Super Return

Steve Schwarzman made $690m last year

I am in Berlin last week for the Super Return conference, the largest private equity conference in the world which brings together the rich and the very rich. The mood this year is vibrant and upbeat despite Russia and Greece and all the other various crisis that plague our news. How can one be downbeat when interest rates at nought percent and money is free? The deals are flowing. 

Another sign that the industry returning to worrisome levels is fund raising: in 2014, firms raised something like $550bn compared to $640bn in 2007, the peak. Not too far off. Unsurprisingly, acquisitions multiples, relative to EBITDA or free cashflow, now exceed 11X. Once an 8X deal thought high. 

Here is something to ponder: The richest people on Earth got richer in 2014, adding $92 billion to their collective fortune. The net worth of the world’s top 400 billionaires on Monday stood at $4.1 trillion, according to the Bloomberg Billionaires Index, a daily ranking.

As for Steve Schwarzman, he founded Blackstone, one of the most powerful investment firms in the world.  His net worth is $11bn (photo from the web).

Ultra Races, The Lions And Madeleine's Reaction

Eitan pulls it down

I've been doing a spot of running and slowly up to 25 miles or so a week. This morning I connect with Alex for a seven mile loop of Richmond Park. Alex ran the Marathon des Sables in 2013 finishing 9th overall (des Sables is a six-day, 156 mile ultramarathon in the Sahara desert. It is considered the toughest footrace on Earth). We are joined by four other ultra- runners including Zoe who was third in des Sables last year. To join us, Zoe runs 13.5 miles and, I assume, she will run 13.5 miles afterwards to get home. I suppose if you love running, four hours of it is pure pleasure.

The next ultra race these guys will do is the Peak District 100. It ain't level.

The Sheen Lions host The Barnes Eagles on a muddy pitch on a freezing morning and lose 2-1 against a team in the bottom of the league table.  On the bright side, I am writing this from inside.

Me: "Your mother has something to tell you."
Madeleine: "Mom?"
Sonnet: "You go the part in the play!"
Madeleine: "Oh my God! Are you kidding?!"
Sonnet: "No honey."
Madeleine: "I am so happy."
Me: "Congratulations kid. You earned it."
Madeleine: "I can't believe it."

I Am

13 candles

We celebrate belatedly Madeleine's 13th birthday; Eitan bakes a vanilla cake and we watch 'Moonstruck'.  

Both kids meant to run the English National Cross Country Championships, which they have qualified for and representing the Hercules Wimbledon, but neither make it to the start-line: Eitan recovering from his chest cold and Madeleine for lack of racing shoes, which have gone missing.

Instead, Madeleine auditions for the play "I Am" at the Battersea Arts Center. 16 selected out of 40 and our gal makes the grade despite being the youngest by four years. She - and we - could not be more proud. There will be four performances at the end of March.

On Spider Man

Madeleine: "How much do you think the first Spider Man is worth?"
Me: "'The Amazing Spider Man' or 'Peter Parker the Spectacular Spider Man?'" [Dad's note: my Spider Man collection includes 'Peter Parker the Spectacular Spider Man' in vintage condition from 1-50. I also own 'The Amazing Spider Man' from around #100]
Madeleine: "'Peter Parker.'"
Me: "I don't know. Maybe 75 dollars. .."
Madeleine: "What!? Is that all ?"
Me: "That's a lot considering I paid 25 cents for it."
Madeleine: "I thought it would be worth more."
Me: "How many times is it worth now to when I first bought it?"
Madeleine: "Oh, no, not that !"
Me: "A figure, please."
Madeleine: "Uh, 300?"
Me: "Wow, you're right. That was one hell of a guess. What are the odds on that?"
Madeleine: "Is it right?"
Me: "How did you get 300?"
Madeleine: "It was easy. 25 goes into 75 three times and, um,  I added two zeros to go from 25 cents to dollars."
Me:
Eitan: "What's so funny Dad?"
Madeleine: "It's still right isn't it ?"

