Sometime in 2015 I will be starting - and hopefully completing
- the Executive Certified Financial Planner (CFP) program at Oakland
University. I have been fascinated by
the investments field all my life and have been studying it for years. I have already spent a number of years
collecting daily market data and writing my own summary in a few lines every
night. For several months now I have
been sharing this daily summary with my colleagues in the Troy finance study
group I joined four years ago. This is a
very serious group and I will be accelerating my studies of their strategies
this year. So today I announce the
launch of my new finance blog, “MariasCap,” which will replace my daily summary
emails and provide a narrative of my journey through this new chapter of my
life. Every night I will post my usual
one paragraph summary of The Day on Wall Street and, occasionally, I will have
a second more extensive posting discussing some investing concept or
strategy. As an example of what the daily posting looks like, directly beneath this you'll find the daily summary for December 31, 2014.
I have taken the opportunity during this holiday season to register the name of my new company with the county clerk’s office. This new avocation started four years ago when I took a class through the American Association of Individual Investors (AAII). This particular two-weekend class focused on a powerful new investing strategy called Investors FastTrack. It is a sophisticated investment methodology that filters through all the tens of thousands of stocks and funds that are out there and delivers only the best ones to your portfolio, from which you can then cull individual instruments that offer the optimal marriage of high yield with low risk, depending on your personal risk tolerance. That is the promise of FastTrack - it is a technical methodology that all but eliminates risk without unduly sacrificing profits.
You say
it sounds too good to be true. You say
there must be a catch. Well, there is a
catch - a big catch! The catch is that
it is a very difficult methodology and one that takes years to master. Our instructor has been using it with great
success since its founding in 1989. 1989
incidentally was the year that my career in aerospace finance ended and so,
learning that is when FastTrack began has sort of drawn me to it, like this is
what fate had in store for me. Our
instructor tried to give us a quick and dirty intro strategy to get started but
even that has proven to be quite a challenge to master. Since the class, we have all been meeting
twice monthly in study groups to continue learning the nuances of FastTrack. Our group is appropriately called the MRI
group for Managed Risk Investing, for that is what FastTrack is all about. It attempts not to eliminate risk but to
manage it.
There is risk everywhere. It is pointless to try to eliminate because
that cannot be done. And you don’t want
to get rid of risk. Some risk is good for,
without some risk, you are also forfeiting all opportunity. Sure you can just hide under your bed the
rest of your life and probably nothing bad will happen. But you also won’t be having a life. Besides, there’s still no guarantee that a
plane won’t crash into your bedroom, or your house become engulfed in a
mudslide or vanish into a sinkhole.
There is risk everywhere. The
objective is to calculate it and determine what level you’re willing to live
with. The more risk, the more reward,
but this all must be tempered with solid analysis and sound judgment.
For years now I have been keeping a
log of daily market summaries on my computer as my quick and dirty way of
keeping up on the macro picture. There
are two ways to evaluate an investment – by analyzing technical data and by
studying reports on fundamentals. This
group is almost exclusively technical, which is to say they use all kinds of
sophisticated statistical models to track the movement of the price of a stock. These models then give signals which the
technician can then use to select the best stocks and funds. For the truly purist technician, what is more
important is that these signals can also be used to predict with reasonable
consistency not only what to buy but when, and most importantly, when
to sell. The objective is to
minimize losses. For the astute
investor, keeping losses to a minimum is much more important than keeping
profits at a maximum. For those who know
how to use them, these strategies can do what most people will tell you cannot
be done. They can be used to time the
market, to raise one set of flags when stocks are low, another when they are
high.
It is certainly credible enough to deserve a good hard study. On the other hand, though I think technical analysis is fine and has some value, I also believe very much in studying the fundamentals. When I study the super-geniuses like Warren Buffett and William O’Neill, they very much stress that you need to do both and I very much agree with them. These daily market reports are my way of staying abreast of the fundamentals taking place not only in companies and on Wall Street but also in the entire macro-economic geopolitical global climate.
These purist technicians strongly believe that fundamentals are irrelevant since they claim their numbers so very rarely lead them astray, and even when they do have a loser, it’s usually for a very small amount. They largely ignore fundamentals (which would tell them about the general health of the company and general health of the economy) since they know that no matter how good the fundamentals are, the stock can still be a loser, and conversely that there are always winners to be found no matter how bleak the larger picture. As much as I admire the technicians (and hope someday soon to understand how it all works), I strongly believe that ignoring fundamentals can only lead to bad decisions. So I have been collecting these reports every night for years and, for the past several months, have been supplying one-paragraph summaries on email to my fellow group members as a courtesy to help them avoid spending hours every day pouring over the financial press. My summaries can be read in less than a minute and they are then up to speed.
