Category: Letters

Somehow found the tone and content of this letter very funny

From: Arthur Zeikel (Father)

To: Jill Anne Zeikel (Daughter)

Date: Oct. 17, 1994

Re: Managing Your Own Portfolio

Personal portfolio management is not a competitive sport. It is, instead, an important individualized effort to achieve some predetermined financial goal by balancing one’s risk-tolerance level with the desire to enhance capital wealth. Good investment management practices are complex and time consuming, requiring discipline, patience, and consistency of application. Too many investors fail to follow some simple, time-tested tenets that improve the odds of achieving success and, at the same time, reduce the anxiety naturally associated with an uncertain undertaking.

I hope the following advice will help:

A fool and his money are soon parted. Investment capital becomes a perishable commodity if not handled properly. Be serious. Pay attention to your financial affairs. Take an active, intensive interest. If you don’t, why should anyone else?

There is no free lunch. Risk and return are interrelated. Set reasonable objectives using history as a guide. All returns relate to inflation. Better to be safe than sorry. Never up, never in. Most investors underestimate the stress of a high-risk portfolio on the way down.

Don’t put all your eggs in one basket. Diversify. Asset allocation determines the rate of return. Stocks beat bonds over time.

Never overreach for yield. Remember, leverage works both ways. More money has been lost searching for yield than at the point of a gun (Ray DeVoe).

Spend interest, never principal, If at all possible, take out less than comes in. Then a portfolio grows in value and lasts forever. The other way around, it can be diminished quite rapidly.

You cannot eat relative performance. Measure results on a total return, portfolio basis against your own objectives, not someone else’s.

Don’t be afraid to take a loss. Mistakes are part of the game. The cost price of a security is a matter of historical insignificance, of interest only to the IRS. Averaging down, which is different from dollar cost averaging, means the first decision was a mistake. It is a technique used to avoid admitting a mistake or to recover a loss against the odds. When in doubt, get out. The first loss is not only the best but is also usually the smallest.

Watch out for fads. Hula hoops and bowling alleys (among others) didn’t last. There are no permanent shortages (or oversupplies). Every trend creates its own countervailing force. Expect the unexpected.

Act. Make decisions. No amount of information can remove all uncertainty. Have confidence in your moves. Better to be approximately right than precisely wrong.

Take the long view. Don’t panic under short-term transitory developments. Stick to your plan. Prevent emotion from overtaking reason. Market timing generally doesn’t work. Recognize the rhythm of events.

Remember the value of common sense. No system works all of the time. History is a guide, not a template.

This is all you really need to know.

Love,

Dad

When this article was originally published in 1995, Arthur Zeikel was president of Merrill Lynch Asset Management in New Jersey

“During my tenure as Minister, it was the clear and specific policy of the party, to take all steps to protect the environment, and carry forward the legacy of Smt. Indira Gandhi and Shri Rajiv Gandhi, to preserve the environment, and keep a balance between environment and industry. As Chairperson NAC, you have written several letters to me regarding projects in the Environment Ministry, and protection of tribal rights, and I have always kept you briefed that due care was being taken by me to protect the environment. I received specific requests [which used to be directives for us] from Shri Rahul Gandhi and his office forwarding environmental concerns in some important areas and I took care to honour those “requests.” Shri Rahul Gandhi went in person to Niyamgiri Hills in Odisha, and publicly declared to the Dongria Kondh tribals that he would be their “sipahi” and would not allow their interests to suffer at the hands of mining giant Vedanta. His views in the matter were conveyed to me by his office, and I took great care to ensure that the interests of the tribals were protected and rejected environmental clearance to Vendanta despite tremendous pressure from my colleagues in cabinet, and huge criticism from industry for what was described as “stalling” a Rs. 30,000 crore investment from Vedanta.

Fortunately, my decision was upheld by the Supreme Court. The same happened in the case of the Adani projects, where I faced tremendous criticism from within the cabinet and outside, for stalling investment at a time when the country was going through a difficult time in terms of the economy. The complaints of the local fisherfolk and NGOs of environmental violations in the Adani case were forwarded to me by Shri Rahul Gandhi’s office, and I was told to liaise with Shri Dipak Babaria in the matter. Occasionally, I apprised Shri Rahul Gandhi of steps I had taken, and he responded positively. In fact you have yourself conveyed your concern in this regard in letters written to me. In several cases including the stalled GVK power project regarding the Dhari Devi temple in Himachal Pradesh, the Lavasa project in Maharashtra, the Nirma cement plant in Gujarat and in several other cases I was given specific input, to make my decision. Apart from this Shri Pulok Chatterji, Principal Secretary to the Prime Minister was in constant touch with me, and officers of the Ministry in guiding the decisions to be taken by the Ministry at that time.

So in my decision making I have factored in the party line despite all criticisms against me and therefore several decisions of mine were expressly overruled by the Prime Minister.” wrote Jayanthi Natarajan,former Environment Minister