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Sam Zell’s parents’ story

August 17, 2017

My interests are varied, but sometimes my focus is too narrow. It happened with this book and I was embarrassed about it. Here is what happened.

When I told Rick I finished Sam Zell’s book he asked me if I ever heard of Sugihara and I did not know what he meant. I had to reread the first chapter to engrave the name in my mind and to fully appreciate who Sugihara was and the great thing he did.

Zell’s parents escaped from Poland at the onset of the Nazi invasion and went on a circuitous route until they arrived in the United States. In order to get here they needed to get out of Europe. They were able to get to Vilnius, Lithuania and were then able to get forged entrance visas for Curacao but had to travel through Russia and Japan, a journey of 8,000 miles. To do this they needed a travel visa for Japan.

A Jewish refugee delegation went to the Vilnius Japanese vice consul, Chiune Sugihara, for those visas. Sugihara’s instructions when he wired Tokyo was to deny permission. Risking his career and causing danger to his family he took it upon himself to issue enough visas so that 6,000 Jews were saved. This wasn’t widely known after the war, but in 1985 Sugihara received official recognition in Israel as a Righteous Gentile by the Yad Vashem, the Holocaust Martyrs’ and Heroes’ Remembrance Authority. Sugihara’s courageous actions became his legacy – he made a difference!

Sam was born four months after his parents arrived in the United States. Zell’s parent’s story leaving Europe and the certainty of being murdered there and coming to America with very little and not able to speak the language and then forging a successful life is remarkable. That experience has been replicated many times over, though not as much as it could have because of America’s restrictive immigration policies during the period of the Nazi murders of European Jews. To learn a little about one family’s situation, read the first chapter of this book.

Do you want a recognize an entrepreneur in your network? Withum is currently accepting nominations for our Entrepreneurial Strength Award! Using social media, simply nominate an entrepreneur and use #StrengthStory and tag @withumcpa! A member of our team will follow up with you for more details. Nominations are due August 22! For additional information, please visit

Am I Being Too Subtle? By Sam Zell

August 15, 2017

Sam Zell’s autobiography, “Am I Being Too Subtle?” is a must read for anyone that is involved in real estate investing, business acquisitions or who wants to become an entrepreneur.

The book was recommended by my son Rick who is a stock trader and when I finished it I asked him why he read it. He told me that Sam is a very wealthy deal maker with many opinions he agrees with, so he thought he would enjoy the book, which he did. I read it because Rick loaned it to me. I could not put it down and highly recommend it.

I have my own interests, just as Rick has his and everyone else, theirs. I particularly liked the entrepreneurial aspects Zell wrote about and want to share some of his principles.

  • Sam’s fundamentals of business are understanding supply and demand, that liquidity equals value, and good corporate governance and reliable partners are essential
  • Be grounded and pragmatic, recognize a sense of responsibility, and have a shem tov
  • Shem tov is a Yiddish expression that means to have a good name – be a man of your word, do what’s right, do not lie – be a mensch
  • Where there are partners, transparency and the alignment of interests are absolutes
  • When there is scarcity, price is no object
  • Basic tenets of business risk: A big downside and small upside should be avoided. Look for a big upside and small downside
  • Zell refers to William Zeckendorf’s autobiography where Zeckendorf viewed assets as a sum of parts where the value of the whole could be increased using various parts that would be more valuable to different buyers
  • Entrepreneurs need vision, direction, strategy, confidence, optimism, conviction, courage, initiative and creativity and then they need to do something. Without execution, nothing happens

There are many more gems and to get the full flavor of them and everything else he wrote about and Sam’s sagacity, please read the book.

Books are rated highly by me if they are an easy read, are interesting, lets me empathize with the author who also serves as a role model, inspires me, teaches me, and provides and provokes ideas. This book did all these. I also like knowing how successful people got started – he is a self-made man worth $5 billion according to Forbes. Read it! You’ll like it!

Do you want a recognize an entrepreneur in your network? Withum is currently accepting nominations for our Entrepreneurial Strength Award! Using social media, simply nominate an entrepreneur and use #StrengthStory and tag @withumcpa! A member of our team will follow up with you for more details. Nominations are due August 22! For additional information, please visit

An investment story

August 10, 2017

Once upon a time there were a bunch of people that worked hard and spent less than they made. They used the money they did not spend to invest so they could earn interest, dividends and possibly capital gains. They called this unspent money savings.

Some of the people did not want to make investments that they thought were risky so they invested in risk free and safe investments. Other people wanted to make more than they could on the safe investments and they invested in riskier investments. The people with the safe investments saw their money grow steady – slow but steady; and they felt secure. The people with the riskier investments also saw their money grow steady, however it was at a faster rate. They never felt entirely comfortable but were OK with it since it grew at a much greater rate than if they invested in a way that they would have felt completely secure.

One day a terrible thing happened and the people with the risky investments saw their assets steeply drop in value – as much as 50%. They felt miserable, uncomfortable, insecure, and angry. The people with the safe investments did not see anything drop at all, and they felt very happy, comfortable and secure.

