The weather is supposed to finally turn cooler this week, and I will be able to use my fire pit. And the first time I do, I have hundreds of pages of paper to commit to the ash heap of history. The tale begins in 2000.
The firm had several good years, and I had accumulated a sizeable nest egg. I haphazardly invested some of it in stocks through Victoria, our Merrill Lynch broker, whose acumen I never trusted. And then Paul suggested I finally get money "under management," to do better than I was doing myself.
At that time Northern Trust, long a bank for the very rich, decided to bottom feed and seek clients for accounts with a mere $1M in investable assets. They had hired a bunch of people to do this, and went after relative schleppers like me.
Well, Northern Trust always stood for old money. And Midwestern old money at that! So Wifey and I walked across Brickell, and met with our new advisor, a Michigan Biz School grad named Diane. As we drank tea and coffee in fine china, she explained that, since the money wasn't immediately needed, she was going aggressive -- major growth. And, since I was a busy lawyer and Wifey had as much interest in finance as she did in, um, maybe roller derby -- paying 1.5% of the accounts value each year seemed like a bargain.
And sure enough, in that crazy tech boom, the balances zoomed. In 2 months, the account had grown nearly 20%. I stopped looking at the monthly statements, and focused on the law practice, and life. But then I started hearing about the tech bubble bursting -- this was around 2002, and I figured I ought to pay more attention.
The account was worth about half of its high. What? How was this possible? Wasn't I paying these people to know when to sell before the losses got too significant? I met with Diane, and she shucked and jiived about how it was all an algorithm, computer generated, and that's how it worked. I remember one particular security, which she bought at $100 per share, and was now worth $10. Why hadn't she sold it, I asked, when it lost about 20% of its value, instead of watching it crash to the ground? I mean, losing money was one thing, but PAYING someone to lose your money was another.
Diane shifted to the other benefits of being a Northern customer. In fact, we had watched a few Heat games from their corporate box, and one night was a ton of fun. Their local boss, Sherman, was a VERY buttoned down Black man -- extremely serious at all times. Our friend Allison happened to be at the game, in her brother in law the Heat CFO's box, and came to the Northern box rather lit. She tried to get Sherman to dance, and he held his arms so tightly it was like he was afraid Allison was trying to steal his wallet. "C'mon, Shermy baby -- lighten up and dance." He chose not to.
Other than that, there were no other benefits to being a Northern Trust client -- well, maybe one more. I got to tell people the classic riddle: How do you get a small fortune? Give Northern Trust a LARGE fortune...
Well -- we closed the account, and gave the money to our neighbor and friend Pat for handling. We followed Pat from Prudential Securities, to Oppenheimer, to Northeast, and finally to a platform called Western International. Pat has done very well for us -- and calls me before making any moves, and the moves are all well researched -- not some stupid computer program.
Pat felt strongly I ought to double my usual stock investment in a fruit company, in '03. Their lead fruit man, Steve Jobs, had returned to take over. Well -- that investment has of course soared over the ensuing 18 years, and has been gifted handsomely to the Ds, the grandson, and our various charities.
But back to the bonfire story. I kept the file of all the statements from Northern in the back of my file cabinet. I had thought about suing them for broker incompetence, but didn't want to admit under oath I was naive enough to have trusted them. So the huge file just sat there clogging up the file drawer.
Until the other day. I plucked it out, and realized it was time to say goodbye. So at the fire pit, it will be tossed on -- a talisman of my learning curve as an investor.
Today, I manage our family's accounts. I had kept a small account with Oui, out of old friendship, but she left her company, Morgan Stanley, and I told her thanks for the memories. Now Pat is my advisor, although he only has a small percentage of our money under his management. I'll never give up full control again -- the thought of having to go back to lawyering full time is not a pleasant one to me.
And the fire pit awaits the fuel from my folly...
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