The Louis XV Console Arrived, Art as an Investment, a Strong U.S. Dollar, and Other Saturday Afternoon Thoughts

That didn’t take long! The Louis XV-style console I mentioned arrived last Saturday as I was reading books to the kids in their playroom. Aaron helped the furniture dealer bring it into the house. Like the other pieces we’ve sourced, it exceeded our expectations both absolutely and relative to the fantastic price we got on it. (You’re going to hear me reiterate it so many times, but I still cannot get over how this stuff is essentially being given away.) We’re still not sure what this particular area will ultimately look like, but we’re thinking maybe cashmere-colored grasscloth, the art will need to change, and the sconces will be upgraded. One thing at a time. We will go through iterations until we walk by it and every single time it makes us happy; a dopamine hit from form and function. With three levels of the house to furnish, a more-than-full-time job, and two toddlers, it will happen when it happens. In terms of priorities, this must be the furthest thing down on my list.

Now, a week later, I added a few other items. Earlier today, I won two paintings at auction, one from an auction house in Florida and the other from an auction house in California with both bids being placed remotely. The first is by the late Brazilian artist José Quirino depicting a man in a straw hat. The second is by the late American educator and artist Joanne W. Overdorff and shows a ballerina in a geometric, almost mathematical, pattern. Neither work of art was very expensive – the Quirino went for $500 plus a $125 Buyer’s Premium plus shipping and sales tax, which altogether came to $792.13, while the Overdorff went for $400 plus a $100 Buyer’s Premium plus shipping and sales tax, which altogether will come to $557.91 plus whatever the finalized shipping bill is going to be as that’s getting worked out now – but there is something about each I find interesting and beautiful.

I’ve never been one to buy art as an investment because I don’t think it can be, in the sense defined by Benjamin Graham, regardless of any returns generated as it lacks intrinsic value in the sense that its price is entirely dependent upon what other people will pay you for it. In contrast, if I own big block of stock in The Hershey Company, even if the stock market is frozen, as long as the company keeps selling chocolate bars, the cash keeps piling up and I can use that money to buy things. The profits, in other words, are a source of intrinsic value entirely separate from whether or not anyone will ever give me money for my ownership stake. I don’t need anyone to agree with me on valuation nor do I need to part with the asset to realize a benefit. As such, I think art should be purchased because it brings you joy. Whether it costs you $1 or $100 million, if you have the funds and its something that enriches your life, that is all the justification required. (In any event, I’m much more of a silversmith or pottery or sculpture guy rather than paintings.)

That’s not to say a person can’t make a lot of money in the art field if they are shrewd at shaping public opinion and are willing to take long-tail, multi-decade risks. Certainly, it’s possible, albeit difficult. For example, the late David Rockefeller once had his family office do a study of the best returning asset classes in his portfolio and his legendary art collection, by far, generated returns that crushed everything else including his equities. But it wasn’t about the money per se. The guy loved art and was a multi-billionaire heir of the wealthiest oil tycoon who ever lived. This was a man who had Monet’s Nymphéas en fleur as his stairwell painting in his New York townhouse, for heaven’s sake, which ultimately went for $84.6 million at auction. It was the second most expensive of Monet’s works ever sold and he just casually hung it there for his family and guests to enjoy.

Anyway, it’s been so nice as the house starts to come together to sit up until the early hours of the morning reading reports in silence or as music quietly plays, the fireplace on, wearing comfortable clothes. Often, it’s been rainy and windy outside, which is a sound I missed so much. I cannot emphasize enough how much it has reduced my stress levels and let both Aaron and I feel like we are becoming ourselves, again. (I’ve told you a couple of times my hair has started to turn white and silver, which will remain as a memento. When we first arrived in New Albany, the kids were super-excited to play in the snow so we got them some snow boots. I leaned down and was helping them put them on when this picture was snapped. You can see how much my hair color has changed in a few short years.)

The past week has been super-productive in particular. I found a couple of new companies I want to buy for both the Kennon-Green family and clients at the firm. The share price isn’t as discounted as I’d prefer but there is a chance with stocks falling over the past two sessions since the new inflation data came out that we might go into a correction, even if modest, so we can take advantage of an opportunity to do something intelligent about it. Regardless, when I’m thinking about 10 or 25+ year horizons for successful individuals and families, the economics of these particular enterprises are particularly compelling so even if I have to wait quarters or years, I think the odds are good they someday end up on the asset book.

I’ve also been searching for any international assets, in particular, that might be interesting. The strength of the U.S. dollar, driven by higher interest rates than the rest of the world can support (at least in any stable, prosperous democracy) has meant purchasing Swiss, French, British, German, and Japanese assets, among others, enjoys a bit of a tailwind at the moment provided you don’t have to take the cash flows and bring them back to the U.S. but can reinvest them in the country until it is wiser to repatriate the capital. (Some of this is mitigated by the fact the big multi-nationals, of course, have major U.S. dollar revenue-generating operations, which serves as a sort of natural internal hedge to a strong dollar.) I can only imagine what it would look like if we did have an interest-rate spike, which is not completely out of the realm of possibility.

Yeah … that’s it for now. It’s been a good Saturday. Aaron and the boys made chocolate chip cookies together this morning, which I enjoyed as I sat here and wrote this post.