The Intelligent Conversationalist Page 6

  • The word on everyone’s lips these days is inequality. The top 0.01 percent has seen their earnings rise exponentially, while everyone else has seen theirs stagnate. The American dream is inaccessible to too many millions. Pose the question, How does America level the playing field so that Main Street doesn’t always come second to Wall Street?

  • The monuments on euro notes are fictional so no country’s national pride is offended.

  • The euro is the world’s second most traded currency in the world after the US dollar.

  • As of 2014, with more than €995 billion in circulation, the euro has the highest combined value of banknotes and coins in circulation in the world, having surpassed the US dollar.

  RED FLAGS

  • Avoid an embarrassing schoolboy/girl error here. Note that the Enron scandal was way before the credit crunch—it occurred in October 2001.

   Enron was an energy company based in Texas that had grown into one of the US’s largest companies in just fifteen years. But its success was based on artificially inflated profits and dodgy accounting. Enron became the largest bankruptcy reorganization in American history at that time and the biggest audit failure. The scandal also led to the dissolution of its auditor, longtime accounting firm Arthur Andersen.

  • The long and the short of it, bulls and bears—don’t mix them up:

   “Going long” on an investment basically means betting its value will increase.

   “Going short” on an investment basically means betting its value will decrease.

  —Hedge funds often take positions on both sides of an investment—like going to the horse races and hedging your bets by betting on most of the field. Hence the phrase hedge funds is certainly not the stupidest name banksters have ever come up with, although it may be one of the more unfortunate concepts.

   A bull market is one in which prices are rising or are expected to rise; in contrast, a bear market is one in which prices are falling. So if you are bullish about the dollar’s Forex rate against the pound, you think the dollar is going to strengthen against the pound, so you get more pounds for your dollars and that trip to London looks increasingly likely.

  • Everyone agrees that the complicated US tax code, which hasn’t been reformed since the Reagan era, needs to be sorted out and that loopholes must be closed. The problem? People have their own favorite loophole that they think should stay. It’s a topic that you just go around in circles with, and as an interesting human being with a reputation to uphold, do you really want to talk about tax at all?

  • Unless you want to cause a mass depression in polite company, refrain from pointing out that we live in a globalized economy. Contagion means what happens in Europe doesn’t stay in Europe. Same goes for China or anywhere else for that matter.

  • The UK with its pound is a member of the EU but not of the Eurozone. I was once on a US business network segment talking about Europe with someone who didn’t know this. Seriously.

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  WISE WORDS

  A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.

  —Robert Frost

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  SOCIAL SURVIVAL STRATEGY

  Argument: How can America level the playing field so that Main Street doesn’t always come second to Wall Street?

  Yes, this is a question, not an argument per se, but in polite company you are expected to pose it. Nobody actually knows the answer, although they might pretend that they do. Money isn’t “trickling down” from the big earners to normal people fast enough, but forced redistribution of wealth is not the way America does things. Mention reforming the tax code and investing in education, and then blame DC. Even if you are talking to a politician from DC, they’ll just blame someone else who lives there—it couldn’t possibly be their fault, oh no.

  Crisp Fact: “The monuments on euro notes are fictional so no country’s national pride is offended.”

  The euro really is a classic case of “marry in haste, repent at leisure”—utilize this gem if you want to look knowledgeable in a discussion about finance … or divorce.

  Pivot: “What’s your favorite European city/where in Europe would you like to visit?”

  Almost everyone will be able to wax lyrical on this topic—travel is always an excellent cocktail party conversation topic.

  CHEAT SHEET 8—AMERICAN DREAMERS—THE GOOD, THE BAD, AND THE AHA!

  We are now going to briefly profile three quintessential American dreamers: Warren Buffett, Bernie Madoff, and Oprah Winfrey. From them, we will glean some lessons on how to hopefully, as long as our governments don’t screw us over, end up more like Buffett and Oprah than Madoff.

