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A Most Ridiculous Story

By Dr. Steve Sjuggerud
Tuesday, November 14, 2006

Steve Wynn recently poked a hole in a Picasso a few weeks ago...

Wynn was in his office, showing off the masterpiece he agreed to sell just 36 hours before for $139 million, when he accidentally bumped the canvas with his elbow.

Barbara Walters and lawyer David Boies were two of a handful of people in his office at the time. These two are never at a loss for words – and they didn’t know what to say.

“The blood drained out of their faces...” Steve Wynn said of his guests. Wynn had declined many requests to talk about this, until now. It was “the clumsiest and goofiest thing to do... At least I did it myself.”

More ridiculous might the story of the painting... and the buyer who agreed to pay $139 million for a single painting...

The $139 million would have been the highest amount ever paid for a painting, if Wynn hadn’t bumped it. The buyer would have been Steve Cohen.

You may not know the name Steve Cohen. But you should...

Steve Cohen is probably worth $3 billion (according to the Wall Street Journal). He got there by trading stocks. The hedge fund he launched in 1992 (again, according to the Journal) “has generated an average annual return to investors of 43.5%, after he takes a sizable cut of profits.”

What’s Steve doing with his own money? Well, he’s put a billion dollars into high-end collectibles, namely art, like this Picasso. Let me repeat that: One of the world’s greatest stock traders is putting his money into high-end collectibles, not stocks.

I’ve been writing about (and personally buying) collectibles for a few years now. I think they’re one of the last cheap great asset classes. Consider this chart of the PCGS 3000 Index (of 3,000 rare coins) – it’s down by two-thirds from its peak, and trading at the same levels it was more than 20 years ago:

Steve Wynn paid $48.7 million for the Picasso in 1997 – so he’s not doing too badly. Selling it for $139 million would have been a compound gain of more than 12% a year.

But the more ridiculous part of the story is not that Steve Wynn put his elbow through the painting... It’s that the world’s greatest trader thinks $139 million for the Picasso is a good deal.

I’ve said for two or three years now, collectibles are the last cheap asset class. It seems I’m in good company in this belief.

Good investing,


Market Notes


After spending the last six years going nowhere, telecom stocks are enjoying a quiet bull market right now...

Last Thursday, we mentioned how tech leaders like Cisco, Oracle, and Microsoft are finally living up to the hype surrounding them in the late ’90s. Telecom stocks are in the same boat. Stocks like Verizon, BellSouth, AT&T, and Level 3 are reporting brisk business and rising stock prices.

We asked our resident technology expert Porter Stansberry for what’s behind the bull market in telecoms:

“Two things are driving the resurgence. One, video over the Internet (aka YouTube) is finally filling up all of the extra fiber-optic capacity that was installed in the late 1990s, giving companies such as Level 3 and Verizon’s MCI new life. Demand is again leading the market, instead of supply. 

“Second, there’s a major upgrade coming to the Internet’s operating software, Internet Protocol (IP). Called Internet Protocol version six, or IPv6,this new software will lead to even more data on the net and higher revenues for the networks.”

As our chart of the Telecom ETF displays, the bull market is just getting started. Look for Porter’s favorite way to play it later this week…

A bull market in full: The Telecom iShares (1-yr chart):

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