Mr. Wien is Vice-Chairman of Blackstone Advisory Partners, a title that Rory Sutherland, Vice-Chairman of Ogilvy says is the best title. Charlie Munger, Vice-Chairman of Berkshire Hathaway has a slightly different perspective:
"I didn't set out in life to become the assistant leader of a cult."
—Mr. Munger at the 2007 Wesco annual meeting as recorded
by T2 Partners' Whitney Tilson
From Barron's, May 26, 2016:
The Wall Street strategist reveals the name of his mystery advisor, “the smartest man in Europe.”
There will be no essay on The Smartest Man in Europe this year. My good friend and mentor Edgar de Picciotto, chairman of Union Bancaire Privée in Geneva, has passed away; he was 86. I met him during the 1980s when I was at Morgan Stanley and he was a regular attendee at our global client conference at Lyford Cay in the Bahamas.I came to know him well when we were both supervisory directors of Soros Fund Management and met for several days twice a year in Europe. (Soros was an offshore fund.) When I started writing about him in 2002, I chose not to reveal his name to protect his privacy. I did, however, have a shirt made with the legend “Smartest Man in Europe” and gave it to him, but he told me he only wore it around his swimming pool.Over the years I learned that he didn’t think like other investors, and I wondered about the formative events in his background. He was descended from a mercantile family whose roots stretch back hundreds of years to the days when they operated canteens along the Silk Route, providing food and weather protection to travelers moving to and from China and India. Born in Lebanon and educated in Europe, he came to the United States for training in finance. Sensing great opportunity as Europe recovered from World War II, he settled in Geneva and began managing the wealth that was accumulating on the continent. He was an early investor in hedge funds and his reputation as a person who could identify secular change, talent and undervalued assets ahead of others grew over the years.
[For more on Byron Wien, read this week’s Barron’s magazine cover story on the investment legend.]
He lived well. His homes in and near Geneva contained paintings by artists ranging from Canaletto to Kandinsky. He bought one of the few private homes designed by Oscar Niemeyer (the architect of Brasília). It had fallen into a derelict state, but it was on an incomparable spit of land in St. Jean Cap Ferrat in the south of France and Edgar restored it impeccably. At its entrance he installed a fuchsia Jeff Koons balloon dog, twenty-five feet tall, which was brought in by crane.While he took pleasure in his material possessions, it was discussing and reading about ideas that really aroused his enthusiasm. He was one of the first people to identify the investment potential of Japan in the 1980s and then sold his positions before the sharp decline in that market. Before the Berlin Wall came down and Russia began to dismantle its command economy, he saw the changes brewing there and the potential available to domestic and overseas investors. He was an early investor in the emerging markets and he sold his positions there in a timely way as well. He did the same with gold and technology. After September 11, 2001, he was an aggressive buyer of U.S. stocks, but by the middle of the decade, he cooled, sensing a pending recession.He pressed upon me the importance of understanding the macro environment. “Many people describe themselves as stock pickers,” he would say, “but you have to consider the economic, social and political context in which the stocks are being picked.” He encouraged me to meet as many people of influence as I could. For him, networking never stopped. He would test his ideas on those he respected, and if he ran into a strong opposing opinion, he would reflect on it seriously and sometimes change his position. While he never lacked conviction about his ideas, he was open-minded and flexible. “Nobody owns the truth,” he would tell me.As I look back on the titles of my essays about him over the last 15 years, they provide a chronicle of the market’s glory days and pitfalls. In my first essay about him in June 2002, nine months after the attacks on the World Trade Center, he was “upbeat.” He believed that although terrorism was a continuing threat to investors and an incident could destabilize markets for a period of time, the world economy was huge and had plenty of momentum, so he was very positive.Some of what he said in 2002 rings especially true today. “All the portfolio managers I know in America are complaining about how hard it is to make money. No powerful themes are emerging that they can put big money into. The only way to perform is to trade, but the friction costs are great. Portfolio managers in New York still don’t understand the importance of global interdependence.” So when many investors were still cautious, he said, “I see an opportunity to make some serious money here: I bought gold on leverage, sold the dollar short, put money in European hedge funds and invested heavily in Russia. I am excited and very busy and I expect to make a killing.” And he did.In 2003 he talked about the opportunities in China “which is on its way to becoming the manufacturer of everything the world wants, but, as it moves up the technology scale, it will seek political influence. The U.S. is abdicating its political and economic leadership position. You Americans think of yourselves as the brains of the world. You cannot provide jobs for your 300 million people as a service organization. Nine-tenths of your population simply cannot find gainful employment cutting the grass, doing the laundry and cleaning the houses of the one-tenth that the world holds in awe.”In 2004 Edgar was down on Europe and the United States, but bullish on Asia where he saw an expanding middle class. At that time he was beginning to understand the importance of monetary policy in determining the future course of stock and bond prices. He suspected that even though the Fed was likely to be accommodative, inflation was going to stay low, despite the theories of Milton Friedman of the University of Chicago.In 2005 he was bullish on bonds because of the build-up in liquidity around the world. Few people expected interest rates on U.S. government paper to decline as much as he did. He thought U.S. stocks would do well as a result. He was, however, worried about the debt accumulation taking place at the government, corporate and individual levels. In 2006 he was focused on the migration of economic opportunity from Europe and the United States to Asia, and the prospect of stagflation in the mature developed countries, but he was still bullish on the United States. He sensed a movement to the left in America (he should have lived to see Bernie Sanders), but he didn’t think it would undermine the capitalist spirit of the country. He was positive on India and concerned about the rise of Islam. He was buying gold.By 2007 he was growing cautious. The title of my essay that year was “The Smartest Man Is Wearing Rain Gear.” The title in 2008 was “Overcoat Time for The Smartest Man.” He was nervous about the debt incurred by marginal borrowers to buy assets that he considered overvalued. As a result, he pulled out of all the hedge funds where he was locked up beyond one year. By 2008 he was recommending cleansing the U.S. economic system through bankruptcies and a devaluation of the dollar to revive manufacturing, but said that America was not ready to go through a period of severe pain. In any case, he expected the standard of living to remain flat in the West and rise in Asia. He was beginning to cool on globalization....
....MUCH MORE