  CASE STUDY 1. THE GOOD—WARREN BUFFETT

  Warren Buffett, the “Oracle of Omaha,” who was born in 1930, is the chairman, CEO, and largest shareholder of Berkshire Hathaway, and one of the most successful investors on the planet.

  TIP 1

  An oft-quoted Buffettism is: “The first rule of investing is don’t lose money; the second rule is, don’t forget Rule No. 1.”

  Rejected by Harvard (successful people always encounter failure—it is the making of them; success is about not giving up), Buffett then enrolled in and graduated from Columbia Business School. He subsequently returned to Omaha and worked as a stockbroker while taking a Dale Carnegie public speaking course.

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  SUGGESTED READING

  Warren Buffett called Dale Carnegie’s How to Win Friends and Influence People the most important book he’s ever read. Once you get past the fact that the chapter titles tend to state the obvious—for instance, “If You’re Wrong, Admit It,” “Give a Dog a Good Name”—it is a worthwhile read. Forgetting or ignoring the obvious is usually the root cause of any pickles we find ourselves in.

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  Buffett invests only in “something that I can understand to start with; there are all kinds of businesses I don’t understand.” Buffett has thus made investments over the years in companies like Coca-Cola, the Washington Post, and Gillette, but avoided taking part in the dot-com boom in the 1990s. Buffett was dismissed as having lost touch but had his “I told you so” moment when the technology market bubble burst.

  TIP 2

  Invest only in what you understand.

  Buffett is famous for not flashing his cash; he lives in the same house in Omaha that he bought in 1958 for $31,500 (last assessed in 2003 at $700,000). Possibly the most noteworthy aspect about his domestic setup was a slightly unconventional arrangement with the women in his life. There was his first wife Susan, whom Buffett had three children by. In 1977, Susan went off to San Francisco to pursue a singing career and introduced him to Astrid Menks, who became his longtime companion. Buffet remained married to Susan until she died in 2004, and he married Astrid in 2006. Holiday cards to friends were signed “Warren, Susie, and Astrid.” If that wasn’t remarkable enough, he’s pledged to give away his fortune to charity, with over 80 percent of it going to the Bill & Melinda Gates Foundation.

  CASE STUDY 2. THE BAD—BERNARD MADOFF

  Bernard Lawrence “Bernie” Madoff, born in 1938, is the former chairman of the NASDAQ stock exchange and the admitted operator of a Ponzi scheme.

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  KEY TERM: PONZI SCHEME

  • A Ponzi scheme is a bogus investment operation. It pays returns to investors either from their own money or from that of later investors, rather than from any actual profits on real investments.

  • It lures investors in by offering short-term returns that are either strangely high or unusually regular.

  • The system is destined to collapse because the earnings, if any, are less than the payments to investors.

  • The scheme is named after Italian-American immigrant Charles Ponzi, who became notorious for using the technique in 1920, although he did not invent the tactic. Charles Dickens’s 1844 novel Martin Chuzzlewit and 1857 novel Little
Dorrit each describe such a plot decades before Ponzi was born.

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  Madoff founded his Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960, with money he had earned working as a lifeguard and sprinkler installer. He was its chairman until his arrest on December 11, 2008. In order to compete with firms that were members of the New York Stock Exchange trading on the stock exchange’s floor, his company began using cutting-edge computer information technology to circulate its quotes. After a trial run, the technology that the firm helped develop became the NASDAQ (National Association of Securities Dealers Automated Quotations).

  There was, initially, something of merit about Madoff. NASDAQ became the largest electronic-screen-based equity securities trading market in the USA. It now has more trading volume than any other stock exchange in the world. There is controversy over when Madoff’s asset management firm turned into a Ponzi scheme. According to him, he began the Ponzi scheme in the early 1990s. However, federal investigators believe the fraud began as early as the 1980s, and the investment operation may never have been legitimate. Finally, in December 2008, Madoff’s sons told authorities that their father had just confessed to them that the asset management arm of his firm was a massive Ponzi scheme, and quoting him as saying it was “one big lie.”

