What a Difference a Fortnight Makes

Two weeks ago, I had dinner with one of my best friend’s father “Eli”. He is about 76 years old and loves to talk about his investments. As we munched on our Chinese food, he pulled out a slip of paper – on it, his total dollars made or lost in the portfolio each year since 1999. He wanted to talk to me because he felt like although he had done pretty well, he was concerned that he could no longer handle the account on his own.

To some extent, investing was Eli’s hobby. His wife has been sick for about ten years and as she became more and more incapacitated, Eli expanded his knowledge base and became a student of the markets. Although he had gone through most of his life working with brokers who sold him “hot” stocks, he came to me at the end of 2000 to ask what he should do. “I have all of these gains and the broker doesn’t think I should sell. The broker begged me to ‘hang in there’ because he believes that the market will come back.”

At that moment, I encouraged Eli to manage his own accounts. For years, he seemed to have better ideas than his broker and I feared that unless he took over the account himself, things could go south. I talked to him about exchange-traded and open-ended mutual funds and suggested that he develop a plan to create a more diversified portfolio, sell some of his stuff and move into a structure that he could effectively manage with an easy-to-use on-line brokerage firm.

To say that I created a monster is an understatement. Eli became obsessed with portfolio management, reading everything he could and keeping tabs on the various new funds that were introduced. In honor of his 70th birthday, he called me to talk about his new favorite asset class-bonds and even dabbled in commodities with a small percentage of the portfolio. I figured that things were going along well because I did not hear from him too much. That’s why I was surprised when we went out to dinner two weeks ago and he lamented “I’m too old for this…it just hurts too much to go through the gyrations.” We discussed solutions and by the end of the meal, he seemed OK.

Yesterday, I attended the funeral of Eli’s wife, Liz. When we were back at his house talking about her, he said to me, “Can you believe how much my life has changed since I saw you two weeks ago? Then it seemed like my most important problem was my stupid account and today, I could care less about it.” I reminded him that he did not need to think about that right now. He smiled and said, “You know, Liz used to tease me that my portfolio was like the only girlfriend she would share me with!” I noted that they both appreciated whatever got him through hard times. I got home and thought indeed, what a difference 14 days can make.