As I have already stated, this blog
will now replace those emails. Every
day, I will post my few sentences of summary on this blog along with an
attached and highlighted pdf market summary from that day’s edition of Reuter’s
business news. There will be some days
that I will have more than one posting as I share my journey and elucidate my
discoveries.
I will be using this blog to not only document the CFP but also the strategies that the FastTrack methodologies offer. I may very well ultimately conclude that FastTrack doesn’t really work, but I will avoid such a conclusion until I have thoroughly investigated it. There are about 20 of us in the MRI group and maybe six or eight who have achieved mastery. Those that have think it’s the greatest thing since sliced bread, and these are all very bright people, most of them doctors and engineers. Our instructor has claimed a 14% equity curve using FastTrack, and that is with minimal volatility and risk. 14% is phenomenal; it is almost double the stock market averages except that the stock market averages come with considerable volatility and risk. If I ultimately find that I can duplicate these results, I will then be using FastTrack to manage my own clients’ accounts. If not, there are a lot of other strategies I will be learning through the CFP.
Last month Oakland University
announced they were revamping the program, making it more prestigious and with
considerably more flexible scheduling.
For one thing, they now require you have a college degree to get the CFP;
before you only needed a high school diploma, one of a number of problems I had
with it. How seriously can professionals
regard this credential if you don’t need any education to earn it? The broker’s license remains the low-brow
credential, requiring only high school and about four weeks of study. That’s what makes a credential like the CFP
so much more valuable.
But I very likely won’t be stopping there. There are a ton of credentials in the financial services industry and at minimum I will be continuing my studies to get both my tax license (about a six week course, but something very tangible to fall back on - and a 50% discount on the course and test fee once I’m a student at OU) and the Registered Investment Advisor (RIA) credential, something that is at a considerably higher premium than even the CFP. My own broker, Matt Moran at Merrill Lynch, is an RIA. He’s also an MBA and a JD. For the much longer term, USC offers a five course 2nd MBA called the MSBA in which I can take a specialization in investment finance; and our very own Lawrence Tech is one of the few universities around that offer an accelerated D.B.A. (Doctor of Business Administration) degree, a credential that offers the same advantages as the Ph.D. but is recognized in industry, whereas the Ph.D. is really only recognized in academia and is really only appropriate for candidates pursuing careers as college professors. The D.B.A. not only is an accepted credential to teach college but is also considered the fast track to senior management, and a qualification to be a C.E.O.
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Now back to where I started – the
vision I’ve had for most of my life of having my own financial services firm
and possibly even starting and managing my own mutual fund or hedge fund. Our instructor tells us that, once we have
mastered this methodology and can duplicate that 14% equity curve, we will have
clients lined up around the block begging to give us their money. That’s pretty much what Bernie Madoff did,
only his company was a fraud. But he
attracted an enormous number of very wealthy clients not with outrageous
promises of 30 and 40% returns but for a much more reasonable, much smoother
14% return. His problem was that he
wasn’t investing the money at all but spending it on himself and then providing
the illusion that his fund was successful by using new investors to pay the
dividends to older investors. He was
also such an accomplished con artist that he even had the SEC believing he was
legitimate. But he wasn’t. Frankly, his was nothing more than a Ponzi
scheme, doomed to collapse at some point.
FastTrack provides the same returns legitimately.
My instructor has been so successful using FastTrack that, since his retirement from GM where he had a career as a procurement manager and getting his own CFP and broker’s license during the 1990s, he now has so many clients that for years he has been accepting no one new. As with all brokers, his personal finances are confidential but the techies in the group who have known him for years confirm that he has made his millions and has helped many of his clients do the same.
That promise of a 14% equity curve is basically the pot at the end of the rainbow in this business. I mention Bernie Madoff because he’s reared his ugly head again recently in a fascinating documentary on PBS. I am writing a screenplay right now about a con job and the most intriguing thing I have found in all my research is how smart most of these con artists are. It begs the question – if they put one-tenth the energy into a legitimate scheme that they did with the con, they wouldn’t need the con. Bernie Madoff was really smart and clever. Why did he do it? Why didn’t he just go legit? Well, that’s what we’re all hoping to do. We’re hoping to accomplish the same end, only do so legitimately. I have just ordered the DVD of “The Billionaire’s Boys Club.” I saw the TV movie when I was living in L.A. The same thing happened there. The true-life character that Judd Nelson played had figured out a legitimate way to beat the market. Yet he decided to scam his clients anyway. Why? If he had gone legit, he would have been very successful. Instead, he became a criminal and ruined his life.