Well, a funny thing happened afterwards. It seems the people with the safe choices started to get paid much less for their savings – in some cases there was a drop of 60% to 70% in the interest paid to them. Their principal remained the same – untouched – safe and secure – but the income dropped so much that they started to feel miserable. On the other hand, while the people with the risky investments saw their assets drop greatly, the dividend checks they were getting hardly dropped at all. Their cash flow remained the same – they still felt insecure, uncomfortable but only had minimal changes in their cash flow and they did not have to curtail too much of their spending.

And then one day their assets went back up to what it was before the drop, so they started to feel much better and began to forget that they once felt so miserable, and the dividends kept coming with continued increases. So, life went on as it was before the terrible drop. They still felt somewhat insecure, but weren’t feeling miserable, uncomfortable or angry.

The people with the safe savings were receiving so much less income that they started to feel miserable – and that made them feel less secure and uncomfortable and angry. And they started to figure out how they could cut back on their spending.

The people with the safe investments had insured bank certificates of deposits. The people with the risky investments had their money in a diversified stock portfolio. The drop described above occurred from the beginning of 2008 through the end March 2009.

The moral is that risk is subjective, needs definition, understanding and a focus on the goal of what is more important – secure asset values or a sustainable and reasonable cash flow.

A Wise, Rich and Depraved King

August 8, 2017

Once upon a time there was a very wise and rich king. He was known throughout the entire world and his opinions and judgments were constantly sought. Whenever someone wanted to speak with him they brought him massive gifts of precious metals, jewels and wives. He is said to have had over 1000 wives and concubines [but only three children – a son and two daughters].

He was very smart, but also very greedy, strayed from his father’s belief in God and became a depraved person. While he inherited a great kingdom, he made no plans for his succession and his kingdom disappeared with his people dividing and warring with each other, and then being conquered, exiled and scattered. This occurred between 931 BCE and 586 BCE.

Some 2100 years later in the 15th Century CE his gold and other wealth was still being searched for. One such man was Christopher Columbus who got the backing of the Spanish King and Queen. He searched for but did not find the King’s hidden wealth when he landed on what is now America. 76 years after that another Spanish explorer, Alvaro de Mendaňa de Neira, led an expedition looking for the King’s gold in the vast South Western Pacific Ocean and came upon a group of Islands. While they were not successful, they nevertheless named the islands for this wise, rich and depraved king and called them the Solomon Islands.

Even today there are still those who think they can find the wealth of David’s son, King Solomon.

You Should Always Know Where are You Going, and Where You’ve Been

August 3, 2017

Once upon a time a man organized a three-ship journey toward the west. He thought he arrived where he was going, but the map he had was wrong. Somehow, a few thousand miles of the Earth’s circumference was missing from the map.

He also wasn’t as successful as expected since the anticipated gold and other riches did not materialize. When he returned home, to divert attention from his lack of success, he started boasting about what he discovered using Biblical analogies and something about finding the Garden of Eden. He also thought he found a new route to the other side of the world. He went on a couple of more trips embellishing the same stories each time he returned. Meanwhile other people started following his route.

About 10 years after that first trip, one of the people that travelled his route wrote descriptions about the land he saw where the men and women went about their business completely naked and the women appearing attractive and lustful. He also claimed to have discovered a “New World.” His descriptions were printed and interest in them spread quite rapidly. Around that same time a map maker in Italy named Corvino published a map showing the previously unknown and unnamed new land.

Five years later a German mapmaker was putting together a world map and was combining information from previously printed maps and included the land mass shown in Corvino’s map. Wanting to name it, mapmaker Martin Waldseemüller and his partner Matthias Ringmann chose a version of the now popular writer’s name. Thus, because of the rapid spread of the descriptions with the sexual content, the previously unknown land mass was called America after Amerigo Vespucci.

It seems that Vespucci’s sex filled letters were more interesting to the prurient readers than Columbus’ attempt to boast about what he found using Biblical analogies. It also proved that truth can be stranger than fiction…or boasting. And possibly that believable sex sells better than unbelievable Bible stories.

How to Invest if You Do Not Have $1 Billion

August 1, 2017

Last Tuesday I posted a blog about how someone with $1 billion should invest it. Today I want to relate it to those that do not have $1 billion. To put it in perspective, this can apply to anyone that has money they want to invest to be used to secure their financial future, be it $200,000, $2,000,000 or $20,000,000.

For starters investable funds that are needed to secure a financial future refer to providing necessary cash flow, and reasonable asset preservation and growth. Here is a template of what to do.

Introductory comments

  • The suggestion to put a substantial amount into a charitable foundation was a one-time only maneuver that was to take place in the year the $1 billion was received from the sale of a business. That size donation would be tax deductible in that year and that year only, so is not recommended for others or for that person in a later year unless they have similar income then.
    • There was a presumption that the cash flow from the entire $1 billion would not be needed for living costs, so the diversion into the charitable fund would not cause any type of hardship or place the donor in a future position where they would regret doing it because of this.
    • There were three plans suggested. I would not use any of them for those without such a large amount of money, but would alter in the suggested plan that follows along with my reasons.
    • The plan I would use as a start would be Plan 2.
    • Plan 1 is too conservative and does not allow for asset and cash flow growth, inflationary pressures and a “rainy day” fund which I think is essential.