  TIP 3

  Keep it legal.

  In March 2009, Madoff pleaded guilty to eleven felonies and admitted to turning his wealth management business into a massive Ponzi scheme that defrauded thousands of investors of billions of dollars. The amount missing from client accounts, including fabricated gains, was almost $65 billion. On trial, Madoff refused to name any coconspirators and pleaded guilty to all charges, so in June 2009 he was sentenced to 150 years in prison, the maximum allowed. Definitely, defiantly bad, Madoff’s Ponzi scheme preyed heavily on his fellow Jews, destroying the fortunes of numerous Jewish charities and institutions, including Steven Spielberg’s Wunderkinder Foundation.

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  NOTEWORTHY NUGGET

  There were at least six botched investigations of Madoff by the financial authorities. Muppets.

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  CASE STUDY 3. THE AHA!—OPRAH WINFREY

  Oprah Gail Winfrey is the epitome of the multi-hyphenate. Talk show host, television producer, publisher, philanthropist, and actress, she was the wealthiest African-American of the twentieth century and the only black billionaire on the planet for three years running. An inspiration to millions, Oprah has been called the most powerful woman in the world.

  Born on January 29, 1954, in the very rural Kosciusko, Mississippi, on her birth certificate she was actually called Orpah, from the Hebrew Bible’s Book of Ruth. However, everybody mispronounced it, so she ended up with Oprah. (And since she’s mononymously known as that, we will continue to refer to her by her first name.) She had an incredibly tough upbringing and has revealed that she survived a brutal rape at the age of nine and continued sexual molestation between the ages of ten and fourteen. At fourteen, Oprah gave birth to a son, who died in infancy. To survive the trauma, she is on record as saying she had to believe in a “power greater than herself” and that these experiences later inspired her need to empathize with people in her daily life.

  TIP 4

  From Oprah herself, naturally: Turn your wounds into wisdom.

  A troubled Oprah eventually ended up getting stability and structure when she moved to live with her dad in Nashville. In 1971 she entered Tennessee State University. She kicked off her broadcast career in Nashville, then in 1976 hosted People Are Talking, a Baltimore chat show that became a hit. A Chicago TV station brought her in to host A.M. Chicago and Oprah swiftly went on to do what had been considered improbable—beat competitor Phil Donahue in her time slot.

  Cue a call from Steven Spielberg, a role in 1985’s The Color Purple, and an Oscar nomination for Best Actress in a Supporting Role for her performance as Sofia.

  TIP 5

  Still from Oprah herself: Every time you state what you want or believe, you’re the first to hear it. It’s a message to both you and others about what you think is possible. Don’t put a ceiling on yourself.

  You know the rest—she earned worldwide domination from her natural style of emotional ad-libbing through group therapy sessions. In 1986 she launched The Oprah Winfrey Show, which was nationally syndicated and ran through 2011. She swiftly took control of the show from ABC and made it through her own production company, Harpo (Oprah backwards). Other notable Oprah activities include her book club, O Magazine, the cofounding of Oxygen Media, and philanthropy through the Oprah Angel Network. The Wall Street Journal coined the term Oprahfication—public confession as form of therapy. And then there was the Oprah Effect: When Oprah endorses something or someone—perhaps most notably Barack Obama—people listen.

  On a personal level, she has been with her boyfriend Stedman Graham since 1986 and met her BFF Gayle King when they were in their early twenties.

  TIP 6

  Seriously, why would it be from anyone but Oprah herself?: Every one of us gets through the tough times because somebody is there, standing in the gap to close it for us.

  Arguably we all emote more—from politicians to television anchors to people next to us in the office—because of Oprah. In 2012 she even made it into the dictionary with her catchphrase “aha! moment,” the official definition from Merriam-Webster being: “a moment of sudden realization, inspiration, insight, recognition, or comprehension.”

