Sunday, August 18, 2019

“The Biggest Blunder in Recent Auction History”

"Anything that can go wrong, will go wrong." It's Murphy's Law.  He may have been in the audience at this weekend's RM Sotheby's auction of "the first Porsche."

To begin with, this little 1939 race car wasn't really a Porsche. That brand wasn't launched until after WWII. Ferdinand Porsche, who designed the vehicle, called it his"ancestor" Porsche.

Produced to represent Nazi Germany in a Berlin to Rome race that was cancelled when war broke out, the so-called Porsche Type 64 is more like a Volkswagen, built on the chassis of what would become the VW Beetle and powered by a souped-up VW engine. Over the years the vehicle has been significantly restored and modified. Still, it's one supercool-looking pre-war race car.

On Saturday, August 17, the almost-Porsche was put up for sale, at an expected price of $20 million or more, at RM Sotheby's auction.

And so began "the biggest auction blunder."
This is the only surviving example personally driven by Ferdinand Porsche,” the evening’s emcee said, then announced that bidding would open at “$30 million,” a figure that was written on the front media screen of the auction theatre. Half of the crowd laughed; the other half cheered. After rapid bidding up to “$70 million,” with the crowd on its feet, iPhones raised, and cheering, the auctioneer announced that he had meant to say “$13 million,” and then “$17 million,” rather than 30 and 70. The media screen was quickly changed to reflect the $17 million sum.

Boos and shocked yelps and shouts ensued. People walked out.
At $70 million, the pre-Porsche would have been by far the most expensive vehicle ever sold at auction. At the actual final bid, $17 million, the reserve price was not met. So, no sale.

Monday, August 12, 2019

Phone Scamming: “This is Your Government Calling”

Since 2014, Michelle Singletary writes in The Washington Post, the FTC has received almost 1.3 million reports of scam phone calls from government imposters. Many, many more calls have gone unreported.

Popular current scam, judging from how often I receive the message: "Due to suspicious activity, your Social Security account has been suspended." Correcting the "problem" of course involves cleaning out the individual's bank account.

Singletary's column includes precautionary tips that wealth managers should pass along to their elderly clients.

Wednesday, August 07, 2019

Private Equity: for Better or for Worse?

At best,  private equity firms acquire so-so-companies and make them better businesses. At worst, they loot and scoot, stripping companies of assets and leaving them buried in debt.

Presidential hopeful Senator Elizabeth Warren sees the worst. She proposes to make private equity firms responsible for the debts and pension liabilities of companies they control.

The SEC chairman sees the best, advocating changes that would allow everyone access to deals now limited to well-heeled investors.

When your obedient blogger was a lad, private equity was truly private – a deal your lawyer or financial adviser put together. Now that private equity is big business, regulatory proposals are inevitable.

Bigness, however, does not necessarily result in superior returns for investors. For the fiscal year ending in June, the median public pension fund earned a return of less than 7%. A plain vanilla portfolio of 60% stocks, 40% bonds would have earned better than 9%.

Apparent reason for the pension funds shortfall? Significant investments in alternative assets, notably private equity.

Livestreaming funerals

This is not brand new news, but it is the first I've heard of it.  According to Wired, more and more funerals are being livestreamed, to allow the more distant to participate.  A recording of the stream may be posted for later viewing.  Reportedly many families find this very comforting.

One more thing for the estate planner to mention!