INTRODUCING MARIAS
Will I ultimately discover that
this brilliant eccentric strategy really does work and find a way to master
it? Time will tell. I will say that it’s loads of fun to study
so, even if I do eventually abandon it, all of my time will be justified for
entertainment purposes if nothing else. Meanwhile,
I have already taken the steps to register my new company as “Marias Capital
Management.” Marias (pronounced like
“marry us,” not “Maria’s”) was an inspiration that came to me not too long
ago. It is an acronym for Managed
Risk Assets. It is also a
mash-up of two words - one Spanish, one French - meaning “the three Marys” in
Spanish, referring to the biblical Marys, something that is meaningful to me
since The Richard and Ruth Grogan Memorial Foundation will ultimately be
integrated into Marias. The Spanish word
marias also happens to be the derivative inspiration for the Marianas Islands
in the South Pacific and the Marias Archipelago just off the western coast of
Mexico south of Baja.
There is also the word “maris” from
the Old French which approximately equates to both a noun for “husbands” or
“husbandry” and a verb for ‘husbanding.”
Isn’t that, in one word, what sums up financial services? Aren’t investors basically just “husbanding”
(or gathering resources) and then practicing “husbandry” (or growing them) and
making those resources or assets more bountiful? Between the acronym and the mash-up, it
seemed the perfect name for a capital management company.
Since I have also been spending a considerable amount of energy learning the new digital technologies for film and video production, at least some of this blog will be devoted to producing short instructional videos on investment basics and strategies as I learn them myself. As the professors at OU have already articulated to me, this country is headed towards a major pension crisis and the need for CFPs and other qualified investment advisors will be one of the hottest areas in business as, for the next 25 years, 20,000 new baby boomers will be retiring each month. These new retirees will not be comfortable entrusting their life savings to some 22 year old kid fresh out of college. That is why this is one of the most promising fields for 60-somethings.
MY HISTORY IN FINANCE
I saw
“Snow White” at age 5 and was instantly mesmerized. Even as a 5 year old, I was able to
appreciate that there was some kind of magic happening behind the screen that
had created the remarkable illusion of this great story. Even as a 5 year old, I already yearned to
find out what that magic was and learn to use it to tell my own stories. And even as a 5 year old, I also understood
that I was going to need money to tell my stories so becoming competent in
business had to be a major part of the plan.
So as a youngster, I already had my life planned out. I begin writing my first scripts at the age of 7 and began making 8mm films at 12. I would go to film school for undergraduate and work in the industry for a few years before pursuing a master’s in business. Then I would start my own film company. Boston University became my choice for my film degree. After five years working in Hollywood, I entered the University of Southern California for my business degree. That’s when the fun really started.
When I got my MBA some 34 years ago, they never told us that there would come a point in your 50s that it would be difficult to keep your job, let alone get a new one. I never considered that the MBA might have an expiration date. Yet that is exactly what I discovered when I turned 50 and began my quest to resume my MBA career, finding no companies that wanted older managers. As part of this quest, I systematically undertook to reestablish contact with my former classmates from both Brother Rice, many of whom had MBA careers, and my own MBA classmates from the University of Southern California. By the time I hit 55 I had corralled quite an impressive network but found that virtually all of them had now been forced into early retirement and had to settle for considerably less prestigious (and of course less well paying) jobs on the rebound. It created a lot of stress and anxiety for them but, happily, though it took a few years, most of them landed on their feet. Between their pensions, their new salaries, and the fact that our expenses grow considerably smaller as we approach our senior years (kids out of college, mortgage paid off), they are all now almost back to where they were when they were forced out several years ago. By time I was 60, not a single one of them still had the career they had had at 50.
Fortunately, I was not saddled with these same woes as my father passed away shortly after I turned 50 so I have spent the bulk of this past decade not endeavoring to rebuild a career that had become obsolete but rather immersed in taking care of my mother in a nursing home and managing the family estate as the executor of my parents’ trust funds. Due to an unfortunate fluke which I will not elaborate on here, the estate became short of funds for paying for the nursing home and this was all consequently gravely aggravated by the Great Recession.
Actually it wasn’t really that unfortunate. Though managing the estate became a monstrous undertaking, I had nonetheless always been fascinated by the field of investing. Now faced with this new crisis, I had no choice but to get into investing and get into it big time. All I had at my disposal for paying the bills were the stocks my father had left. The only option I had was to go into “Wall Street” mode full force and squeeze more earnings out of those stocks.
