The Fine Art of Living
The Daily Reckoning PRESENTS: If you’re too busy in your work, you don’t have time to learn new ideas, to discover new truths, to enjoy life’s little pleasures, or perhaps to pick a winning stock! Beating the market requires you to look in untrodden paths, and you need the free time to do it. Mark Skousen explores…
THE FINE ART OF LIVING
“Almost any person of reasonable intelligence has the potential capacity to master the fine art of living.”
– J. Paul Getty
Last month I started my own weekly e-letter, “The Worldly Philosophers,” wherein I highlight each week a worldly wise business leader or teacher, and what lessons we can learn from them.
One of my favorite worldly philosophers is America’s first billionaire, J. Paul Getty (1872-1976). He was a 20th century icon. His classic book, “How to BE Rich,” is far different from Donald Trump’s ramshackle alternative, “How to GET Rich.” In J. Paul Getty’s refined world, there’s a big difference between “being” rich and “getting” rich. (Sorry, Mr. Trump doesn’t qualify in my book as a worldly philosopher — worldly maybe, but a philosopher? I doubt it. Getty’s book will be in print long after Trump’s.)
For Getty, life is much more than simply working for a living. Far too many Americans are too busy and don’t take the time to enjoy all that life has to offer. As the wise old Chinese philosopher Lin Yutang says,
“Those who are wise won’t be busy, and those who are too busy can’t be wise.”
I made the mistake of writing this statement on the blackboard on the first day of class as a professor at Columbia Business School. A third of the students left and dropped the class immediately. (Fortunately, the majority had an open mind about pursuing other interests than a 24/7 lifestyle, and rated my class in the top 10% of MBA classes at Columbia.)
Yet there is wisdom in Lin’s statement. If you too busy in your work, you don’t have time to learn new ideas, to discover new truths, to enjoy life’s little pleasures, or perhaps to pick a winning stock! Beating the market requires you to look in untroddened paths, and you need the free time to do it.
J. Paul Getty wrote a whole book, “The Golden Age,” on the need for workaholic Americans to diversify into other gainful pursuits. In Getty’s case, he developed a taste for paintings and other collectibles. He states, “I began developing other, non-business interests and engaging in a reasonably broad range of ‘extracurricular’ activities early in my career. These have all had a profound salutary effect, for each helped generate enthusiasm for the next, and all added zest to life and, what is more, helped me be a better, more energetic and efficient businessman and a much more content and happy person.” (emphasis added).
Funny how we often don’t practice what we preach. In “How to Be Rich,” Getty confesses that for much of his life was he was workaholic. “I still find it’s often necessary to work 16 to 18 hours a day, and sometimes around the clock.” His nonstop schedule led to serious personal and family problems.
Despite tremendous monetary success, J. Paul Getty had one failure. He was married five times. “I deeply regret these marital failures,” he said, “but a woman doesn’t feel secure, contended or happy when she finds that her husband is thinking of his business interest first and foremost, and that she comes next — almost as an afterthought.”
Sounds like Getty needed to read his own book, The Golden Age, about the need to spend more time with his wife and children and less time at the office.
“Make your money first — then think about spending it.”
Like most of us, Getty focused fearlessly on making money and building a fortune early in his career. He lived the life of Ebenezer Scrooge, working overtime and saving every penny. He learned these traits from his father, who didn’t give money to his children until after they were old enough to earn a living. “A sense of thrift is essential to success in business. The businessman must discipline himself to practice economy whenever possible, in his personal life as well as his business affairs.” Getty was famous for installing a pay telephone in his Sutton Place manor in England.
Still, there’s much to admire in Getty. He was a risk taker extraordinaire. He started out as a wildcatter in Oklahoma in 1915. He was never interested in joining the big oil companies. He was an independent operator in a high-risk business. “Fortunes were being made — and lost — daily,” he wrote. “It was not unusual for a penniless wildcatter, down to his last bit and without cash or credit with which to buy more, to drill another hundred feet and bring in a well that made him a rich man….On the other hand, there were men who invested all they owned in leases and drilling operations only to find that they had nothing to show for their money and efforts but a few dismally dry holes. Leases purchased at peak prices one day proved to be utterly valueless the next.”
Fortunately, Getty’s lease proved lucky, and he was on the road to prosperity. But it wasn’t just luck that made him successful. Unlike the other wildcatters, he relied on geologists to find oil, an uncommon approach in those days.
