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Making Sense of the Munich Art Hoard

Making Sense of the Munich Art Hoard | My Precious - artwork, real estate and family controlled businesses | Scoop.it
The second-day stories on the Munich art hoard are filled with contradictory bits of information and many, many questions. Foremost among the questions is why the German authorities have behaved with such secrecy.
Matthew F. Erskine's insight:

The secrecy around the Munich Hoard of artworks is the most troubling.  

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Family comes first for risk-averse fund managers | Reuters

LONDON (Reuters) - Investors seeking less volatile returns from their stock portfolios are turning their attention to family-owned firms that play for pride as well as profit.In the wake of the 2007-09...
Matthew F. Erskine's insight:

Although many asset managers are looking to invest in family controlled companies, many family controlled companies have little or not experience in deploying growth captial other than that they have from retained earnings or commercial loans.  There is a significant risk that mis understandings could doom such an investment in the long run.

 

For the patient investor, though, this may be the best possible place for risk adverse money.  

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CFA Institute & Edelman Investor Trust Study

CFA Institute & Edelman Investor Trust Study | My Precious - artwork, real estate and family controlled businesses | Scoop.it
CFA Institute & Edelman Investor Trust Study: Investor trust fragile, aligned interests valued highly
Matthew F. Erskine's insight:

The lack of trust between investment managers and their clients is not suprising, considering that many of the insitutional asset managment firms have significantly divergent bsuiness goals (make a profit, gather more clients, keep exsiting clients) than their taxable individual investor clients (keep control of wealth, protect themselves and family, control costs).  

 

Even though the study does make some very good observations and suggestions on rebuilding trust, unless and until the business goals and the personal goals of the asset managers and the clients are borught more into line, trust will remain an illusive result.  

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How the Rich Lend Money to Their Families - MyBankTracker.com

How the Rich Lend Money to Their Families - MyBankTracker.com | My Precious - artwork, real estate and family controlled businesses | Scoop.it
Remember the days when — if you were rich — you were able to mooch off your wealthy parents easily and without consequence?
Matthew F. Erskine's insight:

The Family Bank concept, that is a bank with softer terms than a commercial bank, harkens back to the immegrant banks of the 19th century, where families savied money to help bring family members over from the old country and help set them up when they got here.  

 

This also meshes well with the "micro loan" banks lending to the poor, since the purpose is not to make a profit as much as it is to educate and uplift both the lender and the creditor in their society.

 

 

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Invitation to Dialogue - The Straight Deal Charter.

Invitation to Dialogue - The Straight Deal Charter. | My Precious - artwork, real estate and family controlled businesses | Scoop.it
With the expansion of on-line selling sites related to art and antiques growing daily – and the related reach of these sites now extending yet further to new markets - the question of on-line confi...
Matthew F. Erskine's insight:

As the retail art market becomes more and more crowded with somewhat faceless dealers and other sellers over the internet (not to mention Google) some reputable dealers have banded together to establish the Straight Deal Charter, sort of an art buyer's bill of rights.  

 

I have been working with Gene Lipitz and tohers on something simialr but for clients of investment managers, based on Gene's presentation to the Institute of Private Investors, and called 8by8.  

 

Such an internal code of conduct is ecellent, but is lacking, in my opinion, because a buyer who does not know the seller (and may not ever know the seller) cannot assurtain whether they follow these tenents through outside observation.  Also, I think that these would be quite hard for staff and employees to implement without going further and establishing, for each firm, a set of procedures and policies that, bound together with a coherent burinss doctrine, allow them to make the right choice, and remain flexible in response to the client's needs and goals.  

 

Excellent beginning though.   

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IRS To Collect Estate Tax From Beneficiary After More Than A Decade

IRS To Collect Estate Tax From Beneficiary After More Than A Decade | My Precious - artwork, real estate and family controlled businesses | Scoop.it
Seal of the United States Internal Revenue Service. The design is the same as the Treasury seal with an IRS inscription.
Matthew F. Erskine's insight:

There is no question that the IRS was sloppy in this case, but the underlying issue is the choice of the personal representative (with professional advice) to make so many extensions on the payment of the estate tax return, so leaving them open to the possible claims against one of the beneficiaries for the entirety of the estate tax due. It is an example of "unjust" results, but also an example of poor risk management and planning on the part of the beneficiaries and their advisers.