************************************************
And so it went. During the boom years before the onset of the
Great Recession when the market was doing 18%, I was doing 35. During the depths of the recession when the
market overall lost more than 40% and most Americans lost closer to 50% due to
panic selling, the estate portfolio lost only 5%. Of course, during the big bull market that
started in 2009 and continues to this day, the portfolio continued to flourish
right up until I liquidated it in the estate closure process in the months
following my mother’s death. In all that
time, despite what I had at the beginning and the drastic obstacle of the
recession, I managed to not only pay the bills but retain about 75% of what we
started with so that the heirs could get a nice little inheritance.
Yes, it was an enormous undertaking but one that also brought a great deal of personal satisfaction. After seven years of doing this and doing it so well, I was again seriously considering that maybe I should be doing this for a living. Maybe I should be changing my career to investing. But how do I do it? Do I go after a master’s in finance? Do I take 8 months to do the MSBA, the specialized 2nd MBA and do it in investments? Do I pursue a Ph.D.? Seven months after Mom’s death, I attended an MBA conference at Oakland University and presented my case to the business faculty. It took them about two minutes to determine I’d be an ideal candidate for the CFP.
THE USC STORY
A brief detour back to the
beginning: I had entered USC initially
planning to go into the investment industry but had such a horrible finance
professor my first year that I happily abandoned that dream to pursue small
business management, a specialization for which USC had the reputation for
being one of the finest schools in the country.
At the time, only Harvard and Stanford had better programs in
entrepreneurship and it fit perfectly into my long term goal of starting my own
film production company. So I abandoned
investments because of a lousy finance professor just as I had abandoned piano
in my childhood because of a less than wonderful piano teacher. As you all know, after decades of thinking
about it, I took piano up again when I was 54 and, now with a truly wonderful
teacher, have been going great guns ever since.
At USC my focus was strictly on being a manager on Main Street, not Wall Street. For my master’s project, I started a film production company and wrote and produced a short dramatic film for the Catholic school adult education market. When I graduated at the age of 27, it was the end of a ten year plan to get experience in both business and film and then offer myself to the industry as someone who understood both and could work both sides of the studio. After graduation, I approached the studio gates expecting that an MBA graduated in the top 10% of his class from a school with the stellar standing of USC would be welcomed. It was one of the biggest shocks of my life to learn that no one would believe me. I always figured they might be skeptical and want to talk to me first, not just blindly accept my story just because I had come from USC. But never in my wildest imaginings had I ever considered the possibility that they just flat out would not believe me!
I had always known that the
greatest problem in the film industry is the dichotomy that exists between the
suits and the artists. My ten year plan
had been based on the assumption that I could conquer that dichotomy and,
having done so, would be welcome as one of those individuals skilled in
both. What I discovered instead was that
the dichotomy was there for a reason. It
was simply a deeply ingrained belief that both skills were so highly
specialized that no one could possibly excel at both. No, it was strongly believed that anyone
claiming to do both couldn’t be very good at either, and they didn’t care that
you came from USC.
Everyone I approached in this manner simply dismissed me as an assumed mediocrity. When I changed direction and tried to get hired strictly into a business function, I was informed that they hired strictly from the Ivy League – Harvard, Stanford, Yale – and that USC was not Ivy League. Ironically, my network at USC did curiously enough land me back at square one as a script writer. The short script I had written for my thesis was so well received that it generated more opportunities, the further irony being that I made more money in six months writing scripts after USC than I did in the five years in L.A. before I entered USC.
One thing became very clear very
quickly. If I desired to resume my film
career, my MBA would be of no use and I would have to go back to being strictly
a writer. Was I going to keep taking
writing jobs, in which it was made very clear to me that, even though it would
pay well, there was very little hope that I’d ever be more than just a
writer? Or do I stay with my life plan
of starting my own company to write and produce my own films? After ten years of laboring towards a
specific goal, I had a decision to make and it really wasn’t that hard. I wanted my own company and I wanted to make
my own films.
I could see little wisdom in throwing away two years of graduate business school. On the other hand, with a graduate degree now under my belt, I understood better than ever that I still had much to learn about running a business, even a small one, especially a small one. They had hammer –
A BAPTISM OF FIRE AT
UNIVERSAL STUDIOS
They had hammered at us at USC that
80% of all new businesses go under in five years. I was not going to be one of those
statistics. Actually, the shock of
finding out the studios could care less about my carefully nurtured background
proved a blessing in disguise. I knew I
still had more learning to do and needed real world experience before launching
off on my own. Actually, USC was pretty
unique in that respect because, in the Entrepreneur Program, we spent our
entire second year doing consulting internships at local small businesses so as
to get real world experience right away.