Getty also bought oil stocks in the depths of the 1930s, another unpopular but shrewd move. Finally, in the 1940s, Getty bought oil concessions in the Middle East: “Instinct, hunch, luck — call it what you will,” he said. “The Middle East was the most promising locale, the best bet, for oil exploration.”
Yes, Getty was a Wall Street investor too. He warns, “Get-rich-quick schemes just don’t work,” advised Getty. “Making money in the stock market can’t be done overnight or by haphazard buying and selling. The big profits go to the intelligent, careful and patient investor, not to the reckless and over-eager speculator.” He recommended buying relatively low-priced stocks in “industries that cannot help but burgeon as time goes buy.”
Getty’s chapter on the stock market in How to Be Rich is the best 12 pages you will ever read. I made it required reading in my investment class at Rollins College and at Columbia Business School.
As a libertarian, I liked Getty’s politics. “Taxes are too high — and far too numerous….A logical, equitable tax program will have to be devised to replace the insane hodgepodge of federal, state, county and city levies that make life a fiscal nightmare for everyone.” He would not be a fan of Sarbanes-Oxley!
He also favored greater freedom in international trade. “The long-term solution to our country’s economic problems lies in more, not less, foreign trade.” Lou Dobbs, Bill O’Reilly, and Pat Buchanan, are you listening?
Getty liked to travel and live abroad. He moved to England, in part to manage and get a better view of his international financial affairs. He knew the value of diversifying abroad. His interests included oil, real estate, fine art and worldwide stocks.
I can second that. In the early 1980s, my family and I moved to the Bahamas to get away from the rat race, and our two years in the Bahamas, and later London, were life changing. It was life in living color! (To read my account, see “Easy Living: My Two Years in the Bahamas,” at http://www.mskousen.com/Books/Articles/living.html).
I’ve followed Getty’s advice in taking some time off to learn and have fun with my family and friends. Each year I produce a private conference for worldly philosophers called FreedomFest.
Certainly John Mackey, CEO of Whole Foods Market (worth $7 billion), is a busy executive. Over the past few years, we’ve become friends. He takes off six weeks (!) each year to go hiking somewhere in the world — to get away, think and take a break from work. He is a better entrepreneur because of it.
He feels the same way about FreedomFest, my private conference for worldly philosophers. He told me, “Mark, I turn down hundreds of invitations to speak each year, but FreedomFest is one I’d pay to attend. I wouldn’t miss it!” John will speak on “My Personal Philosophy of Self-Actualization: Leadership Through Personal Growth.”
John told me he is bringing three friends with him. If John Mackey and his worldly wise friends can take 3 days out of their schedule to come to FreedomFest, how about you?
for The Daily Reckoning
April 24, 2007
P.S. There’s never a dull moment at FreedomFest, with seven sessions going on simultaneously, including discussions and debates about investing, philosophy, history, science & technology, geo-politics, health, and the arts. We offer an exhibit hall, a bookstore, several cocktail parties, lunches, and to top it all off, an incredible never-to-be-forgotten 7-7-7 Gala Banquet on Saturday night. All in one of the world’s most exciting cities…Las Vegas.
We do offer a 3-day intensive investment seminar, with such luminaries are Alex Green, Addison Wiggin, Horatio Marquez, Dan Denning, and many others. (It’s co-sponsored by Agora Financial.)
In addition to John Mackey, we have 77 other speakers, including: Muhammad Yunus, this year’s Nobel Peace Prize winner; Art Laffer, the father of supply-side economics; Nassim Taleb, author of “Fooled by Randomness”; Michael Shermer, columnist for Scientific American; Nathaniel Branden, author of “The Psychology of Self Esteem.” Marketing guru Ted Nicholas on “17 Life Changing Success Secrets.” James O’Toole of the Aspen Institute; and Charles Murray, author of “Human Accomplishment” and “The Bell Curve.” Culminating in a Big Debate on U. S. foreign policy between Dinesh D’Souza and Congressman Ron Paul. Plus a 3-day investment conference with top experts from around the world.
Where will you be on 7-7-7? Make it unforgettable. Call Tami Holland, Conference Coordinator, 1-866-266-5101; go to www.freedomfest.com. You’ll be glad you did.
Editor’s Note: DR contributor Dr. Mark Skousen is a professional economist, financial advisor, university professor, and author of over 20 books. Dr. Skousen has taught economics and finance at Columbia Business School, Barnard College at Columbia University, and Rollins College in Winter Park, Florida. In April 2005, Grantham University honored Dr. Skousen by renaming its School of Business “The Mark Skousen School of Business.” In 2001-02, he was president of the Foundation of Economic Education (FEE) in New York.
