April 19, 2004

She's Come Undone

WE FULLY ADMIT we're not "with it" when it comes to rock music these days; and as such, we may not be the best people to offer up an opinion regarding the unceasing woes of Courtney Love. We have never listened to her music; we have paid scant attention to her legal battles; and for the life of us, we can't say how she managed to gain the popularity which she now enjoys. In short, she has contributed a pittance to our existence.

However, like a shark drawn to blood, we took great interest in learning Ms Love has reported she and her daughter were swindled out of a full $40 million, and that the wires say Ms Love is at least $4 million in debt. If accurate, this represents a truly amazing and cautionary tale. We can think of no entertainer that has faced such financial calamity; despite the stories about Elton John and Michael Jackson, they are very much still standing, even if their egos may be a bit bruised from the disclosures.

Now, we are not yet convinced that Ms Love's circumstances are entirely her own fault. People of much greater intelligence have found themselves victims of similar swindles. Such stories crop up in the papers every few months: a trusted long-time financial advisor absconds with retirement savings, leaving agony and turmoil in his wake. Indeed, if what we are being told is the truth, it does seem possible that Ms Love merely made the fatal mistake of trusting too much; and that she just delegated out her fiduciary responsibilities, not ever dreaming that the people she trusted would do such things.

Of course, we should reiterate that we have no direct knowldge of Ms Love's situation other than what we have read; and the true story may be entirely different. But from our limited knowledge of the situation, we can offer up some cautionary advice for readers who may someday find themselves with significant assets.

The first point is that one ought not, if one can help it, put all of one's eggs in one basket. It would seem reasonable to have at least three baskets; and it would further make sense to ensure they were very strong baskets indeed. By this, we mean that one should look for solid management firms, firms which would have extreme problems in the public marketplace if it came out they were screwing around with people's hard-earned.

The second point is that one ought always -- ALWAYS -- maintain control over one's holdings. It is one thing to rely on an advisor if one truly has no knowledge of matters financial; but it is another thing entirely to simply abdicate one's responsibilities in keeping an eye on one's own affairs. Ms Love, for instance, reports that someone purchased a BMW on her credit card. Had we been in her situation, we would have fired anyone and everyone responsible for that, and then had them bastinadoed most fiercely, and then had thrown into a crocodile pit.

The third point is that one must keep an eye on one's cash flow, no matter what one's holdings. Ms Love reports that a full $100,000 per annum was spent on her dog walker; a ridiculous sum of money for such an expense. We find it amazing that Ms Love was unaware of this, given its extreme cost; but the interview which she gave on the subject makes it sound as if it was a new and disturbing revelation.

Now, we realize that we may sound a bit paranoid; but we can assure you that we merely see the virtue in extreme caution and extra redundancy. And it is not a principle which we apply solely to financial institutions. Consider how we deal with our automobile maintenance.

We have a full five shops, all of which are honest and reputable, at which we have maintenance work done on our sedan. We have one shop which we use for the sole purpose of having the car inspected and doing routine preventive maintenance, such as oil changes. We have a second which we use for minor repairs, a third and fourth which we use for certain specialty repairs, and lastly, a shop of impeccable reputation which we use for major repairs. All these shops get our business; but if one shop finds a problem, we take it immediately to a second shop and have the problem addressed there.

This provides us with three major benefits: first, we usually get the problem fixed cheaper than we would have done so otherwise; second, we have peace of mind knowing that our shops are honest; and third, we prevent any one of these shops from conveniently finding new things wrong with the car, and thus soaking us in the wallet. Not that they would, but it never hurts to be cautious. And, yes, we admit this is cumbersome; but in the end, we have found it worthwhile.

Finally, a last thought. We must say that we really feel sorry for Ms Love's minor daughter, who is the true victim in this whole sordid sale. It is one thing when an adult loses out because of poor decision-making or markedly bad judgment; but to see a child lose out through no fault of her own is particularly saddening. If only for her daughter's sake, one hopes that the situation is not as dire as Ms Love makes out.

Posted by Benjamin Kepple at April 19, 2004 01:45 AM | TrackBack