Also, MBA programs are structured using the case study method in which
for each class session you study a business problem that a real company once
had and then, using the notorious Socratic Method, debate how to best solve
that problem. In the Entrepreneur
Program we went a giant step further by doing case studies on companies on
which the professors themselves had consulted.
We would then extensively debate a corrective course of action for that
company and then, to conclude class, the professor would inform us of the
solution they actually came up with.
Believe it or not, more than occasionally did we mere graduate students
come up with better proposals than the professional consultants with whom our
professors had worked.
But the consultant internship was unique at USC. The custom was for the program director to assign each student a company to work with for the year. However, given that my goal was to work in the film industry, I asked for and was granted permission to find my own internship opportunity and was fortunate to find that Universal Studios (through the parent company MCA) was happy to take me on. It so happened they had a small educational film unit that was faring poorly so, given my professional background in educational media, they welcomed me to spend a few months studying the deficiencies in this little company and write a proposal for a new business plan. I started working with the company in September 1980 and submitted my turnaround proposal to the MCA New Ventures office in January. It was always a thrill for me to drive through the gates at Universal Studios as I went to my regular meetings with the young lady executive who supervised me at MCA New Ventures.
******************************************************
The New Ventures offices were in
the famed “Black Tower,” which was the ultra-chic all-black glass executive
office building at Universal. This was
the same building urban legend had it that Spielberg had infiltrated as a
teenager. The story went that young Spielberg
had simply put on a Brooks Brothers suit, got himself a fancy briefcase, and
just walked past the guard like he owned the place, entered the Black Tower and
simply located an empty office and proceeded to occupy it. He was there for something like six months
pretending to be a producer while he worked the Universal directory like crazy
trying to wheedle his way into an opportunity and, while he was around the
facility, trying to muster the resources to get his own films made. He had them so convinced he actually worked
there that they even put his name on the lobby directory, gave him a telephone,
and assigned him a secretary. It took
about six months for Human Resources to get around to checking him out and he
was then summarily ejected from the premises.
By then he had established quite a network and was back two years later
as a 19 year old being offered a seven year contract to direct for Universal
Television. After several years
directing some of the best TV movies of all time, he was offered “Jaws” at the
age of 26.
So there was a lot of history behind
all that black glass. Many master
filmmakers I idolized had occupied offices in this same building so yes, it was
an exciting day for me every time I did a meeting there. My supervisor was thrilled with my proposal
for the turnaround of the educational media unit and installed me as the new
President of the unit and would be compensated with profit sharing and 20%
stock ownership once the unit was in the black again. I would have a position waiting for me upon
graduation with full access to the Universal facility and network, a built-in
distribution outlet for the short films I’d be producing through my own
company, a home at Universal for the film production company I started as my
thesis project at USC, and the promise of later expanding into TV movies and
low budget features as things progressed.
You can see why I was so optimistic about opening the pearly gates of the studios upon graduation, having so carefully nurtured myself for ten years to be skillful in both business and filmmaking. If this all sounds too good to be true, it certainly turned out that way. About six months later, I was to learn that I was just being used as a pawn in solving a much bigger problem Universal had than just this little educational film unit. Consultants much more experienced than I had tried turning around this little company and failed so, when I came along, I was chosen for the task specifically because I was only a graduate student and they expected me to fail. They counted on me failing. They didn’t want the unit saved; they just wanted the appearance that they were trying. Actually, if I succeeded it would make a mess because they were getting fat tax breaks plus a lot of prestige by keeping the unit just the way it was. When come May it was looking very much like I was going be getting the little company in the black, I was hastily summoned to the Black Tower and told to cease. The project was terminated and my association with Universal abruptly ended. They had only been pretending to be impressed with me so that I would stick around as long as it suited them.
MY USC MBA THESIS
PROJECT
Fortunately, my USC Entrepreneur
Program advisor thought this tragic betrayal ending was far more instructive,
interesting and entertaining than the fairytale ending I had been working
towards. Even though the project ended
disastrously, I got an A on the consulting report and another A on the business
plan for my own production company that served as my thesis. This propelled me into the upper echelons of
my graduating class putting me in the top 10% and admission to the prestigious
Beta Gamma Sigma Society which was the national organization for top business
school grads.
But the fairytale of gaining admission to the studios was now dead. And despite my credentials, I could not even get an interview to try to convince people I could do the job because they were so deeply ingrained in the belief that anyone claiming to be good at both business and art couldn’t possibly be any good at either.
