Articles

What’s your measure of success? What is your finish line?

This fall, one October day, I was enjoying a chilly morning drive on a windy mountain road through the beautiful dense Oregon spruce forest. I was on the way to Intel’s Portland Campus. The sun was just rising above the mountain tops, and I was already wondering what kind of questions I will be able to answer on the spot, and what kind of questions will still linger long after I leave… During that half day at Intel discussing stock picking, and sharing my experience as an investment advisor to families and entrepreneurs, I kept hearing a very similar question asked in a dozen ways – What’s your measure of success?

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News vs. Noise

As investors, we are in the business of absorbing information, understanding the world, and drawing conclusions. Our goal is to deploy capital at the highest possible rate of return, while avoiding the risk of a permanent loss. We need to navigate around uncertainties in search of opportunities. That mission can only be successfully fulfilled if we limit the excess noise, but leave room for the relevant news to reach us. The more distracted everyone else becomes, the more our patient and disciplined approach shines in comparison

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THE THIRD-GENERATION CURSE

There is a famous proverb in the United States: “From shirtsleeves to shirtsleeves in three generations.” Interestingly, many diverse nations have the equivalent saying: “Rice paddies to rice paddies in three generations” in Japan; “Clogs to clogs is only three generations” in England; “Wealth never survives three generations” in China; “The father buys, the son builds, the grandchild sells, and his son begs” in Scotland: these are just a few colorful examples.

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What I learned sailing over an underwater volcano

Earlier this summer, with gusting wind in my hair, fine sand between my toes, and harsh salt on my hands, I was sitting at the helm of a 40-foot (12 meters) sailing catamaran. As a sailor I know that alertness and preparation are crucial to not only enjoyment but even, frankly, survival, in some conditions and locations. A particularly treacherous stretch of this trip was the crossing from the island of Carriacou to Grenada (in the Lesser Antilles, Caribbean Sea). This experience and a conversation with a dear friend, crew member, author and investor himself – Jake Taylor led to a discussion about our strengths and weaknesses. It was fascinating to note the way sailing and investing put both to a real test!

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Your Money Manifesto: The Three Rules of Thumb!

If I had only one sheet of paper and could only write down three rules of thumb for starting, building, and keeping a family fortune while living a happy, fulfilling, peaceful life, these would be my choices…

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Fortune Keeper’s Dilemma: The Three “Whys”

About a year ago, in California, I had the great pleasure of giving a TEDx talk on investing. It was a warm April evening, and the organizers generously hosted an outdoor book signing for me. Over the next couple of hours about a hundred attendees of all ages shared with me not just their impressions of the talk, but also their stories about money, wealth, and investing. Everyone had a story, but most of them also had a question: if building and keeping a family fortune is such a challenge, why should anyone bother?

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Eyes on the (snow)ball!!

Investing might not be easy, but it can be simple. I often get asked what I do for a living. The short answer would be, “I work in finance.” But the accurate answer would be, “I invest money for families and entrepreneurs with a hundred-year investment horizon.” A more vivid description comes from Charlie Munger, Warren Buffett’s business partner, who compares this kind of investing to rolling a snowball down a hill. With all the noise and distractions, let’s see what it takes to keep our eyes on that snowball!!

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The most precious dollars

What does counting pennies have to do with keeping and growing a family fortune? Why savings and inheritance are the most precious dollars you could ever have?

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CURSED or BLESSED?

In a career devoted to managing family fortunes, I have grown increasingly convinced that – in terms of financial outcome — inheritors tend to be either blessed or cursed from the start.

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Apples, oranges or mangoes? Three types of managers

Recently, I found myself exploring a charming little fruit stand on the island of Guadeloupe in the French Caribbean. While making difficult choices among the fruits on display, it occurred to me that my process was not unlike the challenge many clients face in selecting the right money manager.

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Not all returns are equal

During my recent European trip at a dinner with friends, someone asked me if the market was up that day. It’s a question I often get from anyone who knows that I’m an investment advisor and a stock-picker. I often disappoint them saying that I don’t know because I haven’t looked.