On its face, the decision to extend the payment of estate taxes "until the equity portfolio grows in value" seems like a logical play. The current very low interest rates means that the accrued interest on the tax outstanding is much less than the likely return on a managed portfolio of investments. Literally, you could use the assets otherwise earmarked for payment of taxes to earn enough to pay the taxes and preserve the pre tax value of the portfolio to boot. But, when you factor in all of the possible (even if unlikely) risks of such a strategy, you realize that the risk is higher when you delay the payment of tax than when you defer the payment of tax, even though it is counter intuitive.

Sometimes, clients (and advisers) need to really stop and do some hard thinking about the potential risks they are getting involved with such planning. For example there is a famous illustration of this point in a risk tolerance test, part of which goes as follows: Which is more risky - having a guarantied loss of $50,000, or having a 80% chance of losing $100,000 and a 20% chance of losing nothing? Intuitively, we usually say that the chance to lose $100K is less risky than the certainty of losing $50K, but mathematically and logically, the certainty of losing $50K is less risky than the possible loss of $100K.

This fits the facts here almost exactly, and is an object lesson that the you need to be informed about risk before being given a choice. For example, if the beneficiary had been told " the least risky path is to pay all of the taxes within 9 months of the date of death, shared by all nine of you, but you can defer the tax for ten year or more, but there is a chance that you will have to pay all of the tax by yourself" it is a more accurate representation of the risks involved.

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Managing Family Dynamics in Business Succession Planning

Managing Family Dynamics in Business Succession Planning | My Precious - artwork, real estate and family controlled businesses | Scoop.it
In this session you will learn about: 3 things most families can do to maintain family harmony; When should you talk about your exit plans with your family - Matt gives us some valuable tips; How to deal with perceptions...
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artprice.com, the world leader in Art market information

artprice.com, the world leader in Art market information | My Precious - artwork, real estate and family controlled businesses | Scoop.it
ARTPRICE VIDEO, streaming, download, artprice.com, the world leader in art market information: Art price guide and art market reference book, updated world auction sales calendar, art prices, artists records at auction for painting, drawing,...
Matthew F. Erskine's insight:

Artprice has listed the compemorary art sales in London, 

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Japanese Man Claims $1.6M Renoir Painting Sold at Sotheby’s Was Stolen | In the Air: Art News & Gossip | ARTINFO.com

Japanese Man Claims $1.6M Renoir Painting Sold at Sotheby’s Was Stolen | In the Air: Art News & Gossip | ARTINFO.com | My Precious - artwork, real estate and family controlled businesses | Scoop.it
ART IN THE AIR - Art News & Gossip
Matthew F. Erskine's insight:

Despite the good faith of the buyer, he or she cannont get agood title to the artwork if, during the past, it was stolen, even if the owner failed to place the artowrk in the international registries.  

 

This case highlights the need for title insurance for artwork, just like you would have title insurance for real estate.

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Comment on Modern art was CIA ‘weapon’ by Alex Boyle

Comment on Modern art was CIA ‘weapon’ by Alex Boyle | My Precious - artwork, real estate and family controlled businesses | Scoop.it
Keep your friends close and your enemies closer. CIA likely heard from FBI that Lee Krasner et al were friends with Stalin’s icepick assassins hunting Leon Trotsky in 1940. Krasner told them Trotsky went to visit Diego Rivera in Mexico City.
Matthew F. Erskine's insight:

Interesting article from 1995 reprinted on the role the CIA had in promoting exhibits of Amercian Contemporary art in the 1950's

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UPDATE: Marcato Capital Reports 6.6% Sotheby's Stake, Calls Shares Undervalued

UPDATE: Marcato Capital Reports 6.6% Sotheby's Stake, Calls Shares Undervalued | My Precious - artwork, real estate and family controlled businesses | Scoop.it
Matthew F. Erskine's insight:

It will be interesting to see whether the "attractive investment" by Marcato Capital and Mick McGuire, the activist investor from Pershing Square Capital.  I doubt that the strategies that work with auto parts manufacturers will work in the opaque world of artwork sales.  

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Fresno Met’s Closing Could Hold a Lesson for Detroit

Fresno Met’s Closing Could Hold a Lesson for Detroit | My Precious - artwork, real estate and family controlled businesses | Scoop.it
The 2010 closing of the Fresno Metropolitan Museum of Art and Science in California may be a template for the threatened Detroit Institute of Art and the South Street Seaport Museum.
Matthew F. Erskine's insight:

Although museums seem to be eternal, they actually are relatively recent creations in their current form, the earliest dating from the 18th century as extention of personal and royal collections.  The curtrent economic stress on unban centers, most dramatically in Detroit, highlights the inabiltiy of some municipalities to maintain a cultural icon when its social infrastructure crumbles.  