I had formed the film company as a
partnership with friends of mine who were students at USC Cinema so after
graduation, we spent a few months making the short film I had written with me
as producer. My USC Cinema colleagues
and I were all huge Frank Capra fans and by far our favorite Capra film was
“It’s a Wonderful Life.” Actually the
script I wrote entitled, “God and Man: Take Two,” was a tribute to Wonderful
Life, a 20 minute condensed version of that film, the story of an ambitious
young film director who loses sight of what’s important in life – namely
family, a perfect topic of adult Catholic ed programs. To further honor our devotion to Capra, we
named our company “Bedford Falls Films,” the fictional town that was the film’s
setting. During our Hollywood years
preceding USC, three of us had worked together at a Catholic film company in
Los Angeles, so who better to go to for a distribution deal that them? After a few months of negotiations on script
development and casting, we had the deal.
Our former employer even agreed to give us the cover of their fall
catalog.
Not only were a number of USC film
students involved but some faculty members tagged along as advisors. These kids were all industry brats, their
parents being longtime Hollywood film professionals, and were so impressed with
my script that they financed the film their kids were making. As things progressed, there were considerable
doubts from these professionals who were helping us out about whether the film
itself was really going to be any good.
But one thing they never changed their minds about was the script. In fact, as the film neared completion, the
major criticism of it was that the kid who directed it had veered too far from
the script.
Like the Universal debacle, inter-family rivalries ultimately did the film in, with each of our so-called advisors trying to maneuver things so that their kid got the bulk of the credit for the film. We did not have any contracts with each other. As we all started as good friends, the film was being made on a handshake. Since the director both shot the film and was editing, I thought nothing of letting him keep custody of the negative. As tensions accelerated, the kid’s father took possession of the negative and claimed it as his personal property. He was now calling his investment a loan and taking the negative as collateral. That was the straw that broke the camel’s back. Things were now so bad that everyone just got mad and walked away. That was the end of the film. I would have bought the film back if I had the money but I had nowhere near that kind of money.
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During my last months in the
Entrepreneur Program, one of our guest speakers was the head of legal at Warner
Bros. I called him during this debacle
for advice and he was happy to help me out, but not without a little
admonishment. “Mike, the film is dead
but I can at least pull some legal tricks out of my hat and make sure this
young man and his father never finish and release the film on their own. It’s going to cost you a couple hundred
dollars but I’ll get you out of it. I
just wish you had called me before you started.
I would have advised you to be sure to vault the negative, and that much
I would have done for free. Of course, you
could fight this and force them to give the negative back, but it’ll cost
$50,000 and be tied up in court for five years.
But you’ve only spent 8 grand on this film so far and it sounds like the
film is weak anyway. Is it worth it?”
He was absolutely right. The fact is I had violated the Prime Directive they had taught us in the Entrepreneur Program. Every business has one vital area that can make or break it. I should have understood at the outset that my vital area was possession of the negative. As I said, this whole thing was done on a handshake. I had always known that the success or failure of the project rose and fell entirely on the trust that was between us. If we ever lost that trust, we would be dead in the water.
That’s exactly what happened. In the years that have passed since that disaster, I have often pondered what I might have done to save the day, but always concluded that since it was a handshake deal between friends, once the friendship was gone, the deal was gone and there was nothing I could, should, or wanted to do about it. But with all the experience I have acquired since, if it happened today I would go talk to the kid who directed it and somehow work it out. I knew that his problem wasn’t with me but with one of the other kids in the partnership. Today I would it work it out. Then, I had no idea how to. That’s called experience. The failure of this film was yet another reason why I knew I needed more experience.
FINANCIAL
APPRENTICESHIP AT MCDONNELL-DOUGLAS
These were just two of many
colossal disappoints during the six months following my graduation that
convinced me that I was better off momentarily leaving film and pursuing
experience in a more conventional industry.
As I said, the script I had written had impressed enough people to get
me more writing jobs but ultimately I took an entry level position as a
financial analyst at McDonnell-Douglas Corporation (MDC) in Orange County, about
40 minutes southeast of Hollywood.
Finance was the last place I wanted to be. I thought the real action was in marketing but was told I had to spend a few years in the trenches first. I was 28 when I started MDC planning to stay just a couple years and then transition back to film. I was 30 before it occurred to me that I would have a better chance at this transition coming in from the investments side than from the corporate side. But a trip back to USC to consult with another finance professor to spend a year getting the MSBA and then change directions provided still another shock. This professor told me that, even at the age of 30, I was already too old to get started in investments. Brokerage firms were looking for kids fresh out of college whom they could mold. The fact that I’d be in my 30s and, worse, have not just the MBA but the MSBA, would only convince them that I’m already too old and too set in my ways to be a good candidate. He advised me to stay on the track I was in and make my career in corporate finance.
