When I was about 35, I worked with a Houston company that bought and developed real estate, and financed a good part of it by selling limited partner joint venture participations.
Most of our clients were prominent Houston Jewish men.
Although I'm an Episcopalian, I was often appointed to call on these fellows to announce our latest deal, give them a prospectus and walk out with their check.
I had been raised among a significant number of Jewish friends, so I knew a lot of Yiddish and very much understood how the Yiddisher kop (Jewish brain) worked.
It was such an easy sell. But one thing I noticed was that if the prospect didn't buy while I was there, he wasn't going to, although that didn't happen very often.
No one read the prospectus, and I noticed that they were impatient when I attempted to tell them about both the upsides and downsides that could happen. The most onerous of those were 1) that it may be necessary to make future cah calls on them and 2) it may take several years for it to prosper, and they were honor-bound to hang in there for the long haul.
In the main, Jews understand risk and gambling much better than the average non-Jewish businessman on the street. When we had to make cash calls or when a property didn't develop or sell as fast as we had hoped, they didn't complain. They stayed in.
Calling any game before all nine innings are played is usually more risky than hanging in there until the end.
A few years later, my clients became mainly Christian doctors and prominent businessmen. It didn't occur to me that they would, in the main, handle their business differently.
When we had to make cash calls, many of them called foul, and refused to pony up. And even though our prospectus showed that, say, the rewards of ownership probably wouldn't accrue for five years, they began wanting their money and profits a year or so later.
What I learned from these two experiences was that investments are often de jour. If everyone at the cocktail party is talking about their joint ventures, those without one get one quickly so that they can talk about theirs.
"Cocktail Joint Ventures" have given in to the latest gimmick -- having a financial adviser. He's the person you turn over your life savings to with the hopes that he/she will be able to make you richer than you could make yourself on your own.
I've been professionally involved in personal finance for decades. While it is my formal education,I didn't come into it on purpose; I basically fell into it.
I've counseled people about their finances since I was a young man, and I've been on countless bank, pension and church boards.
In almost every case, I have resigned from the bank, pension and church boards after a short time, when I have found financials that made no sense and votes that had caused illogical, unknowledgable decisions.
Again, the primary reason for being a member of those boards was to develop Cocktail Talk.
So, here's how I approach financial counseling. I review all of the parts that make-up a client's estate for prudence and accuracy and legality. I prepare a written set of recommendations, I collect my fee, and they are on their own.
You don't need a financial adviser looking over your shoulder, churning you account, and en-massing fees. Just follow the plan that I specifically prepare for you.
At what point does an entity need a paid financial adviser? I don't know the answer.
I know one of my appointments was to a board that oversees a portfolio of $10 million. They didn't want to fire their investment adviser, so I resigned. In my view, they didn't need the adviser's services, and none of us needed the exposure of trying to defend ourselves against a stockholder suit should someone figure out what the net losses and advisory fees were costing.
So what are some more Cocktail Talk discussions -- the current ones?
- Open floor plans. They are on their way to join avocado kitchen appliances. In the main, people aren't interested in having to keep their kitchen's spotless all of the time.
- Cablevision stock. Cablevision stocks are like chain letters. The last group holding the stock sees their investment evaporate because cablevision companies always need new capital to survive.
- Companies that have a published value of billions, and that had a net worth of $1,000 only a few years prior. The value is calculated by multiplying the number of outstanding shares by the current market price. Earnings don't support the debt or that value. Gamblers cause it.
- Bitcoins. The financial markets answer to the Las Vegas slot machine.
There are ways to grow your net wealth that are inexpensive to participate in and that have very low risk and reasonable opportunity for increased value.
Problem is, that strategy will probably never rise to being Cocktail Talk. If ou want to discuss yours, you're welcome to send me an email.
BILL CHERRY, REALTOR
Since 1966
Dallas
214 503-8563
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