  On January 1, 2011, OWN, the Oprah Winfrey Network, launched. Yes, it may have had its teething problems, but Oprah will always be adored, literally and figuratively, through thick and thin. And she has uttered what are quite possibly the wisest words on which to end a finance chapter: “Though I am grateful for the blessings of wealth, it hasn’t changed who I am. My feet are still on the ground. I’m just wearing better shoes.”

  We now turn to religion, which unlike the “Church of Oprah” has left too many parts of the world in ruins far too often.

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  WISE WORDS

  Success is not final, failure is not fatal: It is the courage to continue that counts.

  —Winston Churchill

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  SOCIAL SURVIVAL STRATEGY

  Argument: “Invest only in what you understand.”

  Financial “advisors” may try to make you feel inferior with their “superior” knowledge, but remember how well most of them didn’t predict the financial crisis? Ignore them and follow one of the most successful investors ever, Buffett—put your money only in what you understand.

  Crisp Fact: “There were at least six botched investigations of Madoff by the financial authorities. Muppets.”

  Those in charge can and do have the wool pulled over their eyes just as much as the rest of us. Something that is too good to be true always is.

  Pivot: “The Oprah Winfrey Show was my daytime TV guilty pleasure back in the day. I’m not sure I have one now, although I am partial to Saved by the Bell reruns. You?”

  Nobody you want to speak to for any length of time wishes to dwell on finance; everyone has at some point played hooky from school or work and can wax lyrical about their secret daytime TV favorite.

  SUBJECT THREE—RELIGION

  RELIGION SUMMARY

  The key theme to keep in mind when discussing this subject—apart from appreciating at the start that you are walking on eggshells—is how similar religions are. Really. Judaism, Christianity, and Islam are Abrahamic. Hinduism, Buddhism, and Sikhism are Dharmic. All the main religions use the lunar calendar to varying degrees, so their big dates tend to shift on the Gregorian, aka Western, calendar. Arguably the great tragedy of mankind is that so much strife has come from them. But you do not want to focus on catastrophe over cocktails, so a fun crisp fact to throw out there—it will upset Fox News viewers if you’re with some, but they will (hopefully) take it in seasonal spirit—is that Christmas can be linked with paganism, so much so the Puritans canceled it i
n 1644. And that’s the type of Puritan that originally turned up in America; thus it’s the ultimate American tradition to wage war on Christmas, despite Fox’s arguing to the contrary every year. A good pivot out of the whole quagmire that is a religious deliberation, especially if it’s ended up on anything to do with the “war on terror,” is to remark that there exists a debatable myth that the word assassin is derived from the Arabic word for hashish user from the Middle Ages. You can then inquire where your companion stands on legalizing pot. The straitlaced especially may surprise you.

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  WISE WORDS

  Religion is regarded by the common people as true, by the wise as false, and by the rulers as useful.

  —Lucius Annaeus Seneca, Roman Stoic philosopher

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  You do not have to be one of the 1.1 billion a-religious types in the world to agree to a degree with a certain Roman Stoic philosopher. For the other 6 billion or so worshipers in the world, there are about 4,200 religions. Nobody can escape faith; it is something that has an impact on all our lives on a daily basis.

  This series of Cheat Sheets encompasses descriptions of the main beliefs and practices of over 2 billion Christians, well over 1.5 billion Muslims, possibly more than 1.5 billion Buddhists, a billion Hindus, and 14 million Jews, almost half of whom live in America (compared to around 2.6 million Muslims). Judaism may be only the twelfth largest religion and Yasser Arafat, former chairman of the Palestine Liberation Organization, may have claimed that his strongest weapon was the womb of the Arab woman, but Judaism began in the Middle East over 3,500 years ago. It is thus the original of the three Abrahamic faiths, the others being Christianity and Islam. Judaism will forever remain one of the world’s great religions.