I also tried a couple of times
during that period to transition into marketing but was told each time I needed
at least five years of experience to get a job in marketing. At the age of 33 when I finally had my five
years in, they suddenly changed their tune and now asked why I wanted to be in
marketing when all my experience was in finance. You just couldn’t win. But by the time I had the five years under my
belt, something new and wonderful had happened.
I discovered I really loved corporate finance. It turned out that not only did it pay quite
well, but it brought with it a lot of prestige and respect. My job was to take all the accounting data
and write reports translating it into language the product line managers could
understand, specifically highlighting problems before they happened and
offering solutions to problems that existed.
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I had been mistaken about
marketing. It was finance, not
marketing, that provided the fast track to the top. It was finance, not marketing, that had the
best career potential. I really loved the
fact that everyone marveled at my ability to make sense out of the
numbers. I had found my niche. I actually looked forward to getting up and
going to work every morning and each day just flew by.
By the time I had been there five
years, I was the de facto head of finance for the CAD/CAM division of McDonnell-Douglas. I was a direct report to the vice president
of CAD/CAM, my reports were read by the directors, and neither he nor the
CAD/CAM directors would make a move until I had had a go at the numbers and
given my recommendations. I was managing
hundreds of millions of dollars in product lines and inventories. If I had gone into investments, do you think
any brokerage firm would have let me manage hundreds of millions of dollars in
assets at the age of 33? When
McDonnell-Douglas decided to discontinue CAD/CAM, I next landed at Northrop in
an even more prestigious position. At
MDC, CAD/CAM had been just one of many divisions of McDonnell-Douglas
Automation. At Northrop, I was on senior
staff for the entire computer division in charge of all the labor finance for
the company. I was also making almost
double the salary that my father had earned as General Manager of Engineering
at General Motors at the time of his retirement a dozen years before that.
I was pretty satisfied that I had made the right decision after USC to temporarily leave film and get experience in a more conventional industry. I had certainly gotten a whole lot of very valuable experience. When I left MDC, I was given such a generous severance package that I decided to use the money to take six months off and try to get back into film. Assuming my timing was perfect for a change, I was once again shocked to get the same reaction as five years earlier. No one would believe me. I couldn’t even get interviews. I finally found a little film production company in Hollywood that was looking for a new vice president of marketing and spent almost four months courting them and negotiating for the position. In the end, they decided to drop the marketing job and wanted me to just write scripts for them instead. Just scripts, emphatic assurances again that I would never be doing more than writing scripts. In fact, every opportunity I found during that six month period was for writing, each paying slave wages and with the usual caveat there would never be any opportunities for advancement. So when the offer came from Northrop, it was an easy decision.
I was at Northrop for 14 months before I was diagnosed with Chronic Fatigue Syndrome and forced to go on medical leave and come back home to Michigan to recuperate. That was 25 years ago. For five years I was virtually bedridden but as soon as I started feeling a little better I endeavored to transition back to work. Going through recovery though, I would have to start part-time and slowly transition back to a full career. I now found the opposite experience from what I had in California. I could not even get interviews for MBA positions; no one would believe I could handle one. But then, for fun, I wrote and produced a short video for a national PBS contest in Boston and won. It wasn’t long at all before Detroit-area producers were asking me for help with their scripts and with producing their projects.
BACK IN MICHIGAN –
WHO’D A THUNK?
Such was the irony. In L.A., the movie capital of the world, I
couldn’t get anyone to let me do more than write. They were actually quite emphatic that they
would never let me do anything else. In
Detroit, producers were falling all over themselves with promises of letting me
expand my horizons. In the next ten
years, I was involved in the production of several feature films and dozens of
short films and videos. More
importantly, I personally produced my first independent feature film which
premiered in 1999 at the prestigious Michigan Film Theater in Ann Arbor and won
admission to four film festivals. More
important still, one of my major functions producing the feature was attracting
investors and managing the budget. By
the end, I had been managing a team of over 150 people with a cash budget of
$80,000 and a deferred budget of nearly $200,000 dollars.
Graduate film school would not have
cost less and yet I learned so much more, and I certainly would never have left
graduate school with a feature film under my belt. During this ten year period, I accomplished
more towards my life career goals in film in Detroit than I had in 13 years in
Los Angeles. I also ran two small
production companies and two non-profit educational entities for writing and
filmmaking. All along, I was continuing
to try to get MBA interviews with no success at all. I also continued keeping a strong hand in
with the financial tools and studying more and more about investing. When my father passed away in 2004, I was
finally in a position to start putting some of this accumulated knowledge to
work.
FROM MAIN STREET TO
WALL STREET
To this day, I’m not exactly clear
on what has happened during the last 35 years.
