The Better Letter: Odds and Ends

This week's TBL includes a number of things I've been meaning to get to

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Objective Standards

Consisting of brick tower fragments, tangled beams, crooked staircases, and leaning walls, the Wexner Center for the Visual Arts at The Ohio State University is a picture of controversy and confusion. It has no obvious functionality. One must wander around to find an entrance. It includes stairways to go nowhere and huge beams plunging down from the ceiling that stop in mid-air. As the self-guided audio tour says, “It’s reason out of control, reason gone crazy, obsessive, mad!”

Within a few short years, cracks in the structure started to show – figuratively and quite literally. The skylight leaked. A glass curtain wall let in too much light, threatening the artwork. The interior temperature deviated by as much as 40 degrees in a single day. The Center closed for three years (three years!) to do repairs. 

It hardly seems a coincidence that during that hiatus, it relocated its galleries to a former coffin factory two miles away.

It is utterly postmodern in design but for one crucial element: the foundation. Shoddy design and workmanship compounded the problems.

Don Henley got it right: “The more I know, the less I understand | All the things I thought I knew, I'm learning again.”

One may take the philosophical position that there is no objective truth, but if a structure isn’t well designed and well built to objective standards, it’s going to fall down.


What Michelle Pfeiffer Needs

She was and still is a major film starPeople magazine put her on the cover for its first-ever “50 Most Beautiful People” issue. The New York Times, no less, has called her “devastatingly gorgeous.” So, when Esquire magazine’s cover asked, “What Michelle Pfeiffer Needs…”, the answer printed on the inside front cover — “…Is Absolutely Nothing” – seemed superfluous at best.

As it turned out, however, it’s really true that nobody’s perfect. She needed a significant amount of help to appear perfect.

Adbusters magazine obtained a copy of the Esquire editorial memo to their photography retouching company which included detail as specific as “clean up complexion, soften eye lines, soften smile line, add colour to lips, trim chin… soften line under ear lobe… add hair to top of head.” Harper’s magazine printed a copy of the bill for retouching services for the two images. The charge? $1525 (back in 1990).

It seems a remarkable precursor to Instagram.

Many portfolio managers must publicly disclose their holdings on a quarterly basis. When I worked institutionally, at the end of every quarter, some managers would prepare to “have their picture taken” by getting rid of a number of problematic holdings. It was called “window dressing.” 

In earlier days, before regulatory mandate eliminated the practice, some managers would “sell” before quarter-end with a handshake agreement to buy the same securities back after the reporting was done. Either way, while a few didn’t want their competitors to see everything they were doing, these managers typically didn’t want their investors to see some of their “bets” or the mistakes they had made.

Sometimes those managers were criticized for minor perceived errors even though the portfolio was doing well overall.

For whatever reason, we humans tend to pick apart the pieces more than appreciate the whole. This problem relates to the fundamental attribution error — the error we make when we overweight the role of the individual and underweight the roles of chance and context when trying to explain successes and failures.

Every money manager and financial advisor has experienced the frustration of being able to report good performance overall but having clients fixate on those things that didn’t go so well. That frustration is difficult enough when the underperformance is real. But often the “problem” is nothing of the sort — it’s simply a perfectly normal down period for a particular investment type or sector (see here). 

A portfolio without assets that aren’t performing well on a nominal basis is not diversified and such diversification is a very good thing indeed. Managing those expectations (featuring FOMO – fear of missing out – and regret) is a crucial part of the job. Investors tend to worship at the altar of price momentum in the church of what’s happening now.

Diversification is prudent because we cannot predict the future, no matter how tempting it is to think we can.

No diversified portfolio is full of winners all the time. Such an expectation isn’t just unrealistic — it’s nuts. As my friend Brian Portnoy says, diversification means always having to say you’re sorry.

By any reasonable measure, Michelle Pfeiffer was (is) gorgeous without a bit of touch-up work. Many perfectly wonderful portfolios aren’t perfect either. But they can still do the job and do it well. The same logic applies in other areas, too. Start with relationships and marriages….


Totally Worth It

Margo Robbie has three goals she and her production team discuss at regular check-ins every month: quality, variety, longevity. That’s a pretty good shorthand investment philosophy, too, if you add “well priced.”

A net worth of $93,170 is enough to make you richer than 90 percent of people around the world. Your net worth (wealth) is the value of your financial assets, such as investments and cash, plus the value of your real assets, usually housing, owned by households, minus your debts. More than 100 million people in America are in that top 10 percent worldwide, far more than any other country.

