is the glue that makes a bipartisan deal possible. 
In practice – well, you try to design a revenue-neutral plan that cuts income tax rates to 10% and 25%. You're eliminating the deduction for mortgage interest? Lots of luck with that!

Sunday, February 23, 2014

“The Talent To Prosper"

In Legacies Can Last For Centuries we linked to an interview with Gregory Clark. In his New York Times column Clark offers a fuller introduction to his views:
The fortunes of high-status families inexorably fall, and those of low-status families rise, toward the average — what social scientists call “regression to the mean” — but the process can take 10 to 15 generations (300 to 450 years), much longer than most social scientists have estimated in the past..
Why is membership in the upper and lower classes so lasting? High social status seems to depend on certain traits.
In modern meritocratic societies, success still depends on individual effort. Our findings suggest, however, that the compulsion to strive, the talent to prosper and the ability to overcome failure are strongly inherited.
"The talent to prosper." Interesting term. How would you define it? A penchant for thrift? A head for business? The ability to delay gratification? The good sense to follow the advice of a faithful trust officer?

The Times accompanied Clark's column with this spot-on illustration by Javier JaƩn: the evolution of the Upper Crust.

Thursday, February 20, 2014

Philip Seymour Hoffman's Unrevised Will

Photo: Wikimedia Commons
The actor didn't didn't intend to die of a drug overdose. Updating his will was probably the farthest thing from Philip Seymour Hoffman's mind.  Deborah Jacobs places blame on the lawyer who should have included boilerplate covering children born after the will was signed.

Because Hoffman wasn't married to the mother of his children, Jacobs points out, estate taxes will be heavy. Ordinary citizens may not see a problem. Most families can scrape by on $20 million after taxes.

Tuesday, February 18, 2014

The Girl Who Married a Trust Breaker

Mavis Gallant died today in Paris at age 91. Over the years she published one hundred fourteen short stories in The New Yorker. The magazine has put this tale, published in 1956, on public view.

Gallant's story of a fading old Brit and his young second wife, living precariously in Italy, evokes the end of empire. (1956, you'll remember, was the year Egypt nationalized the Suez Canal.)

"The joke of it is," the story begins, "there's nothing to leave. Nothing at all." Thus the young wife learns that the child she has borne the old Brit will have no inheritance.
It had not been Stella’s ambition to marry money. ••• [T]he trouble was that during their courtship Henry had seduced her with talk of money. He talked stocks, shares, and Rhodesian Electric. He talked South Africa, and how it was the only sound place left for investment in the world. He spoke of the family trust and of how he had broken it years before, and what a good life this had given him. Stella had turned to him her round kitten face, with the faintly stupid kitten eyes, and had listened entranced, picturing Henry with the trust in his hands, breaking it in two.

Monday, February 17, 2014

Beware Double Y-Axes

As we've warned you (Lies, Damned Lies … and Charts) sometimes seeing shouldn't be believing. Here The Atlantic zings the chart below for using double y-axes. Great way to make mountains out of mole hills.

Wednesday, February 12, 2014

Stock Trading: The Race to Zero

Between the NYSE data center in Mahwah, N.J., and the Nasdaq center 35 miles away, lasers are now deployed strategically atop office and apartment buildings. They're the first wave of a network patterned after U.S. Air Force aerial communications. As the WSJ explains, it's all about high-frequency trading:
It is the latest salvo in the "race to zero," traders' term for their efforts to whittle away the difference between the speed their orders travel at and the speed of light. Zero, the point at which that difference would disappear, has become a kind of holy grail to computerized traders, for whom nanoseconds—billionths of a second—can spell the difference between profit and loss in their algorithm-driven trades.
For a briefing on how high-frequency trading came to be, see the Deal Professor. Before 2007 stocks generally traded on The New York Stock Exchange or Nasdaq. Then the SEC changed the trading rules. Current result: 13 public stock exchanges and 45 "dark pools" where most trades for long-term investors are made.

 The race to zero must be lucrative, but couldn't grown men and their algorithms find more constructive work?

