Art, Stocks and Money

Art, Stocks and Money

The Best Charity

All that Glisters, or Glitters, or Whatever

The Santa Monica Museum of Art, although I’ve never visited it, has brightened up my week.  I read in a recent news story that the museum holds an art sale every year called “incognito.”

The idea is simple.  Hundreds of artists (over 480 this year) donate paintings, all of them in the same format (8″ by 10″) and the museum sells them for $300 each, regardless of who painted them.  Some of the artists in the sale are quite well known, and their works are worth much, much more than the $300 price.  Others are, of course, are worth much less.

Tickets to participate in the sale cost potential buyers a minimum of $100, and all proceeds go to benefit the museum.

Obviously, some of those who buy tickets for the sale are only trying to score a bargain and grab a cheap work by an expensive artist.  And word has it that some of the high-priced painters try to work outside their usual subjects and techniques to throw people off, while others produce works that are in their usual style.  

What I love about this idea is that the Santa Monica Museum is forcing sale participants to decide what their relationship to art actually is.  Should buyers look for what the market says is good (the big names) or should you find something you personally like?  There’s plenty of room in the art world for both investors and collectors, and there’s nothing wrong with either position.  

I’ve always assumed that anyone who invested in the stock market did so to make money.  At the very least, anyone who went to the trouble of buying individual stocks rather than mutual funds or exchange-traded funds had to be investing with the bottom line in mind.

As it turns out, that’s not necessarily so.  I’ve talked to several investors who are as interested in either the intellectual challenge or the casino-style thrill of stock investing as they are in building their wealth.  These investors are willing to absorb some losses because the satisfaction they get from picking a winner is hugely enjoyable.

It makes sense.  After all, people do all kinds of things with their money where there’s the possibility of a payoff, even though they know the odds are against them.  Las Vegas comes to mind, along with various lotteries and get-rich-quick schemes.  (I also include penny-stock investors in this group, especially since I’ve spoken to more than half a dozen of them who’ve been locked into a losing position on an illiquid stock for months at a time.)

Whatever your motive for investing, whether it’s a systematic program for building a retirement nest-egg, an intellectual puzzle, a roll of the dice or a deadly serious attempt to rebuild your bear-ravaged portfolio, I have to believe that you’ll always do better with an experienced ally in your corner.  Cabot’s newsletters offer sound advice in many investing styles perfect for investors who want to put the odds on their side.

Since I write the Cabot China & Emerging Markets Report, I’m obviously sympathetic to aggressive growth investors, whether they’re in it for the cold-eyed love of cash or just enjoy the rush of investing in the hottest markets on the planet.  If you’d like a trustworthy ally in your quest for stock market glory, just click on the link below for a no-risk trial subscription.

I hope you’ll indulge me, because this section of today’s Cabot Wealth Advisory isn’t about making money, so you can skip to the stock recommendation if that’s what you’re interested in.

We don’t talk about charity much in the Cabot Wealth Advisories.  The rewards of charity are deep, but–except for that all-important tax deduction–wealth isn’t one of them.  

But I’m going to recommend a charitable donation that has a unique combination of benefits.  It’s giving blood, and it’s my favorite donation for a couple of reasons.

First, it’s incredibly personal.  The money I give to veteran’s groups, food kitchens and environmental causes is money well spent, but my cash just goes into the pool along with everybody else’s.  

That doesn’t happen with my blood.  It goes from me to another person.  I won’t ever know who that person is, but it’s still a good feeling.

The second reason is that it’s the only contribution I make where I’m absolutely sure that the person who gets it really needs it.  The people who receive blood have usually lost theirs due to an accident, a surgery or a disease.  They need blood to stay alive.  Not a bad reason in my opinion.

I only started keeping track of my blood donations when I moved to New Hampshire, and I’m about to finish giving my 10th gallon of B Positive.  This isn’t a huge amount compared to some people, but I’m pretty sure there are people walking around who are alive now because I could give them what they needed.

Summer is a tough time for blood banks, as the need rises and the number of donors falls.  I hope you’ll consider seeking out a blood drive and making a contribution.  It’s a great feeling.

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My investing idea today is a jewelry company, which isn’t the sector that usually springs to mind when growth investing is mentioned.  But Fuqi International (pronounced Foo-chee) is a Chinese jewelry manufacturer that’s catering to an enormous appetite for gold among China’s increasingly affluent people.

In many countries, China and India among them, gold jewelry isn’t just an adornment, it’s a way to accumulate wealth and pass it along to future generations.  Long experience has taught many people that necklaces around your neck and bracelets on your wrists are more portable and more reliable than volatile currencies and fragile banks.  So, as personal income rises, so does the amount of money heading into gold jewelry.

Fuqi International (FUQI) has grown from a $15 million a year business in 2002 to sales of $399 million in 2008.  And in some ways, the layoffs and hard times in China have only reinforced the need for tangible commodities that can be used when a rainy day arrives.

Fuqi runs everything–management, marketing, design, sales and manufacturing–from one 53,000-square-foot building, bringing out 300 new designs a month and selling through its 30 provincial distributors and 700 direct sales agents.

Sales in 2008 were up 153% from 2007, and earnings continue to rise.  A quarterly report that showed a 45% jump in earnings on a 41% gain in sales gave FUQI a lift on May 15, shooting it from 6 to 11 in just a few days.  The stock has now corrected to just under 10, and looks very healthy.

Shakespeare may be right that “all that glisters is not gold,” but gold is doing quite well for Fuqi International.


Paul Goodwin
For Cabot Wealth Advisory


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