Are all up days or years in the stock market the same, though? From the outside, a gain of 10% of the entire stock market’s performance seems to be identical with a 10% increase in price, and thus good news for stockholders. In actual fact, not all 10% annual returns are equal.

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How to compound your wealth?

If we can only shift our mindset from getting rich overnight to compounding wealth over a lifetime, everything changes and our odds of success dramatically rise…

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INVESTING: FROM BEN GRAHAM TO PHIL FISHER TO… MICHELANGELO?

Like many fundamental (serious) investors, my early influencers were Philip Fisher and Benjamin Graham. It could be said that growth investors are looking for the next Microsoft, Apple, Google or Amazon. In contrast, value investors look for neglected stocks that are so cheap that bad news won’t hurt them much, while any good news could trigger a major upward re-evaluation. Both approaches, however, seek the same result: to uncover and analyze winning stocks.

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SIZE, CONFLICTS OF INTEREST and FIRM CULTURE

As We Enter Our Third Year, Some Thoughts About How to Pick, and Be, the Right Money Manager

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VALUE / CONTRARIAN INVESTING – VERSION 3.0?

The advent of the knowledge economy is not making life easier for disciplined investors. In times of uncertainty like these, character will prevail.

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PLANNING OUR LIFE AND BEYOND

When we at Sicart engage with clients in planning for the management, use and disposition of their fortunes, we first try to spend ample time on defining the kind of life they want to live, the goals they hope to achieve, and what legacy they wish to leave behind. Whatever the age of the clients, their views on these subjects are usually vague – probably because decisions about them do not seem urgent and are expected to come into proper focus as they age. Yet procrastination is not an option for any of us.

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Infinite Horizon, Finite Assets

Investing in finite assets with an infinite investment horizon is one of the unstated challenges of our business. The task becomes even more difficult as the markets boost prices of assets that are not only intangible in nature, but also whose profit-generating ability is questionable or potentially short-lived.

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SOLITUDE OF THE WEALTHY:

My partner Bogumil Baranowski has discussed some of the psychological problems associated with family patrimonies in his series “Blessings & Curses of Inherited Wealth – The Guide for Inheritors.” Over my years of helping multi-generational families to preserve and grow their wealth, I too have noted the challenge of maintaining “normal” relationships with friends or relatives who have less money.

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The Great Investor In You – Our first TEDx Talk

There are three secret advantages we already have over professional investors. But how can we use them to become great investors ourselves?

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What is long-term anyway?

Recent market volatility has made many of us jumpy, and many investors agree that this might be a time to show increased caution. But one subject still prompts very diverse opinions: the investment horizon.

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How do you stay a millionaire?

“How do I keep what I have?” is the query we hear much more often than, “How much will the market rise this year?” Those who are familiar with our long-term value contrarian mindset know better than to pose the latter question seriously. The recent increase in volatility and a worldwide sell-off in major indices has broadened the discussion. Investors started to focus more on keeping what they’ve made in this market. Some wisely realize that they might not have the time to make their money back if they were to lose it. What can be done about that?

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CONTRARIAN VALUE: EASIER SAID THAN DONE

“We consider ourselves long-term, patient, contrarian value investors” are the first words in the “How We Invest” section of our website. But what do they mean in practice?

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YEAR-END PEARLS OF WISDOM

For many years, I have been collecting quotes, citations and other bons mots. Of course, Googles and the likes have made this modern variation of plagiarism much easier in recent years, sometimes even dispensing quote addicts like me from reading original books in the text. On the other hand, there are good reasons besides plagiarism … Continue reading YEAR-END PEARLS OF WISDOM

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Blockchain, Bitcoin, and the future of money

Blockchain has been on our minds for a while now, and here we propose a three-part discussion.

First, we will examine the potential benefits of blockchain technology. Second, we will explain why we believe that Bitcoin might turn out to be a misuse of a great technology. Finally, we’ll sketch out our idea of the future of money, finance, capitalism.

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HUBRIS AND FAILURE: SOME USEFUL INVESTMENT LESSONS

Last year, French journalist Christine Kerdellant wrote a book with an intriguing title (Ils se croyaient les meilleurs – Éditions Denoël 2016), which could be translated as: “They thought they were the best – a history of great management mistakes.” The point is that the most successful entrepreneurs are those who have first stumbled, but have learned from their mistakes. Interestingly, they often are more prone than professional managers to search out and hire collaborators who also have experienced failure and have survived. The book appealed to me because, in Sicart Associates’ business of wealth and investment management, mistakes are quite useful — on the condition that they don’t recur too often, and that lessons are learned from them.