Tuesday, February 11, 2014

Wealth Trends From the Times

The New York Times' latest Wealth section offers more substance than most. A few gleanings:

The aging of inheritance. Seventy years ago Merrill Anderson published its first newsletter. Back then, estate planning articles assumed readers well might die before their children were grown. These days, The Times points out, the children may be ready to retire before they inherit from their parents. 

Unchanged over the years is the behavior of those receiving sudden wealth. Some feel a sense of stewardship; others don't. Some find it hard to break sentimental ties to an inherited home or large block of stock. 

The proliferation of family foundations. "There are now over 40,000 family foundations in the United States, making grants totaling more than $21.3 billion a year," The Times reports, "up from about 3,200 family foundations doling out $6.8 billion in 2001…" Few are big-league foundations; sixty percent have assets of less than $1 million.

The absurdity of top incomes. In 2012, "the average household in the bottom 90 percent of the income distribution earned about $30,997. For the average household in the top 1 percent, the figure is $1,264,065…." As for the top 0.1 percent, well, look at the chart.
Late in the article, The Times acknowledges that really high incomes seldom persist. Most one-percenters can't maintain their privileged position for five years.

What Tax Cheats Cost Us

Charles Kenny at BloombergBusinessweek:
[C]lose to 15 percent of federal taxes owed…are never paid—about $385 billion a year. If that $385 billion were collected, it could fund universal pre-K for 4-year-olds, double the size of both theEarned Income Tax Credit and the U.S. Air Force budget, and reduce the deficit by more than a quarter—all at the same time.

Sunday, February 09, 2014

Family Legacies Can Last For Centuries

Samuel Pepys
"Shirtsleeves to shirtsleeves in three generations" doesn't tell the whole story. In The Son Also Rises Gregory Clark asserts that family prosperity – using multiple measures including education, occupation and access to wealth – can last for three or four centuries.

One poster child for Clark's theory: Samuel Pepys, seventeenth-century British navy bureaucrat and author of the best diary* I ever read.
Pepys has always been a rare surname, flirting with extinction. In 1880 there were only thirty-seven Pepyses in England, and by 2002 they were down to eighteen. Seventeenth-century parish records of baptisms and marriages suggest there were only about forty Pepyses living art one time even then. The Pepyses emerged from obscurity in 1496 when one of them enrolled at Cambridge University, and they have prospered ever since. Since 1496, at least fifty-eight Pepyses have enrolled at Oxford or Cambridge, most recently in 1995. For an every surname of this population size, the expected number of enrollees would be two or three.
In Clark's view money isn't everything. Even if one generation drifts from wealth to "shirtsleeves" – deserting family for social work in Africa or beachcombing in the Caribbean – the next is likely to return to prosperity, perhaps helped through college by a doting grandmother.

Or by a trust fund left by grandfather.

* The Pepys diary online is annotated with links that help London in the 1600s come alive for the modern reader. I keep meaning to reread the diary. If you haven't, you should.

Saturday, February 08, 2014

Wealth Managers, Beware of Hackers

“The Nigerian prince email swindle, in which a supposed royal offers riches in exchange for a bank account number, is to today’s phishing scams what a Brother word processor from the 1980s is to a MacBook.”
Paul Sullivan in The New Hork Times warns that bad people have become highly skilled at draining money from the accounts of wealth managers' clients.
A security executive at a trust company told of a hacker who got creative in trying to fool the firm. The executive, who requested anonymity, said the firm received an email from a client’s account asking that $137,000 be wired to Italy to buy some art. He said this client was part of a large family that traveled frequently, so the request was not odd on its face. But he said the family had put a procedure in place in which no wires went out without a call being made to the person requesting the money.
 One security tip for investors that hadn't occurred to me: Don't keep documents bearing your signature in your email.

Tuesday, February 04, 2014

Harold Simmons' 44-Page All-To-Wife Will

Why Harold Simmons' widow– sole beneficiary and executor of his will – wanted the will and probate proceedings kept secret isn't apparent now that a redacted version of the will has been made public.

Simmons had already provided for his daughters. Most of the 44-page will deals with how the estate was to be used for charitable purposes (no politics, Simmons instructed) in the event his wife predeceased him.