We watch a TV add for L'Oreal's "Punky" mascara. Me: "Do you wear it? You're the target audience."
Madeleine: "No. And I'm not the target audience because I don't wear mascara."
Me: "All these ads do is sell junk."
Madeleine: "Wouldn't it be cool if you didn't have to pay for it? What if you could trade for other stuff?"
Me: "That's a great idea. You could call it junk-for-junk dot com."
Madeleine: "I would use it."
Me: "So would I."

Half Term Break

Madeleine and Willoughby

The kids on half term break and Eitan watches four hours of television which really means six. Or 7. In fairness the poor kid is recovering from a cold and he (and Madeleine) have been working hard in school, sports and extracurriculars.  Each have a running schedule to keep them sharp and, yes, there is some homework. Eitan is re reading 'Lonesome Dove' but it has been slow going: after several weeks he's on page 76 of 945. Still, it is not Harry Potter (Thanks God).

Willoughby over for the afternoon. When not hanging out, he designs graphics for different merchandise sold on redbubble.com (he and Madeleine lie on the floor reviewing traffic statistics and listening to music).

We pile into the car to buy another turtle (pre named Alfonzo Smith). Madeleine: "At Sheen Mount we used to get house points for good behaviour."
Willoughby: "At my school, we got to be a Mexican for the day."
Me: "Oh?"
Willoughby: "We were studying the Mexicans or something. We also had a Mexican Of The Year but they just decided to give it to everybody."
Me:
Willoughby: "By being good, you got Mexican points. If you got enough points you got a prize."
Me: "Like a taco?"
Willoughby: "Like your picture with a golden Mexican moustache."
Me: "So did you learn anything about the Mexicans?"
Willoughby: "Um, no. But we got to dress up like them."
Me:
Willoughby: "I guess that's kind of racist. Stereotyping them like that."
Me: "So you did learn something."

St Louis Re Union

David and Moe

David is Moe's sister Joy's oldest child, ie, my cousin.  Both are from St Louis. I saw David last summer in London.

David's special interests include esophageal diseases, colon cancer screening and outcomes in endoscopy (his website bio says). He has has been a member of the OHSU faculty since 1982, and Chief of the GI Division since 1998.

David's research into colon cancer (VA Cooperative Study on Colon Cancer Screening, 1993 to 2002) changed the way colon cancer screened in the US. His work has saved tens of thousands of lives. Famously he gave Katie Couric a colonoscopy live, on air, during the Today Show (Couric's husband died from colon cancer).

David is also a walker and whenever together we try to organise a hike of some sort. Some years ago we marched across London covering the West End to East London. My earliest memories of David from visits to St Louis when I was maybe 4 or five.

Abstract from David's research:

Background Aims: The relative efficacy and effectiveness of different colon screening programs has not been assessed. The purpose of this analysis was to provide a model for comparing several colon screening programs and to determine the key variables that impact program effectiveness. 

Methods:  Five screening programs were compared: annual fecal occult blood test (FOBT) alone, flexible sigmoidoscopy, flexible sigmoidoscopy and FOBT combined, one-time colonoscopy, and air-contrast barium enema. Key variables were adjusted for sensitivity analyses. Cost-effectiveness was defined as the cost per cancer death prevented. 

Results : FOBT alone prevents fewer cancer deaths than the other programs. The addition of flexible sigmoidoscopy to the FOBT increases the rate of cancer prevention. One-time colonoscopy has the greatest impact on colorectal cancer mortality, largely because of assumptions that cancer would be prevented in most patients who undergo polypectomy. FOBT alone is the most cost-effective of the programs, but the cost is sensitive to several key variables.

Conclusions: The model shows key variables that impact the cost-effectiveness of colon screening programs. Compliance is an important determinant of effectiveness of all of the screening programs. Future study should be focused on methods of patient education that improve patient compliance with screening.

