Sunday, April 29, 2012

Money in the Mad Men Era: New, Old, Turned On

Three ads from the summer of 1966:

New Money. The post-World-War-II boom raised the net worth of many a business and professional person to a level that suggested the need for investment advice. This U.S. Trust ad, prepared by The Merrill Anderson Company, seems simple enough. But look at the type-setting of the body copy. The first paragraph is tightly spaced, to avoid carrying a word (a widow) over to the fourth line. The second line of the second paragraph is loosely spaced, presumably to avoid hyphenating. Ad agencies obsessed over such things in those days. (And they did not have Adobe software to help them.)

Old Money. In the 1960s as today, New Money aspired to the trappings and patina of Old Money. Perhaps that's why this Chase Manhattan nest-egg ad features what surely was an Old Money avocation: mushroom hunting.

Curious detail: Photos in earlier nest-egg ads draw the eye to the individual, then lead you to notice his or her shackles and the nest egg. Here, the egg dominates the scene. Interpret the psychological implications as you will.

Turned-On Money. The VW van – which the maker kept insisting was a station wagon – became a 'Sixties icon. When trust-fund babies wanted to drop out, take off and turn on, they did it with this vehicle. Or so the popular notion had it.

VW was a star client of Doyle Dane Bernbach. Think of how superstar hedge-fund managers have shaken up the investment world. That's pretty much what Doyle Dane Bernbach did to Madison Avenue.

Tuesday, April 24, 2012

“All His Money Was In iTunes!”

The Economist discusses digital property as estate assets, Not a simple subject. Do Americans own music files worth billions of dollars? Maybe. But I don't exactly own my iTunes downloads outright. Actually, The Economist notes, "Music downloaded via iTunes is held under a licence which can be revoked on death."

One future certainty: "Lots of lovely work for lawyers."

Monday, April 23, 2012

In Praise of The Wealth Report

Blogging about wealth must have seemed like a piece of cake when Robert Frank started The Wealth Report. After the Great Recession and Occupy Wall Street, the nation of Richistan, as Frank calls it, gets less respect.

Fact checkers got on Frank's case for ignoring the vast difference between income millionaires and ordinary High-Net-Worth Individuals.

Lately, though, The Wealth Report has highlighted useful info, including

The Real Wealth Gap: Between the Rich and Super-Rich

The Real Tax Rates of the Rich

Sunday, April 22, 2012

Ads from the Mad Men Era, Continued

Did you know the United States had – and I guess still has – the fastest ocean liner ever built? Instead of hitting an iceberg, the United States got docked by the jet age.

Mad Men's costumers and set designers may already have checked out this 1969 Chemical Bank ad – contemporary guidance on how a high net worth family was supposed to look. (That $580,00? Think $4 million or so today.)

You can bet Irving would not have addressed this ad to businessmen today. But isn't it cool that in the 1960s a bank could decorate an ad with flowers?

Friday, April 20, 2012

Do Most Millionaires Have Million-Dollar Incomes?

Of course not! These days, even someone lucky enough to have $25 million invested might have to stretch in order to generate $1 million of investment income. Unfortunately, almost nobody – including president Obama – pays attention to the difference between those with a million to invest and those making a million before taxes. See Glenn Kessler's Does a majority of millionaires really support the Buffett Rule? 

The Washington Post's fact checker includes data on the Spectrem Group's millionaire surveys. Although these surveys are popular indicators of what's what in the high-net-worth world, they're not based on random samples. In other words, not surveys a president should rely on.

Not even in an election year.

Monday, April 16, 2012

Taxmageddon is Coming! LAARAs, Too!

David Leonhardt of The New York Times offers an extensive guide to the revenue-raising ruckuses that await us at the end of the year. The accompanying charts offer useful, but always arguable, comparisons. With a revenue system as complex and messed up as ours, just how do you define a "tax," a "tax preference," a "capital gain"?

For instance, I hold a few shares of Citi acquired more than two decades ago (don't ask!). On the computer screen the shares show a 49% profit, taxable as long-term gain.  Hah! After adjusting for inflation, I'd need a 66% gain just to break even.

Out of Taxmageddon should come one or more LAARAs (Lawyers and Accountants Relief Acts). Hence this suggestion for tax and investment advisers: grab all the vacation you can this year.

Sunday, April 15, 2012

Still More Advertising to Mad Men

Picture your average investment manager, then picture Warren Buffett. On Madison Avenue after WWII, you had your average Mad Man, and then you had the great Scot, David Ogilvy.

Read Ogilvy's Wikipedia entry to understand what a real-life Don Draper would have been up against.

To sell Hathaway shirts, Ogilvy hired a European count and photographed him wearing an eye patch. To sell Schweppes tonic water, he didn't have to hire anyone. Commander Edward Whitehead, president of Schweppes USA, served as a superb personification for the brand. Half the women in America must have believed – well, hoped – that a bottle of tonic water could turn their husbands into a well-tailored, bearded hunk.

Like ad agencies, investors and their vendors had to adjust to astonishing social changes in the 1960s. Here, Merrill Lynch takes a deep breath and looks on the bright side of the Great Society. Unfortunately, stock-market gains weren't among the benefits. The great postwar run-up in stock prices was over. After hitting 1000, the DJIA would move mostly sideways until 1982.