 

For donors, the failure of museums will always raise questions about how permanent is the insutution, and how can thier intent survive the catastophic failure of the charity.  

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Still keeping it in the family after 90 years of work

Still keeping it in the family after 90 years of work | My Precious - artwork, real estate and family controlled businesses | Scoop.it
It began 90 years ago with a determined young man with a vision, called Bennett Beardshaw.
Matthew F. Erskine's insight:

A story of Specialty Steel Group, Britian's fastest growing private company, shows how a family supports the business, and a business supports the family.  

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Classic 1954 Ferrari Spyder to sell at Bonham's for est. $25 MM to $30MM

Click here to edit the title

Matthew F. Erskine's insight:

Classic cars are extraordinary collectable, but the inerchangable parts of even such a rare vehicle makes the issue of title even more problematic.  Here is a case where the collector removed and replaced parts so that, after the car was stolen, the Belgian Police gave a clear titel because the serial numbers did not match the ones reported.

 

Another interesting aspect of this is how the value of the car is dramatically increased where it is sold with all f the original equipment and documentation.

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Music Royalty Funds Charm Wealthy Investors

Music Royalty Funds Charm Wealthy Investors | My Precious - artwork, real estate and family controlled businesses | Scoop.it
Financial Advisor Magazine created exclusively for advisors by highly experienced editorial and publishing teams.
Matthew F. Erskine's insight:

A recent article in Private Wealth details the funds that are investing in music copyrights to gain the yield that they cannot find in more traditional investments.  Copyrights are a complex area of business managment, with many conflicting laws and contracts between countries and regions.  I am not sure how you can properly value this flow of income, as songs go in and out of fashion.

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IRS Seeks $2 Billion Estate Tax from Former Detroit Pistons Owner’s Family

IRS Seeks $2 Billion Estate Tax from Former Detroit Pistons Owner’s Family | My Precious - artwork, real estate and family controlled businesses | Scoop.it
The IRS is going after the estate of Bill Davidson, former owner of the Detroit Pistons and auto industry supplier Guardian Industries, to the tune of more than $2 billion.
Matthew F. Erskine's insight:

The case involves the use of a self cancelling interest note, or SCIN.  Done correctly, it can be an effective tool, but here the calculations iused to essentially pass the estate tax free is being challenged.  

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Skate's Online Education - Course #2

Skate's Online Education - Course #2 | My Precious - artwork, real estate and family controlled businesses | Scoop.it
Skate's Art Market Research. The variety of information and research products for art investors around the world: Skate's Art Investment Handbook, Skate's Top 5000 Artworks, Skate's Art Stocks, Skate's Art Investment Report.
Matthew F. Erskine's insight:

This course has an excellent faculty, Michael Plummer and Larry Shindell included.  Well worth considering 

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China's $13 Billion Art Fraud -- And What It Means For You...by Abigail R. Esman

China's $13 Billion Art Fraud -- And What It Means For You...by Abigail R. Esman | My Precious - artwork, real estate and family controlled businesses | Scoop.it
First published on Forbes 13.8.2012 on forbes.com www.forbes.com If you pay attention either to China or the art market, you’ve probably heard the story: China last year became – according to art i...
Matthew F. Erskine's insight:

Corruption in the Chinese Art Market makes much of the reporting out of the PRC problematic, even if the levels are not as great as this article reports.  

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Vetting...by Clinton Howell

Vetting...by Clinton Howell | My Precious - artwork, real estate and family controlled businesses | Scoop.it
Vetting is the process used at fairs of looking at an object by a committee of experts to determine both the authenticity of a piece and the accuracy of the label describing the object. It was the ...
Matthew F. Erskine's insight:

The fear buyers have of paying a premium for a pedestrian antique is the driver for the vetting process.  Clinto Howell, in this article, gives a good illustration of how the process of vetting antiques at various shows for authenticity and accuracy of description can be a subjective opinion rather than an objective fact.  Despite this, vetting has its role in building trust and confidence in the buyer, which ultimately benefits the seller as well.  