Every encounter I’ve ever had with the investments industry has resulted
in a very quickly slammed door and the admonishment that they only wanted young
blood. Was I simply having the
misfortune of talking to the wrong people?
Might I have started my investments career decades ago had I only had
the right guidance? I do strongly
believe that everything happens for a reason.
On that basis alone, it really doesn’t matter. After all, I now know I would have gotten ill
anyway so I would have had to leave Los Angeles anyway. In 2007, the doctors discovered I had sleep
apnea and had had it for forty years. It
was likely the apnea rather than the CFS that had caused my debilitating
malaise. This was further confirmed by
the fact that I started improving dramatically after the apnea therapy.
If I had not gotten ill, I would probably still be working in aerospace in Los Angeles. I would never have gotten the opportunity to make the films I have made here in Michigan nor the scripts that I have done. More important, I had eleven wonderful years to be there for my parents before my father passed away, and seven more with my mother before she passed. None of this would have taken place except that I became ill. So yes, I do believe that everything happens for a reason and can hardly blame skeptical finance professors and studio executives for the course my life took.
But the fascination with investments that I have had since high school has never died. In 2010, I discovered Investors FastTrack and have greatly accelerated my study of investments since, all the more intensely since the wonderful seminar at Oakland University two years ago and their encouragement in my entering the financial services industry as a CFP at the age of 61. Truthfully, it may still prove not to be the right path. As I do with everything, I have researched careers in investments quite thoroughly. I have found this path to be rather unique in the annals of industry. Let’s face it – though there are exceptions, if you get a law, engineering, or medical degree, to name a few, the rigors of the course work are so intense that there is really little chance that if you do well in the classes that you will not do well on the job.
Not so with investments. As my own broker and a number of other professionals have told me, doing well in the school work is no guarantee you are cut out for this. That is why the National CFP Association requires two years of job experience in a brokerage firm before they will certify you. About 90% of all trainees wash out. This is not because they cannot do the work; it is because there are psychological and emotional factors in the job that many people find they just cannot handle. Matt tells me that Merrill Lynch hires about 20 people into their trainee program every year and usually only two are left at the end of the year.
This is the first industry for which I’ve found this is true. Certainly if you find that you hate the course work, that’s a pretty good indication that you should be doing something else. But the scary part is you can find that you love the training and get straight A’s but then discover you just can’t hack the stresses of the job. I may still find that. During my first semester at Oakland University, I may even find that I hate the classes. That is why they have the two year work requirement. There is no other way to find out if you’re cut out for this business without actually doing the job for a while.
The good news as Matt tells it is that even though it’s a two year requirement, it doesn’t take even close to two years to figure it out. Almost everyone knows within six months if they love this or hate it (there doesn’t seem to be a middle road) and then quit. So when you boil it down to basics, that’s really all that’s at stake here. I have to invest six months of my life to find out if I love this or hate it. But I’ll complete two of the six classes at Oakland first before I have them place me at a brokerage firm. It will be a well spent six months. I’m assuming at this point that, after a lifetime of fascination, I will not find that I hate it. I usually do exceedingly at the things I have passion for, as long as I have the right teachers. The OU faculty has already impressed me as outstanding.
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You may be wondering – what happens
to my film career? Well, this is
actually all part of that master plan.
During the six months between McDonnell-Douglas and Northrop when I was
still only 33, I was already getting doors slammed in my face because I was too
old for the film industry. Even in my
40s, but certainly in my 50s, I knew that I was way past the age where I could
go back to L.A. and try to convince some film producer to hire me as an
assistant and then work my way up. In
fact, even when I got the shock right after USC at 28 that no one would hire
me, I knew even that early that I could no longer start at the bottom and work
my way up. There was only one course of
action available to me anymore. I now
had to start at the top. I was going to
have to make my own films independently and then eventually negotiate myself
into a deal with a studio. That meant
acquiring business expertise so I could become skilled at attracting investment
capital for making my films. That is
part of why I chose this path.
So much has changed since the 1990s. The digital revolution has opened so many new opportunities. It is now so much easier to make films independently that it ever has been before. I will continue studying, practicing, and mastering this new technology and continue writing and making films on my own. I will pursue the CFP (and perhaps beyond), find out if I’m cut out to be an investments professional, then either take over someone else’s firm or start my own under the Marias moniker. If, in the end, Investors FastTrack proves to work and I am able to establish a low-risk 14% equity curve for my clients, I should indeed have people lined up around the block begging to let me handle their money. If that does indeed happen, my assumption is that a few of these people might just be interested in film. Then I’ll be on my way.
That’s the plan. That’s what Marias is going to be all
about. I will be documenting my progress
in this blog.
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