Amazing story: For more than half a century, governments all over the world trusted a single company to keep the communications of their spies, soldiers, and diplomats secret. But what none of its customers ever knew was that Crypto AG was secretly owned by the CIA in a highly classified partnership with West German intelligence. These spy agencies rigged the company’s devices so they could easily break the codes that countries used to send encrypted messages.

The Eagles made great music but they weren’t always the nicest guys (as anyone who saw the Showtime documentary about the band already knew).

The U.S. birthrate fell by four percent in 2020 according to CDC data released Wednesday, marking the sixth straight year of decline. At 3,605,201, last year saw the fewest number of births reported in the United States since 1979.

As of yesterday, according to the CDC, 56.7 percent of U.S. adults have received at least one dose of a COVID-19 vaccine and 41.3 percent are fully vaccinated. Vaccine hesitancy is lower, too. Gallup reported yesterday that three-quarters of U.S. adults say they are already vaccinated or plan to be, up from 65 percent in December. However, the country’s rate of vaccination — which rapidly increased for months — has peaked, and is now trending downward. With vaccines now readily available to nearly everyone, some portion of the remaining holdouts seems increasingly dug-in and even hostile to vaccines. The rise of more contagious variants of the coronavirus means experts continue to revise their herd immunity estimates upward, increasing the expected population immunity number needed to get control of the virus up from the 60-70 percent range last year to, frequently, north of 80 percent now. Meanwhile, people who refuse to get vaccinated will have higher healthcare costs – for which the rest of us will foot the bill. Most chillingly, a physician who has treated hundreds of COVID patients over the past year told me this week that 24 of the last 25 deaths he has seen from the virus are of people who refused vaccinations – the other was too young to receive the vaccine.

Conservatives (and especially men) are far more likely to deny the science of vaccines and refuse to get vaccinated while liberals are far more likely to deny the science in less direct ways, such as banning access to playgrounds, closing beaches, and refusing to reopen schools for in-person learning, not to mention the stupidity of “vaccine culture.”

The most remarkable thing I saw this week was an Academy Award-nominated short documentary film about the Hollywood actress Delores Hart, co-star to Elvis, Marlon Brando, Karl Malden, and Montgomery Clift. Among her roles was Merritt Andrews, the leader of the spring-breakers in the iconic Where the Boys Are.  

She abandoned both Hollywood and Broadway at age 24 to become a Benedictine nun in 1963 and became Mother Prioress of the Abbey of Regina Laudis monastery in Connecticut. She is still a voting member of the Academy of Motion Picture Arts and Sciences that votes on the Oscars.

A reader sent in this excellent commencement address by Father Edwin Leahy at St. John’s University in Minnesota: “Don’t forget your keys.”

Other worthwhile things I saw or read this week include the following. The funniest. The sweetest (more here and here – Twitter *can* be a force for good). The most tragic. The most interesting. The most thought-provoking. The wildest. The most insane. The most incredible. The truest. Hmmm (“will not pay a single penny in taxes”). The most inspiring. The strongest. The stupidest. The best comeback. The most politically important. The most religiously needful. The most insightful. The most emotional. The worst. Circumstances matterRIP, David Swensen.

This may be the best guitar solo ever.

The backstory is here.

This may be the funniest joke I’ve ever heard (be sure to hang on for all of Johnny Carson’s reaction).

Please contact me via rpseawright [at] gmail [dot] com or on Twitter (@rpseawright) and let me know what you like, what you don’t like, what you’d like to see changed, and what you’d add. Don’t forget to subscribe and share.

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Benediction

Fauré’s Requiem is one of my favorite pieces both to sing and to listen to. The “Sanctus” is my favorite section. The part when the horns enter (about two minutes into the video below) for the hosannas gets me every time. Enjoy this new rendition by the British singing group, VOCES8.

Jesus said that the problem with the Pharisees was not that they were blind but that they thought, in their blindness, that they were seeing. As Wendell Berry reminded us, one who doesn’t know that he’s missing something will ever go looking for it. Moreover, per Tolkien, “The greater part of truth is always hidden, in regions out of the reach of cynicism.”

This week’s benediction is an ancient Irish hymn asking God to be our vision. A Gaelic version is here.

Thanks for reading.

Issue 62 (May 7, 2021)