 

Another helpful aide in building confidence in the value of a piece is the title histroy, or provenance, of an item.  perservation of doucments and descriptions of how items where acquired, when and by whom, are all important.  Though title insurance for tangible property  is usually thought of as applying to only for fine art, it also can have a role in securing the value of a high cost antique or other collectable as a way of managing the risk that the authenticity and accuracy of the description of the items.  

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Family Business Magazine E-News August 6, 2013

Family Business Magazine E-News August 6, 2013 | My Precious - artwork, real estate and family controlled businesses | Scoop.it
Family Business Magazine E-Newsletter: August 6, 2013 [1] August 6, 2013 The Family Business Conflict Resolution Handbook F...
Matthew F. Erskine's insight:

Most recent e-newsletter from Family Business Magaine looks at trasnitions in ownership at the Washington Post, McGraw-Hill and elsewhere.  

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Dealing With Problems In The Family Business

Dealing With Problems In The Family Business | My Precious - artwork, real estate and family controlled businesses | Scoop.it
A client says: “I need to raise cash. My son, Bobby, invested in some silly scheme to cash in on the EU crisis and lost everything.
Matthew F. Erskine's insight:

A recent article of mine published in Finanical Adviser Magazine online on using modeling to help predict when the dynamics within the family and the business can lead to failures.  

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Bill Would Outlaw Fake Slabs

Bill Would Outlaw Fake Slabs | My Precious - artwork, real estate and family controlled businesses | Scoop.it
The bill addresses nagging, but contemporary problems, of individuals who not only make unauthorized reproductions, but who intentionally offer them for sale in phonied up coin slabs.
Matthew F. Erskine's insight:

"Slabbing is the contemporary practice of having coins graded by a commercial grading company, then sealed within a plastic case with the grading information and company promently displayed.  The difference in price of a coin will vary greatly based on also microscopic difference, to the point where a grade of MS-69 and a MS-70 can mean the difference of tens of thousands of dollars.

 

Just like in the fine art world, with so much at stake, frauds seek to take advantage of the less experienced collector who does not regulalry examine or research their purchases, and occationally snare an experienced collector or dealer as well.  In the case of artwork, it can be by putting seemingly accurate catalog, auction houise and dealers numbers and reference on the back or stretchers of the canvas.  

 

Some helpful hints, though, on buying for your own amusement.  

 

First, if it seems too good to be true, it porbably is.  The Antiques Roadshow stories about windfall profits are few and far between.

 

Second, Become somewhat knowledgable about what you are buying.  After looking at enough coins, etc., you sometimes can have a correct gut reaction to a questionable piece.

 

Third, unless you are a dealer, buy becuase you like it, and can afford it, not because you can flip it for a profit.  That way, even if it does not turn out to be quite what you expected, you still have the value of enjoyment of a piece your enjoy.  

 

Outlawing fraudulent slabbing will not make unwise buyers any safer, though you may get some satifaction on suing a bogus slabbing firm for driminal as well as civil penalties.  

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McKinsey Quarterly special issue on China

McKinsey Quarterly special issue on China | My Precious - artwork, real estate and family controlled businesses | Scoop.it
The latest special edition of McKinsey Quarterly focuses on the next chapter in China's economic evolution, from the emergence of the middle class to greater product innovation and the talent the country needs to forge ahead.
Matthew F. Erskine's insight:

As China becomes more and more into the main stream of economic, cultural and policital life globally, how it handles the next ten years have widestread ramifications.  This recent McKinsey report goes into detial on how they see the next chapter in Chinese evolution moving forward.  

 

 

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Frisky at Christie’s...

Frisky at Christie’s... | My Precious - artwork, real estate and family controlled businesses | Scoop.it
November 4-5, Christie’s is auctioning off works from the great art dealer Jan Krugier’s  estate.   Anybody who ever visited the NY gallery (long a fixture in the Fuller building, then uptown at 98...
Matthew F. Erskine's insight:

Sale of Krugier estate shows how the line between "dealer" and "collector" is often blurred. 

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Embrace uncertainty to develop more business acumen

Accountants could do more to embrace uncertainty, according to Accenture’s David Axson, who spoke this week at the AICPA Financial Planning & Analysis Conference in Las Vegas.
Matthew F. Erskine's insight:

everyone needs to know three things: what they have, where they are and what actions they should take in the future;a holistic balance sheet and a proper set of metrics can suffice for the first two, only scenario planning can cope with the uncertainty of planning for the future possible, even if improbable, events.

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