Suggested plan

  • The amount available for investment should be reduced by what I call a rainy day fund. This is an amount of cash would cover expenses for a minimum of six months to a maximum of 18 months (depending on your circumstances) should there be sudden or unexpected changes in your personal situation cutting off expected cash flow. An example of this could be either from the loss of the job or the result of a medical or physical condition that curtails or stops cash flow for a period of time. The rainy day fund would provide the money needed to be used for living expenses until there is a normalization or change in your circumstances that you have or needed to adapt to.
    • These funds can be kept in a money market fund for periods up to six months and then in laddered CDs at six month intervals thereafter so interest will be earned until the CDs mature, with one maturing every six months. The matured CD would either provide the needed cash or would be reinvested for the tail end period of the ladder.
    • Next would be to determine your goals and a plan to achieve them. This could be for someone at or older than retirement age to never run out of money or cash flow; for someone about 15 years younger than retirement age to be able to retire when planned for; for someone with a young family to be able to get the kids through college without accumulating large debt, or to be able to buy a house in a few years; or to quit your job and start a business. Each person would have different goals. The plan would then be the method of attaining the goals.
    • Any plan would be integrated with other sources of cash flow such as Social Security and/or pension distributions.
    • A word of caution or a warning. I do not believe that any investment plan shorter than seven years should put the money at risk, i.e. in the stock market, bond funds or long term bonds. If you needs are less than seven years, nothing I am suggesting beyond this point would pertain to you, so stop reading. Therefore I am addressing people with longer term goals.
    • Determine an asset allocation plan for the percentage of your investible funds that would go into fixed income and the stock market. I’ve written many blogs on this and each separate topic referred to, so will not expand upon this here. To get a reprint see the end for information.
    • In plan 2, I had seven bulleted suggestions. I would suggest now only the second and third bullets for your plan. The first which was the U.S. Treasuries was the rainy day fund I mentioned earlier and for which I suggested insured bank CDs. The second and third bullets are split 1) 33% in longer term bonds that are intended to be held until maturity. Whether they are tax-free or taxable bonds would depend on your tax situation and whether the funds being invested are in your own name or a tax deferred retirement account; and 2) for the 67% balance I suggest the largest three or four index funds to provide some stock market diversification along with regular dividends. Obviously your risk tolerance and comfort level will be important here, but these are my generic suggestions and should be used as a starting point. The latter four bullets should not be considered as they are much riskier than the index fund choices I suggested and you should not take on a greater risk, in my opinion, than investing in funds that track the major stock indexes.
    • With $1 billion, risks are certainly not needed, but there is greater ability to absorb losses in attempts to diversify holdings. Not so, with less money. Regardless of who you are, and the amount of your savings, whatever you have to invest is very important to you and should not be disparaged or given short-shrift by your advisor. To highlight the importance, let me suggest that how it is managed could be the reason that you achieve your goals or not. This is very important stuff!

The above is a suggested plan for most people to consider. I have written about each separate piece of this plan and will send you a reprint of blogs on these topics if you email me your request at Good luck! Be smart, and work at attaining your financial security.

Conversation starters

July 27, 2017

My previous blog presented some ways $1 billion could be invested. The plans were used so that a conversation could be started with the client. The first plan was about as conservative as you can get. The second was not as strongly on the other side of the spectrum as it could be, but adequate enough to be a viable plan as part of the discussion. Plan 3 is a good way to have the client indicate how they might want to spend their future time since earning a living is no longer one of his necessities.

I have found the technique of presenting choices a good way to begin a conversation and elicit comments, thoughts and insights from clients. Starting with a blank page is not as effective and a lot of time is spent exploring alternatives that could have been illustrated quite easily with some advanced thought. It takes work and focus to develop meaningful and believable alternatives, but the time is recaptured by shorter and much more productive initial meetings.

I learned this technique early on from a client that was a new product guru who always seemed to come up with additional uses for existing and stable products, many of which were household names. I know he was great at it because I saw his revenue stream and the avid and consistent re-engagement by his existing clients, and then the success of his suggestions by the promotional activities and advertising of the uses he introduced to them.

One day I asked my client exactly how his technique worked. He took the time to explain it and showed me some of his materials. What he did was make up professionally looking ads for his clients’ and their competitors’ products for crazy, but possibly plausible, uses. Sometimes he had 40 or 50 such ads. He then assembled a consumer panel [which also took much skill and perception] and showed them the “ads” and started asking what they thought, liked and didn’t like. He told me that “it is much easier to get ideas from bad choices than from no choices.” He then explained how some of the really bad ideas led to some great uses and new products.

I adopted this technique and it has worked great for me. Try it, I think you’ll see its effectiveness. Also, reread how I used it in the previous blog.