Get Rich Slow ly

Retirement is no hummock.

Money. You need it. Even if you don’t care about it that much. Today, we’re going to talk about maturity as it pertains to money.

Maturity, when it comes to investing, is the time-value of money. Investopedia defines a stock’s maturity as: “the last date that it can be exercised to be purchased at the underlying stock at the strike price.”

This week’s theme is art. Picasso paints a distorted face. The day he paints it, the only value it has is the canvas and the paint he bought to scratch into it.

Click here to learn more

Portrait of Dora Maar, Pablo Picasso, 1937, oil on canvas.
(Source: Sotheby’s)

Something else happens. Buyers want it. Then others covet it. Strange. Art has no intrinsic value at all. Except in the buyer’s perception; then someone is willing to pay for it in dollars.

We are reminded of Gale Pooley’s “time-value” of pricing. It doesn’t really relate to art. Unless, you’re the guy who wants to spend the money you earned on a particular piece of art.

As the buyer, you determine the value. You could flip a house in downtown Baltimore if you wanted to, also. A bet on a company with bad fundamentals but popular appeal could work for you. Crypto coins may have worked, too.

The Dow ended the day yesterday up 56 points. The S&P 500 almost a percentage point. Tech continued its rebound as the Nasdaq gained a point and a half.

We can attribute most of the stock market gains to the idea that traders believe the Fed is doing its job and curtailing inflation. But at 7.7% in October, is that really curtailing anything? The narrative is inflation has peaked, and the Fed will take a chill pill – at least to .50% rate hikes – on interest rates come their next meeting and press release.

“Is it time to ‘buy the f*cking dip?’” Joel Bowman chided at Bonner Private Research over the weekend.

We would be remiss to take these signals– two days of good data, after months of squalor and writhing– as an all-in. Today’s theme: Get rich slow ly.

From our Session this week with former Goldman analyst turned New York fine art dealer Allen Sukholitsky… he talks about foresight as a weapon when investing in the future:

Kudos to the Masterworks team for thinking through this; to launch a secondary market for the assets that you’re offering investors to invest in, to think about doing that at the same time that you’re making those assets available– I personally think that took a whole lot of foresight.

The benefit of a secondary market is that it has been operating for several years; we tell our investors that when you invest in art you should expect the holding period for any painting you invest in to be, let’s call it three to seven years or, on average, four to five. There are times when it can be considerably shorter than that…

The secondary market, also called the aftermarket and follow-on public offering, is the financial market in which previously issued financial instruments such as stock, bonds, options, and futures are bought and sold. The initial sale of the security by the issuer to a purchaser, who pays proceeds to the issuer, is the primary market.

All sales after the initial sale of the security are sales in the secondary market.

Let’s just say the paintings, after being painted, have time to mature… that is, their prices have cooled, and are now being traded not on their initial public hype, but on their genuine perceived value.

“To your first example though,” I pressed Allen, “if you wait seven years, you hold onto the share for seven years and the effect of the IPO is to sell the painting or the returns to the company when you sell the painting…” Mr Sukholitsky responds:

Yep. We’ll sell the painting to any of the hundreds of intermediaries, collectors, and sort of generally art-oriented individuals around the world. We might do it at auction too, but that’s not our first route in terms of selling paintings. And ultimately we return the proceeds and profits back to investors.

We’ve done that now several times. I think we’ve sold about seven or eight paintings. The performance, frankly, for all of our sold paintings has been quite stellar. The average was a net return of almost 30%.

You might ask someone, ‘Do you think about art the same way you think about stocks and bonds, commodities, or anything else?’ And they’ll probably look at you like you have several heads because nobody thinks of art that way. And so by definition, the art market has not been behaving like any other financial instruments. And for us to be the only institution operating purely from an investment perspective in a $2 trillion dollar asset class that almost nobody else in that market operates in… we think that gives us quite a bit of an ability to generate alpha for our investors.

You can watch the full interview with Allen Sukholitsky here. 

P.S. In 2016, we wrote “the worst thing Donald Trump has done” is make people pay attention to politics again. It used to be fun to quote PJ O’Rourke and say stuff like “why vote, don’t encourage the bastards.” It’s not so fun anymore. Most readers don’t get it.

I also feel disengaged when I’m wearing my red hat that says “es lo que es” on it. ‘Es lo que es’ means “it is what it is” in Spanish. Somehow, we’ve gotten beyond the farce politics in the country have become. I paid to have these hats made… can’t I have a little fun?


Oh yeah, Donald Trump announced he’s running again for the POTUS spot. You can tell me what you think about that here.

Addison Wiggin

Addison Wiggin

Addison Wiggin is founder and executive publisher of Agora Financial LLC, an independent economic forecasting and financial research firm. He and Bill Bonner began writing the firm’s flagship Daily Reckoning in the midst of the tech boom and bust. It was one of the first widely distributed email newsletters on the Internet. The publication’s critical eye on finance and economics continues today. He’s also creator and editorial director of Agora Financial’s daily missive The 5 Min. Forecast.

Recent Alerts

Elon Musk: Savior or Fraud?

Can Musk really be trusted as a guardian of free speech? Read More

The Fed: Killing Jobs… and Killing People?

Yikes — the “hopium” that fueled the week’s big stock market rally is already wearing off. Quickly. Read More

Mr. Market Takes a Deep Drag of Hopium

No sooner did Fed chair Jerome Powell open his yap than the media “embargo” on the text of the speech was lifted. Read More

Beware Three “Gotcha” Taxes

The good news is that the 2023 tax brackets have been adjusted considerably higher to reflect inflation. And yes, there’s bad news. Read More

The Bear Market Is Nearly Over (or Just Beginning)

It probably comes as no surprise that Jim Rickards and James Altucher disagree on the prognosis for the stock market going forward. Read More

Your Recession Investing Handbook

How to invest for the economy’s not-so-soft landing… Read More

Elizabeth Holmes and the Culture of Corruption

In 2020, we labeled Elizabeth Holmes “the poster child for the demented decade gone by.” Little did we know SBF – and others – were waiting in the wings… Read More

The German Uprising Against America

Frustration is growing in Europe over blowback from Western economic sanctions against Russia, rising inflation in general and soaring energy prices in particular. Read More

Direct from DC: A Green Energy Trojan Horse

“There’s a new, extensive U.S. industrial and energy policy embedded in recent legislation,” says Paradigm’s geologist and energy expert Byron King. Read More

Financial Tyranny Gets a Trial Run

“This might be just a [CBDC] pilot program, but you can bet that the real McCoy will be here before you know it,” says Paradigm’s macro maven Jim Rickards. Read More