NewMediaTravelVentures: New Media Travel Ventures - Launch Drafts

Test blog

On Broadway - Investing for Love ... and Money

Every investment requires an understanding of its risks and returns. But as the last two years have shown, simply mastering the numbers isn't enough. And it's not just about what people need. Everybody needs a home and yet the housing bubble led millions of Americans and an entire industry to make decisions that seem obviously foolish in retrospect. Going forward what can investors learn that will avoid similar mistakes?

On June 2nd the Tigres Group is presenting an extraordinary event: On Broadway -- Investing for Love ... and Money. Investing in Broadway has never been for the faint of heart or weak of stomach. But as an investor -- as they say -- if you can make it here, you can make it anywhere. Broadway investing probably requires more gut sense than just about any other business. Not only do you need to trust your partner's honesty and back office acumen, you have to believe in their ability to get people off their sofas and into the theater. So there may be no better classroom to study the human aspect of what makes a good investment.

In addition to that subtle lesson, June 2nd's event provides attendees with the opportunity to meet and discuss this business with some of Broadway's most successful pros, including one of the producers of American Idiot, which was just nominated for three Tony awards including Best Musical.

Here's a brilliant scene from the movie The Producers presenting an hysterically horrible producer, the kind we guarantee will not be attending this event!

What's It Worth?

'We could buy you a new shark, tank, and some formaldehyde for a couple hundred thousand dollars-- so that's all we're going to insure it for.'

Attorney Ralph Lerner's palms began to sweat.

His client had just bought Damien Hirst's dead shark in a tank of formaldehyde -- titled The Physical Impossibility of Death in the Mind of Someone Living --for more than twenty times that amount. By the time Mr. Lerner left his insurance company meeting the company's rep had agreed to insure the shark for more than twice the purchase price. He told the story as part of the Tigres Group's Art Revealed event at the Levin Institute last March.

How do you figure out how much something is worth? And if will it be worth more tomorrow than today? There are all kinds of companies that try to answer such questions.

Jacqui Maduneme's Tigres Group is different -- they don't get paid by steering clients towards one investment over another. Their expertise serves client goals only. They also know that managing money can be a mind-numbing bore. That's why everything they do seeks to engage and enlighten in a way that makes a deeper impression than any other wealth counsel.

Ms. Maduneme knows that money itself cannot buy happiness -- it has no meaning in itself. I has no life in a vault or as figures on a screen. It's what you can do with it -- ensure your family's future, create something that's never existed before, bring a market or community to life -- that makes money meaningful.

Maduneme and her new company want their clients' money comes to do more than just make more money, they want clients' means to have meaning. Even if for some that means buying a fifteen million dollar shark in a box.

Who's to Blame for the Financial Mess? Not Fannie and Freddie!

Here's a lovely picture of our super heroic former Fed chairman Alan Greenspan. In October of 2008 he testified before Congress that the current 'Great Recession' had caused him to question the narrative underlying his entire life. Must be painful to realize that Ayn Rand was maybe, kinda, sorta WRONG! The market didn't self correct -- it hit a wall, HARD! Without heroic intervention we'd be selling apples on the street. So who's to blame?

Here's my take.

A conservative free-marketer friend sent me an article blaming Fannie Mae and Freddie Mac for the financial meltdown. Ah! How lovely to assign blame so neatly!

Too bad it's objectively untrue.

(Before I begin I must mention that I worked in corporate planning and then investor relations for Fannie Mae for eight years ending in 1993.)

I've heard these blame-Fannie-Mae voices for 20 years. It's hogwash!

I guarantee these people have been screaming bloody murder about Fannie/Freddie and the 'over allocation' of capital to the middle class ever since they graduated as 'legacies' from their Ivy League schools and started managing their parents' money.

Here's what really happened:

The Chinese held down the value of their currency to keep the price of their products artificially low. Sales skyrocketed and the Chinese were awash with dollars -- in unprecedented amounts. Those funds came rushing into the international investment markets -- a market ripe for the picking thanks to a plethora of toxic derivative investments, which had been ginned up by the Wall Street hoi polloi. All this made possible by irresponsible deregulation over the last generation. The influx bid up the price of a whole range of investments including mortgage backed securities. (Also see Credit Default Swaps.)

Here's proof that Fannie and Freddie weren't at the core of this problem: the quality spreads between the 'nonconforming' and conforming [FNM, FRE] had disappeared by the middle of the decade. That is -- the much riskier part of the market (those mortgages lacking government guarantees) traded on par with the conforming market. It was a clear indication that all those investor dollars were chasing a pool of potential investments that wasn't growing fast enough. The higher prices made it ever more profitable to be 'in' mortgages for a whole range of market participants -- primary lenders, mortgage brokers, rating agencies, and investment banks. Fannie and Freddie are partially to blame but they're way down the list.

I forgot where I read it but there's a story that Anthony Mozilo the boss -- and I mean boss -- of Countrywide (the nation's largest mortgage lender) strutted into the chairman's office at Fannie and threatened that if Fannie didn't lower its underwriting standards they would become 'irrelevant' in the market place. Not sure, but it sounds like Fannie blinked and became part of the problem but hardly the driver thereof.

With the secondary mortgage market in tow everyone lowered the underwriting bar to allow for more mortgages to be made -- assuming that prices would never fall across the board. But the influx of easy money brought more home buyers than ever before, which helped create a market bubble. Indeed President Bush himself encouraged the trend saying in his 2004 state of the union address that he hoped America would become an 'ownership' society touting the positive societal impact of increasing home ownership. (Notice I'm not blaming him. He's too stupid to blame.)

Check the press in September of 2008. Way before the facts were available these clowns were saying the same thing -- again: don't believe it!