Woody Allen's "Madoff" Movie

Woody Allen's first creative response to Bernie Madoff's massive fraud was a New Yorker humor piece. Two Madoff victims, Woody imagined, are reincarnated as vicious, vengeful lobsters.

Now he's made a movie, Blue Jasmine. Alec Baldwin plays the Madoff-like figure. Cate Blanchett plays his wife. The film depicts her plight after her husband is imprisoned and stripped of his fortune.

Huguette Clark: "Due Influence"?

Hospital Caring for an Heiress Pressed Her to Give Lavishly

Her face disfigured by cancer, Huguette Clark checked into Beth Israel hospital in 1991. She stayed 20 years.

Huguette had step-siblings from her father's first marriage. Her last will left them nothing, favoring charitable beneficiaries, notably Beth Israel.

The reclusive Huguette seems to have distanced herself from her family, and  she certainly must have become almost family to Beth Israel.

Could this be a case of due influence? Should it be settled by awarding the step-siblings a little and otherwise honoring the last will? What do you think?

The Talk

Nice article in the NYTimes, on what adult children should try to learn about their parents' finances.

Wealth Mismanagement in Texas?

Not long after Invesco announced the sale of Atlantic Trust Wealth Management to CIBC, the head of  Atlantic Trust's Austin, Texas, office was found dead.

Now, The Wall Street Journal reports, "investors have come forward to say they lent him in total millions of dollars, according to people familiar with the matter. At least some of that money appears to have gone missing, the people said."

The Trust Company That Saved Olana

When Don Draper, Roger Sterling and the other Mad Men leafed through the April 27, 1968 issue of The New Yorker, surely they stopped at this lavish two-page spread from Bankers Trust.

The trust company had held Olana, home of famed artist Frederick Church, in an estate long enough for preservationists to save it. The self-congratulatory copy was possibly overdone. Just imagine the news items had the decision gone the other way:

"Only months before preservationists could raise money to save Frederick Church's Persian-styled home on the Hudson, Bankers Trust ordered the contents sold and the mansion razed." Would have been bad PR, to say the least.

Today Olana survives but Bankers Trust does not. After misadventures with derivatives, the trust company was acquired by Deutsche Bank in 1998.

Clouds over Olana, by Frederic Edwin Church, 1872

Wall Street Legend Sues Citigroup

Very old rich people stand a significant chance of being robbed or swindled by younger people. A recent example, as we noted last year, is Wall Street legend William Salomon:

Elder Abuse For The Man Who Once Ran Salomon Brothers?

In January Salomon's secretary, provided by Citigroup and accused of stealing over $l million, was found guilty of bank fraud, wire fraud, money laundering and tax evasion. She is to be sentenced June 5.

The 99-year-old Salomon puts his losses at $3 million. He isn't likely to get his money back from the unfaithful secretary, so he's suing Citigroup. 

Perhaps Sandy Weill should not have been so generous to Salomon. To understand why he was, see The Spectacular Rise And Fall of Salomon Brothers.

The 3% Solution – a Tough Sell

In his weekly Wealth Matters column, Paul Sullivan looks at Evercore Wealth Management. Founded by escapees from US Trust after Bank of America swallowed the nation's oldest trust company, Evercore asks the wealthy to focus on net investment results. That is, net returns after fees, taxes and inflation.

Admirable idea, but a tough sell. Even Sullivan has his doubts:

[W]hat I would have liked to see was a pre-fee return along with the returns before taxes and inflation.

Evercore's web site is cleaner than most. Also worth emulating, their uncluttered, plain-spoken newsletter.

Rich Women of 1968

Another flashback to the Mad Men era. Thanks to the agency that created this Air France ad, we now know the French for, "I want to rent a safe deposit box:"

Je veux louer un coffre-fort.

We've shown you a version of this Chemical ad before, Note the new photo at lower right in the montage. Hope the two guys forced to sit on that low, uncomfortable stone wall weren't her lawyer and her trust officer.

Too Big to Regulate

When you just finished The Big Short by Michael Lewis, this is not the headline you want to see in The New York Times:

Big Banks Get Break in Rules to Limit Risks

Art As (Sometimes Dirty) Money

Andy Warhol, "Dollar Sign"

"It is hard to imagine a business more custom-made for money laundering," That's how the art market is described in this NY Times article. 

Sting operations conducted by law enforcers may be helping to stem the tide. “Around 20 years ago," says Philip Hoffman of the Fine Art Fund, "people used to turn up with cash in suitcases to buy Old Masters and no one really cared.”

Will efforts to crack down on the use of art to move money invisibly, undetected by crime fighters or tax collectors, taint the asset class? Or will UHNW individuals continue to see art as a prestige investment? 

“That Awkward Age”

The New Yorker just posted this to my Facebook page. It's so pertinent to many families – including mine – that I'll forgive them for confusing "deduction" with "exemption."