April 16 is Patriots' Day, commemorating the battles at Lexington and Concord that marked the start of the American Revolution. Here's a 1965 Chase nest egg ad featuring a suitably patriotic carving.

Friday, April 13, 2012

Gucci, Rolex…and Hedge Funds

Hedge funds haven't underperform some benchmarks, writes Larry Swedroe for MoneyWatch. Over the past nine years hedge funds have underperformed virtually all of them.
Given the evidence, the only logical explanations I can think of for the continued popularity of hedge funds are that either investors are unaware of the data, or that individuals invest in hedge funds for the same reasons they buy a Rolex or carry a Gucci bag with an oversized logo -- they're expressions of status, prestige, exclusivity, and sophistication. Letting such emotions determine investment decisions is a recipe for transferring assets from your wallet to those of the purveyors of products.
For investment managers seeking new one-percenter clients, are hedge funds losing their usefulness as catnip? 

Was a Little Inheritance Worse Than None?

Madeleine Astor
Although John Jacob Astor IV went down with the Titanic, his teenage bride, Madeleine, five months pregnant, survived. In an earlier post, we surmised that Astor's posthumous child received none of the family fortune.

Not quite. Before fleeing abroad for an extended honeymoon – New York and Newport society considered him a bounder and a cad for marrying a girl younger than his son, Vincent – Astor had made a new will providing for Madeleine. Thanks to Astor's careful lawyers, the revised will also left $3 million to any child who survived Astor but was not mentioned in the will.

Jakey, as Vincent's little half-brother was called, received his inheritance at age 21. Was the fund still worth $3 million when delivered in the Depression year of 1933? Even if it was, Jakey's wealth was puny compared to the $200 million or so Vincent had received.

Resentment of the disparity may have contributed to what sounds like Jakey's wasted life. (He skipped college, tried working, quit, and never took another job.) The enmity of his half-brother, Vincent, probably contributed to Jakey's isolation. He may have received an inheritance of sorts, but as  today's estate planners might say, he missed out on the family legacy.

Update: April 14. Reportedly you can catch a glimpse of John Jacob Astor IV (and maybe Madeleine?) on this weekend's ABC Titanic miniseries. April 15: Yup, there they were at the lifeboat, though Madeleine looked mature for a teenager.

Wednesday, April 11, 2012

Does This “Millionaires Tax” Look Simple?

"It's simple," says the President. Huh? Does this proposed tax act look simple to you?

Don't bother trying to make sense of it. Ezra Klein at The Washington Post has done the work for us: Everything you know about the Buffett rule is wrong.

Monday, April 09, 2012

These Trust Officers Are The Cat's Meow

Georgia Lee Dvorak died last December,. Her will instructs her executor to put to death any of her cats who survive her. Bad news for Boots, who did.

Happily, the executor is a bank, The trust officers "got a Cook County probate court to set aside that part of the 1988 document because they found a shelter to take the 11-year-old cat."

Fifth Third has got to be one of the best-named banks in the country. Not surprising that it has cool trust officers.

Beware of Dark Pools

Investors need the kind of help a fiduciary provides because it's a jungle out there. The Wall Street Journal (subscription) examines the hazards created by high-frequency traders who lurk in Dark Pools. 
Less than half of securities now trade on exchanges with readily available price information, market analysts say. Many investors remain unaware of the strategies technologically savvy firms use to gain a trading edge, and even large investment firms often can have little assurance someone isn't gaming their orders.

Saturday, April 07, 2012

Time for a Love-Feast?

From Ancient, Curious and Famous Wills:
In 1691, John Hall left to the Weavers' Company a dwelling-house, with instructions to pay 10s. per annum to the churchwardens of St. Clement, Eastcheap, to provide on the Thursday night before Easter two turkeys for the parishioners, on the occasion of their annual reconciling or love-feast (settlement of quarrels or disputes).
This Easter, don't you wish somebody would give a couple of turkeys to Congress?

Thursday, April 05, 2012

A Cure for Intestacy?

In Britain, The Telegraph reports, only 40% of the Queen's subjects have made wills. On our side of the pond the stat is even worse: only 35% of Americans have made a will.

Why such a transatlantic lack of will-making? Most will-less men and women simply never get a round toit.

Tuesday, April 03, 2012

The Income Tax: Tragedy or Farce?

Number of pages in the Internal Revenue Code:

Number of pages in the Internal Revenue Code:

For more discouraging words and numbers, see What's the Easiest Way to Cheat on Your Taxes? by the gang at NPR's "Planet Money."

Monday, April 02, 2012

Slightly Eccentric Gifts and Bequests

At Mental Floss Ethan Trex recalls more than a dozen quirky gifts or bequests. Like the 1930's bequests to four Ivy League Schools for the purpose of combating feminism. And the mysterious 2009 gifts, totaling $70 million, to colleges that had little in common except a woman president.

Sunday, April 01, 2012

More Advertising to Mad Men

This Bache ad is prosaic, but the firm was a major wire house in Mad Men days. One Bache broker you may have heard of: Suze Orman.

This small ad from the Thundering Herd is one of Merrill Lynch's most memorable – a blithe admission that  some of their stock picks were duds. If one of the Mad Men crew has to choose a broker, bet they choose Merrill Lynch.

By Mad Men standards we dress like slobs. Two nest egg ads from Chase Manhattan depict proper 1966 attire for gardening or grandparenting.