Portland

 Shoes

Photos from Sonnet and Madeleine's trip to Portland are coming in - these are from my cousin David, where our gals stay during their visit.  They are visited by Moe, Sloan and Mary and other local and far away friends who lend their love and support of Sonnet.

From Oregon, Madeleine and Moe head for the Bay Area to join Gracie, Maggie and the cat Sweetie Pie in Berkeley while Sonnet in Los Angeles meeting with museum directors.

Sonnet, I am told by someone not Sonnet, forgets her opening-evening gown and has an afternoon find a loaner from a friend.

Her exhibition goes off with a bang! as the opening dinner draws Portland's Good and The Great. Over 400  guests- "as big as London", she notes.

The following day Sonnet presents to 500 people on the  exhibition's opening day, giving "the back story on Italian fashion" Madeleine now says. "It went amazing. And people were lining up to get her autograph."

Grandfather, granddaughter 

Oasis Or Mirage

What would Bond say?

I return to the land of the weird and the strange. A gold Porsche Carrera greets me at the Abu Dhabi airport along with a third-world scrum.  It is a most inglorious welcome to the wealthiest city in the world (2007), according to Fortune Magazine.

Once outside, the temps are a pleasant 80 degrees in the late evening. In several months, during the daytime, the thermometer will climb above 130 degrees. I think of this as I jog, the only pedestrian for miles. It takes me two hours to stop sweating afterwards and the dude at the gym looks at me as though I have taken a shower in my suit. In fairness, it looks like I have taken a shower in my suit.

Abu Dhabi is under construction, fueling its economy, as buildings compete to reach the highest mark (the Khalif's benevolent terrifying face looks down upon us from twenty painted stories on many building sides). None can compete with Dubai's Burj Khalifa yet my hotel room, on the 37th floor, looks up a further 33 stories.

Next to the four magnificent Etihad towers, where I am staying, is the ugliest building I have ever seen : gold plated, ten story exterior atrium on the middle floors, a Battlestar Galactica design. 60 floors of pure shiet. Towers, it seems, are in such high demand that anyone can build one. I can't imagine that Abu Dhabi's real estate is anywhere near half filled.

Tycho

Self portrait XXXXI

Friday. And here we go.

The boy and I are down with the bug. Eitan misses his second day of school and comatose under his duvet where he has been all day and I find him this evening. Whimpering. Me, I power through meetings. Now we watch repeats of Modern Family and Big Bang Theory.

The good news: no plans for the weekend and the kids officially on half term break (do they go to school more than vacation?) and Sonnet returns Sunday afternoon. God bless.

Me: "Eitan how's your state of mind?"
Eitan: "Huh?"
Me: "Your state of mind. For the blog."
Eitan: "Spacey."

Mindfulness

Noontime, Piccadilly Circus

It' is cold and grey in London. Yep, February. And March. And April . . . The British cheer themselves up with red buses, red poste boxes and red phone booths. I like this about Britain.

I spend the afternoon at Oxford with Willem who, as we know, runs The Oxford Mindfulness Center "that works with partners around the world to prevent depression and enhance human potential through the therapeutic use of mindfulness."  Think meditation meets mind control.

Mindfulness is getting a lot of attention these days too.  The UK, for instance, wrote 47m prescriptions for anti-depressant drugs in 2011 - as popular as M&Ms.  OMC research shows that mindfulness reduces the recurrence rate of of depression by 50% over 12 months in patients with three or more previous episodes of depressions. In other words, mindfulness is as effective as the drugs without the side effects. 

It is all very Northern Californian ish.

On The UK Deficit

The IMF thinks that the UK will have the largest budget deficit, excluding the effects of the economic cycle, in Europe in 2015 putting Britain's finances in worse shape, in this regard, than Portugal, Italy, Ireland, Greece or Spain. Among the major developed nations only Japan is running a bigger deficit than the UK.