Stock Certificates: Going, Going …

If your broker jumped out the window during the Great Depression, you were sorry you left your shares in street name.  Prudent investors obtained stock certificates and tucked them in their safe deposit boxes.

For decades seasoned investors continued the precaution. In the 1960's, Robert Morse's Bert Cooper, most venerable of the Mad Men, probably still held tight to his shares. The younger generation more likely left their stocks with their brokers.

Holding on to stock certificates had its inconveniences, as did holding bearer bonds with coupons that had to clipped in order to collect interest payments. That's why Chase Manhattan advertised custody accounts in those classic nest egg ads. Trust institutions held customer certificates in their own vaults or, in later years, in depositories.

In the 21st century securities certificates have become an anachronism. Soon they'll vanish altogether, at least for publicly-traded businesses. The coup de grace was superstorm Sandy. Flooding much of downtown Manhattan, Sandy left Depository Trust and Clearing with 1.7 million soaking wet certificates. One million seven hundred thousand!

How will we introduce kids to the world of investing if we can't give them a couple of shares of Apple?

At least old stock certificates, found at sites such as Scripophily, will help preserve the history of American business. This Edison certificate is signed by the great man himself.

The Warren Buffett show

Many years ago, my Dad got a great stock tip: Buy Berkshire Hathaway at $33,000 per share.  Alas, that was too steep for him at the time. Years later, when the B shares were created, he did buy some of those. Accordingly, he can go to the annual meeting if he wishes, and he can bring 3 guests. Five years ago, he took my Mom.

This year I mentioned to Dad my interest in going to hear Warren Buffett speak.  Mom came along for the trip, though her interest in investing is low to none. We preceded the visit to Omaha with an excellent trip to Branson.

When my folks went the meeting five years ago, there were about 5,000 attendees.  They took in the cocktail party Friday, the barbecue Saturday night, the brunch on Sunday. This year, I heard later, there were 30,000 attendees.  The cocktail party was an absolute zoo, so we skipped the other free meals.

The meeting started at 9:30, the movie at 8:30, so we planned to get to the arena at about 8:00.  Big mistake.  The traffic to the arena was backed up about a mile, three of the four parking lots at the arena were already full.  We took our seats at about 8:45.  Turns out the doors were scheduled to open at 7 am, but they opened early because it was unseasonably cold (presumably because of global warming). When thanked for this courtesy by a questioner, Buffett responded that if Berkshire sold coats they would not have opened the doors early.

My first impression:  Can the shareholders of Berkshire Hathaway really be this young?  Loads of 20-somethings, 30-somethings.  I guess they must be, because guest privileges couldn’t account for all of it. Second impression:  It would be great if they streamed this to the internet, to reduce costs and congestion all around.

I had thought to mention some of the meeting highlights, but the NYTimes Dealbook blog beat me to it.  The Breaking Bad bit during the movie was particularly good.  The contrast between Buffett and Munger was striking, they make a great team. The questions were mostly intelligent, the answers always were.  I'd like to go again next year.

Buffett and Munger on Estate Planning

From Dealbook's report on the Berkshire Hathaway shareholder meeting:

A shareholder and estate planning expert takes the mic. He says that many of his clients want to follow Mr. Buffett’s plan to leave his children a significant sum of money, but donate most of his enormous wealth to charity.

“The idea is leave enough to do anything, but not enough to do nothing,” the investor says. “How much is that?”

The audience laughs. Mr. Buffett responds that children’s behavior is often more dictated by how their parents act rather than how big their inheritance is.

Mr. Munger demurs on answering the question, saying it’s a bad idea to discuss one’s will with one’s children — if they will be treated unequally.

The Fiduciary Way to Win the Derby

Good cheer should fill the offices of Bessemer Trust Monday morning. Orb, owned by Bessemer chairman Stuart Janney III and his cousin, former chairman Ogden Mills "Dinny" Phipps, won the Kentucky Derby.

For decades, the Phipps family and their Hall of Fame trainer, Shug McGaughey, have been a force in racing. But this is their first Derby win.

Moral: Invest for the long term. Patience is a fiduciary virtue.

Exchange Traded Funds: Negative Returns?

Carl Richards doesn't think much of exchange traded funds. But his Bucks post sounds like a rave review compared to the slam John Bogle delivered in a 2011 journal article:

During the five years ended June 2010, ETF investors earned far less than the ETFs in which they invested by a truly remarkable cumulative total of 28 percentage points (average ETF, +15%; average ETF investor -13%), reaffirming an apparently enduring principle of mutual fund performance: Fund investors can be their own worst enemies. 

On the web and out in the real world, there are some who hope to teach investors to profit from ETFs. Could a buy-and-hold strategy catch on?

Related post: For Higher Returns, Fire Your Broker?

The Future of Estate Planning?

Two planners offer a well-organized webinar, including doses of pertinant data:

Future of the Estate Planning Profession: What Practitioners Must Know and Do

One of the planners, Martin Shenkman, discusses the trust-planning impact of higher top tax rates on gains and dividends here.