What a mad, mad, mad world!
We are at the Miami Airport. In our brief look at Miami this afternoon, we saw so many construction cranes we thought we were in the Far East. What’s going on we wondered?
But looking more closely we found that the high-rises were either condo towers…or banks and credit institutions. We’ve never seen so many banks outside Zurich.
As near as we could tell, the banks must lend money to people so they can buy condos.
Meanwhile, the money continues to flow – uphill, downhill, and around corners.
Goldman has just launched its biggest leveraged buyout fund ever. And private equity firms bought 654 companies last year, for $375 billion. And look at that Shanghai stock market – up 250% since 2005.
Deals…deals…and deals on wheels…and wheels on deals.
Where the money comes from is obvious; there has never before, been such a huge ‘wave of liquidity’ sloshing over the world. What we wonder is when it will smash into some major low-lying city…and how much damage it will do.
But, of course, we are old fogies. The smart money is betting that this is a wave without end.
And sometimes we wonder, too. There seems to be no stopping it. It is as if the old rules had been, well…waived. Money supplies worldwide have been inflating at three times the rate of GDP growth for years – 10% in the United States…10% in Europe…14% in Asia.
When the old rules were still being enforced, you could inflate for a while…but not for too long. At first, merchants, manufacturers, investors and consumers would be tricked. They’d mistake the new money for the real thing. They’d rush to increase their investments, their capacity, their spending…and their debts. This would create a boom and, usually, get a president re-elected. But then, after a hesitation of about 18 months, monetary inflation would leak into consumer prices. And then there was trouble.
Creditors hate to see consumer prices rise. Because it means that their assets – cash, mortgages, bonds any fixed amount of money or income stream – is becoming less valuable. So, when they saw inflation increasing, the ‘bond vigilantes’ used to ride out with guns blazing.
“We don’t need no stinkin’ inflation ’round here,” they would say. They would sell bonds to protect themselves. And presto…the problem would take care of itself. Lower bond prices meant higher yields…which meant that fewer new investment projects made sense (since the cost of borrowed money had gone up)…and consumers found it harder to borrow money too…which pushed down sales.
This slump corrected the problem. Bad investments were wiped out…savings increased…inflation decreased.
But now what happens? We live in times that are just too wonderful. The problem of consumer price inflation never seems to come up. It is as if we had robbed a bank and no one called the cops. Heck, where’s another one?
Inflation seems to go only as far as the nearest hedge fund…or private equity fund…or Jackson Pollock painting…or Greenwich mansion…or Chinese stock. And then it stops. No increase in the price of toilet paper. No vigilantes getting worked up. No increase in bond yields. No correction. No nothing…except people getting rich without working.
So, please don’t take our investment advice, dear reader. We admit that we don’t know why this is happening…or when it will come to an end…or how it will end.
But that it will come to an end, we have no doubt. For while the ‘old’ rules might have been suspended, we will bet that they have not been repealed.
Chuck Butler, reporting from the EverBank world currency trading desk in St. Louis…
“None of the data due out this morning will be dollar positive, so we will likely see the two-day rally by the dollar come to a screeching halt. I think this morning’s prices will look like good bargains next week.”
For the rest of this story, and for more insights into the world currency markets, see The Daily Pfennig
And more views:
*** “It’s dead down here,” said a friend and real estate pro, speaking of the Miami property market. “Except maybe at the top end…”
It’s dead pretty much everywhere, according to the S&P/Case-Shiller home price index that was released today. Home prices are falling at the fastest rate in 13 years, with 17 of 20 major metro cities seeing lower prices in February compared with January, says the report.
“Declines in home prices are showing no signs of turnaround,” said S&P.
From Boston comes word that foreclosures are running four times the rate of a year ago.
And from California’s inland empire comes a report that mortgage defaults are 168% ahead of a year ago.
Things aren’t looking so great for the bond investors who threw their money into the frothing housing pot, as the delinquencies soar in the subprime sector.
Bloomberg: “They [bond investors] will lose as much as $75 billion on securities made up of millions of mortgages to people with poor credit, says Pacific Investment Management Co., manager of the world’s biggest bond fund. Some of the $450 billion in subprime mortgage-backed debt sold last year has lost 37 percent, according to Merrill Lynch & Co.”
Bond investors aren’t the only ones holding the short end of the stick in the subprime meltdown…thanks to an often-overlooked banking loophole, stock investors can get even more exposure to these bad loans – even more than the banks. Find out how the banks can pass on the risk to average investors, legally!