So far, the public sector deficit has not deterred investors from buying UK govt bonds, which have soared to record levels, buoyed by low inflation and a perception that the UK is a safe haven underpinned by an aggressive deficit reduction programme. Since the financial crisis, the UK has effected the seventh-largest fiscal consolidation among 31 advanced economies tracked by the IMF. 

The success of the reduction programme has, however, been blunted by a lopsided economic recovery with falling wages and lower-than expected tax revenues.

The remaining consolidation will therefore likely come in the next parliament via spending cuts. The IFS estimates that public spending, as a share of national income, may fall to its lowest level since 1948 resulting in 900,000 public-sector job losses reducing the government workforce to its lowest point since 1971 (Deloittes).

Enter the May elections: to reach its targets, Conservatives would cut spending by 6.7% from 2015 to 2019; Labour could hit its less demanding goals by cutting 1.4%. According to the Financial Times, this implies that, by 2019-20, Labour will spend £27 billion a year more than the Conservatives.

Get out the vote.

Taking Care Of Business

Richmond Gate, Richmond Park

Eitan and I bachelors since Thursday as Sonnet and Madeleine in Portland, Oregon, for the opening of The Italians.  We keep it together, going to a pub for dinner last night, staying up late watching TV. Sleeping in. Usual stuff.

Eitan runs the Surrey League Division 1 cross country race, placing 9th out of 29 in a competitive race.  He is glad it's over.

Adventure, Stage Two

Tom's Cafe

I say a momentary good-bye to our dear friends Cindy and Scott, who I first met via the Brown community (Scott on the Board of Trustees and friends with Ira Magaziner who created Brown's "new curriculum).  They arrived in London same time as us, 1997, as Scott opened the law offices of Brown Rudnick.  

Scott and I share a liberal agenda and stories of Providence. He is on the museum acquisition committee of the Rhode Island School of Design where my sister spent a semester in college - I sent Scott a paper Katie wrote on the museum in .. 1987. He turned sixty when I turned 40 and we had a 100 celebration.  Cindy and I share gossips about Brown interviews and London celebrities and today we chuckle over the evening we sat next to Sean Connery and his wife at a Knightsbridge restaurant.

Scott and Cindy returning to Boston for their new careers and next adventures. A small project is the ancient school in Newport, RI, that Scott is turning into their next home. With basketball courts. It will engage him for a while.

Eitan thrilled to be in Tom's Kitchen in Chelsea famous, dear reader, in "Made In Chelsea."

Madeleine Teenager

Madeleine turns 13.

We could not be more proud of this confident, intelligent young woman who has grown up before our very eyes. From the minute she was born, an intense one hour delivery, I knew we had something special: Madeleine was all in from her first loud cry "I'm here, take notice!"

Madeleine's fearlessness evident from the early days when we worried about her trust in strangers, who she approached with a scratchy "hola" or "hello, mister." Her tree-climbing often found me exasperated at the school entrance trying to coach her down from 20 feet. And then there were the battles to get her to wear a dress to a wedding or some party - no way. Not even a lifetime of no-television could budge her.

Madeleine for a long while was a tom-boy happily digging holes in the backyard with her (mainly) boy friends, looking for worms or burying treasures. She was fascinated by bugs which she examined under the microscope. Her love for stuffed animals ("buddies) transferred to fish, hamsters, turtles and, of course, Rusty who she battled for for two years to bring home. How could I say no?

Since secondary school, Madeleine has blossomed into a committed student with top marks in all subjects and rave reviews from her teachers who appreciate her enthusiasm and fast-hand for the question or answer. We are delighted with her friends who are often the class eccentrics ("the cool of the uncool") interested in drama and theatre and sport. She has thrown herself into running and has demonstrated talent on the track and cross-country piste. She attends drama class Saturday mornings. She dreams of California and, like me, is a dreamer.

Some years ago I recall peaking out a window to observe a ring of teenagers. Madeleine, age 8: "I don't wanna be a teenager Dad!" And now she is. And it is glorious.

A Beautiful River

The tide is out

It is a cold morning and I cross the Waterloo Bridge from Waterloo station heading to Sommerset House where it all began: This is where the Courtauld Art Institute located. 

