Steve Wynn’s Elbow and a $91 Million Blunder
October 18, 2006 -
Steve Wynn, the Las Vegas billionaire casino mogul, recently agreed to sell a 1932 Picasso painting “La Reve” to Connecticut hedge fund billionare Steven Cohen for USD $139 million, a $91 million profit in just 9 years of holding the painting. That is until he was showing off the painting in his office to a bunch of friends, and in an animated gesture, wiped out a $91 million gain when his elbow plowed through the painting. tearing a couple of three inch long gashes.
However, the bigger point to take away from this story is that before Wynn’s blunder, he had found a buyer willing to pay $139 million for the purchase of a single painting. It is quite evident that the fine art market is still alive and healthy. In India, Tyeb Mehta paintings that sold for a mere $100,000 four years ago are now selling for more than $1.5MM. I don’t know where else you can find these types of returns. Read the full story here from a guest that was present in Wynn’s office when his elbow went crashing through the Picasso.
Add comment October 18th, 2006
I’ve said many times on previous blog posts that the reasons I discuss the U.S. markets so often is that the U.S. markets drive all other markets around the world. It is quite common to see a record day on the S&P 500 followed by stellar days on the LSE and Nikkei indexes the following day and vice versa. Just look at recent parallel movements. The U.S. Dow hits all –time highs (well not really but if you don’t adjust for inflation, it has), then the Sensex in India last Friday closed 65 points higher than its earlier record high of 12,671.11. This past Monday, in early morning trading, the Nikkei and Topix indexes opened higher in Japan along with the Kospi in South Korea and the S&P/ASX 200 in Sydney.
U.S. Federal Reserve Chairman Ben Bernanke recently stated that the enormous U.S. trade deficit that the U.S. has incurred over the years is nothing to worry about because it merely reflects global savings patterns. He states that emerging economies have a huge glut of savings and thus the U.S. necessarily must have a great debt to balance out the rest of the world’s savings. The logic is, of course, that as the emerging market’s enormous savings glut unwinds, then the U.S. deficit will be reduced significantly. This explanation has a number of gaping holes in it wide enough to drive a Mack truck through.
As the weekend is approaching, I thought I would keep today’s entry very light. Saw a trailer today for what looks like an amazing film about a man, Chris Gardner, who traveled a textured and emotionally challenging journey from the depths of homelessness in the early 1980’s and sleeping in public subway station bathrooms in San Francisco with his son, to eventually founding his own institutional brokerage firm, Gardner, Rich & Co., and becoming a multi-millionaire. Will Smith, you’ve come a long way from the days of the Fresh Prince. 
As an afterthought on my blog entitled “State of Denial”, I thought about the accusation author Bob Woodward made that the Bush Administration, prior to the 2004 Presidential elections, asked then Saudi Ambassador to the U.S., Prince Bandar bin Sultan, to keep oil prices down 
I’ve written here a couple of times that Russia, now with the 4th largest reserves of any central bank in the world, is not to be ignored. However, I’ve also stated that until they clean up their political corruption issues, I’m staying away. First, Andrei Kozlov, one of their central bankers that was leading a fight against money laundering was murdered in an apparent contract killing, then journalist Anna Politkovksaya, one of the most outspoken critics of Russian President Putin, was murdered. And just this week, in another apparent contract killing, 
To keep a pulse on investment topics that people would like to read, I glance at the analytics for my website quit often. I noticed that a reader in Namibia was reading my blog frequently and then disappeared. I noticed this week that new readers from Uruguay, Argentina, Turkey and Australia have joined. However, without feedback from you, the reader, I don’t know what information someone from the UAE is seeking versus someone in Brazil. So to that end, I would welcome comments and suggestions on any blog post via the comment boxes (and if you speak Spanish, you can post in Spanish as well as I can understand Spanish fairly well).
On September 13th, I wrote this entry “Gold has increased volatility these days because of all the morons that run hedge funds that pump and dump commodities such as gold. Recently I’ve already read of numerous hedge funds that were forced to close due to millions of dollars they have lost for investors based on their speculative bets. Prior to the Gold ETF coming into existence just a couple of years ago in the U.S., it was difficult for hedge funds to speculate on gold in huge positions. Unfortunately, now it is not. And unfortunately, gold, already a traditionally volatile asset, has become more volatile because of this.”
While I still like certain individual Chinese stocks, I don’t particularly like the banking industry in China. This week, there has been enormous hype surrounding the largest IPO in history planned on October 27th by the Industrial and Commercial Bank of China, which plans to raise USD $22 billion. To gain some perspective on the size of this IPO, Mastercard’s May 25th IPO, which raised USD $2.58 billion, was the largest IPO in the U.S. stock markets in two years. The mania surrounding Chinese IPO’s is evident. Though both the shares of China Construction Bank and China Commercial Bank skyrocketed by 45% and 25% respectively after their IPOs within the past year, this isn’t enough to attract me into these waters. Why?
In a previous blog, we mentioned that an abundance of perspective is a critical key to building significant amounts of wealth. Why? Because perspective is the only tool that allows you to sort out reality from the masses of junk contained in information that is circulated by the mass media today. In continuation of that theme, I have decided to provide a Down the Rabbit Hole reader’s list that contains many of the books that have widened my historical perspective and that were critical in the development of strategies that have exponentially increased my investment success. They are not traditional investment books with titles like “The Warren Buffet Way” and “How to Build a Seven Figure Portfolio”, so they may surprise you. 