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What it takes to build a great family

Introducing James E. Hughes, Jr., Esq. the author of Family Wealth: Keeping It in the Family, and of Family: The Compact Among Generations. Mr. Hughes reminds us: “As it takes 150 years for a copper beech tree [ metaphorically, a great family] to mature, plant today because there is no time to waste.” He points out that “The vision underlying a system of family governance must be the enhancement of the pursuit of happiness of each individual family member as part of the enhancement of the family as a whole for the purpose of achieving the long-term preservation of the family’s wealth: its human, intellectual, and financial capital.”

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OF STORIES AND NUMBERS

Participants in the investment markets tend to fall into one of two categories. A growing number engages in a relative performance contest where they essentially compete against each other or against “unmanaged” indexes over relatively short periods of time: one, five or, more rarely, ten years. These short periods are convenient for consultants and marketing staffs but, in our observation, sprinters seldom win marathons. We thus prefer to ignore short- or medium-term market fluctuations and to concentrate on our goal, which is to grow the patrimonies of our client families — along with our own — over multiple cycles and several generations.

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A CAREER, A FRIENDSHIP AND A MORAL TALE IN MEMORIAM of MRS. B

Financial institutions like to claim that they always put their clients’ interests before their own — or at least on par with them. Real life shows us scant evidence of that claim. Truth be told, it is hard to sustain a money-management firm as a business (rather than as a professional practice, which used to be the model) without running into conflicts between your clients’ interests and your own.

I deeply believe that resolving those conflicts of interest with probity is key to building a successful practice over time, and I have at least one compelling example to help me remind young colleagues that probity pays.

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New Generation Of Successful Entrepreneurs, New Ways Of Giving Back And Monitoring

Introducing Alexandre Mars, a New York City based, French-born serial entrepreneur, and engaged philanthropist who, in 2015, was named one of New York City’s top 20 philanthropists under 40 by the New York Observer.

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The Inheritance Plan – The Right And The Wrong Way

In the third part of the Guide for Inheritors Series, we introduce Jeffrey Condon the Author of Beyond the Grave. We will learn about the importance of having an inheritance plan, and the author explains that there is the right, and the wrong way. We are reminded how crucial it is to treat beneficiaries equally. Among many other lessons, we also find an interesting discussion of one of the most frequent questions when it comes to inheritance – how much is too much?

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Breaking The Triple Taboo – The Inheritance

Here you’ll find the second part of the Guide for Inheritors Series. This time our guest is Ann Perry, the author of The Wise Inheritor: A Guide to Managing, Investing and Enjoying Your Inheritance. She tells us that money is the last taboo, and inheritance a triple taboo. She also reminds us that inherited money should be treated differently. We learn that with looming biggest ever wealth transfer of tens of trillions of dollars, more of us than ever will be facing the dilemmas of inheritance. What can we do to be better prepared?

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How We Give Matters More Than How Much We Give

In the first part of the series, we are introducing Barbara Blouin’s Publications of the Inheritance Project. Inheriting a fortune – or being lucky enough to leave one to your children – can be a mixed blessing. As the largest-ever inter-generational wealth transfer is upon us, it’s important to realize that how we give may matter more than how much.

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Cyclical Opinions – Secular Approaches

Technological progress makes the world evolve and change. As it does, Sicart Associates believe that the secret to success is to occasionally adapt opinions to changed circumstances while staying true to our long-term contrarian value investment principles.

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The Entrepreneur and the Steward of Capital

As we work with more and more entrepreneurs around the world, we find a number of key differences between them and portfolio investors.

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The Jade Sculptor and the Serial Entrepreneur

A few years ago, I was invited to visit a new jade museum that was about to open to the public in Beijing. Many of the pieces on display had been left behind by Chiang Kai-shek (former leader of the Kuomintang party) when he and his followers retreated to Taiwan in 1949.

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