Beneath me, the River Thames flows East as the tide goes out, towards the North Sea. From now, low tide, the water will rise as much as 23 feet during high tide. 

London is uniquely intertwined with the river, similar to San Francisco and the bay: It is unimaginable to consider one without the other. Human habitation dates back to neolithic times; Julius Caesar was here in 54 BC. And of course Shakespeare.

The Thames tidal flow makes it both interesting and rejuvenating - it charges the city (for some, south of the river a no-go area; East London the new hot spot while the Isle of Dogs equals Canary Wharf) and sweeps away, at least spiritually, London's cares (no longer sewage, fortunately). 

Final 8

Hampton "A" Squad. Photo from Mark Boyle

In an exciting day of football action, Eitan's Hampton Under-14s "A" squad take on Bishop Stortford High from Hertfordshire which is somewhere north of London (I'm in Amsterdam for meetings never to be recalled on my deathbed). This the Final Eight of the English Schools FA Cup (the "ESFA Cup") for all independent and states schools in the country or 610 teams.

The boys have won ten games to get here and are fired up: they win 5-2 in a game, Eitan says, much more competitive then the score. Shaun-Chris the game's star (black kid in middle) who scores four goals. Eitan plays "holding mid-field" and disrupts the action with searing tackles.

Eitan notes that at this level Hampton playing schools associated with the professional football academies - Bishop a feeder for Tottenham Hot Spurs.

Next step: the Final Four.

Eitan flops on the couch, homework done, for some well deserved TV.

It's Snow

False dawn

Madeleine gets her wish - snow! Somehow it is nicer when the sun is up. Of course this means the trains are late and traffic piles up. Planes delayed. By 10AM it's slush.

The kids have discovered eBay and Eitan makes 40 bob (split 50:50 with Dad) selling one of Dad's shirts, never worn by Dad due to some fancy stitching that does not go with Dad's style. Now the kids go through their rooms, attic and garage to convert lost treasures into cold hard cash. They cooperate, agreeing to split any proceeds (after I take my cut). We discuss whether it is right to sell Madeleine's "buddies" instead of donating the stuffed animals to charity. She has turned ruthless. Capitalism in its most naked form.

More Debt

No. 31

According to a recent report from the Centre for Economic Policy Research (CEPR), the ratio of global debt, excluding financial institutions, now stands about 210% of global GDP, up from 175% on the eve of the financial crisis. The CEPR report's title, "Deleveraging? What Deleveraging?" captures its key finding. It could have also been, "What, me worry?"  How daja vu.

Here is what President Hoover's Treasury Secretary, Andrew Mellon, advocated: 

"Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate... it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people."

Party Talk

Auntie Katie's Xmas Slippers 

Sonnet and I pick up Madeleine from a Saturday night party. 

Me: "What did you guys talk about?"
Madeleine: "Nothing."
Me: "Nothing? So what did you do all night ?"
Madeleine: "I don't know. Stood around and pretended we knew each other."
Sonnet: "You must have talked about something."
Me: "Seriously. How about school? Or the weather?"
Madeleine: "Kids don't do small talk, Dad."

Math Is Fun!

Fibonacci is everywhere

Prof Golé warms up the Smith crowd with an overview of phyllotaxis which is the arrangement of leaves on a plant stem - Phyllotactic spirals form a distinctive class of patterns in nature. We are enthused. From there we hit the Fibonacci numbers (0, 1, 1, 2, 3, 5, 8, 13, ... add the last two to get the next, just make sure you start at 0) and the Golden Rule (Divide two lines where the longer part divided by the smaller part is also equal to the whole length divided by the longer part). Then we nail patterns from accretion. The crowd goes wild ! We are on our feet pumping fists like it's the Super Bowl !!

An interesting observation, being in an audience of mainly women, is how supportive the sisterhood is of each other. Speaker makes bad joke, everyone laughs.