I Wish I Didn’t Know Jack

I need to apologize to a lot of people. In the 90’s , I would always recommend GE to my clients. The company was making money hand over fist. Owning shares of GE was like owning a mutual fund: industrial stuff, medical equipment, insurance, financial services, plastics (Benjamin?), all kinds of shit. And Jack Welch! A brilliant friggin’ manager! How can you lose? It was an awesome company.

Neutron Jack retired. But not to worry, the new boss, Jeff Immelt was groomed and ready. When Immelt took over in 2001, GE was a $48 stock. Today it’s barely $18. Thanks to GE Capital and the Financial Crisis of 2008-2009, the stock got as low as $6. When the financial world was coming to an end, I got in touch with GE’s investor relations department and they were helpful enough to send me price history data on the stock going back to 1901. The last time the stock got that low was at the beginning of the Great Depression. Owning GE was like owning a fund. Not a mutual fund, though. It was like owning a very high octane hedge fund that’s managed by a bunch of assholes. Interestingly enough, during Welch’s tenure the financial services segment of the business was responsible for 40% of all revenues.

What happened to turbines, and plastics, and R and D? Ah, a lot of those businesses weren’t profitable. Over the course of two decades, Welch shut a lot of them down shedding 110,000 employees in the process. He also said that “…shareholder value is the dumbest idea in the world.” Ironically, Fortune Magazine crowned him “Manager of The Century” in 1999. Hmm. Disdain for shareholder value. A $48 stock that’s now an $18 stock. Manager of the century my ass.

Basically, though, I’ve come to realize that Jack Welch is an asshole. It’s not necessarily his management style. It’s just who he is. A good clue as to why he feels the way he does about shareholder value would be to look at his marital history. Welch did the predictable, big American company, upper level manager thing as soon as he got to the where he wanted to be: he dumps the first wife that raised the children and followed him around to all the shitty transfers in backwater towns and marries the M and A attorney who, surprise, he’d been banging. Absolutely typical. Is this a course they teach these dickheads in business school? Sadly, my sister in law is going through same experience only her soon to be ex-husband (a lower, upper level guy at a large American manufacturer) was shtuping some skank in accounting. Fishing off of the company dock. Hopefully, he’ll get shit canned after the settlement. The upside is that I won’t have to listen to his bullshit during the holidays.

Back to Jack. When wife number two outlived her usefulness, he traded her in for wife number three: Suzy Wetlaufer, the editor of the Harvard Business Review who was doing a profile on Welch for the magazine. Maybe she’s Jack’s soul mate. Prior to Welch, Suzy, according to a trashy but great story in New York Magazine, was purportedly boinking Jaques Nasser during his tenure as Ford CEO. She was doing a profile of him for the Harvard Business Review. Shocker. Prior to that, it was a 22 year old editorial assistant. I guess Welch was the one who was dumb enough to marry her. Jane, the second wife, is said to have walked away with $180 million. That’s some expensive poo nanny.

Now, this lovely couple has a reality show on CNBC called “It’s Everybody’s Business with Jack and Suzy Welch”. The premise is that Jack and Suzy help a team at a well known company solve a particular problem. That sounds great and all, however, the show is really a 30 minute infomercial for the particular brand they’re working with. The first one was Hertz, then Pepsi, and the most recent was Dominos pizza. So, to me, the message says “…rent a car, drink a Pepsi and eat a slice of crappy pizza while you drive the rental car.” It’s an annoying show hosted by annoying people. He looks and sounds like a character that never quite gelled for J.R.R. Tolkien. She looks like a giant praying mantis. Maybe she’ll eat Jack’s head on the season finale.

In addition to the T.V. show, GE pays Welch $8 million a year. For what? To not drive the stock from $18 to $4? Look, Jack, the shareholders were YOUR boss. Your disdain for shareholder value reflects how you really are. You really don’t care about anyone but yourself and whatever you may be tapping at the time.

So, to clients that bought GE between $48 and $23, I’m sorry. I truly am. My work should have been better. Welch ditched wife number one six years after taking the wheel. From what I can tell, Jeff Immelt has the same wife he had 10 years ago when he took over. He’s already beat Jack by 66%. Maybe it’s a buy at this level.

The Last American Small Business Virgin

In 2008, many months before Lehman Brothers failed, I didn’t follow my own advice. Advice that I give weekly, sometimes hourly during a rough market session, to my clients. I panicked. Having daily court side seats for a crisis that began in 2007, I was worried. Of course, everybody was worried but I was “Oh shit! It’s Great Depression v2.0 and I’m gonna be selling apples!” worried. I remember sitting in my office on Valentine’s Day that year when the Auction Rate Securities market just quit working. I could literally hear it grinding to a halt. That sickening, metal on metal, mechanical failure grinding. I knew it was going to be bad.

So I panicked. If the economy, the world, and everything else is going to hell, that last thing anyone would want to buy would financial investments. I’ve been through tough markets before and I love the racket I’m in but I have a family that includes two small boys that need to be educated. I needed a “Plan B” and I didn’t have one. So what did I do? I bought a small business that was already operating and had been for twenty plus years. It’s a service business that’s labor and machinery intensive. The previous owner, despite health issues, stayed on with us and helped out for a while (I didn’t give up my day job. Too much time and love invested in it.) because, as you can gather, I knew virtually nothing about the business I was buying. Guess when we closed on the purchase. That’s right. Exactly a month before Lehman went down in flames.

Great “Plan B”. Buy a business you know nothing about right at the onset of a recession, maybe a depression and if you need to borrow money to buy a new piece of equipment or get through a tight spot, don’t bother. No one has any and the banks don’t want to lend it out now that you want to do something productive with it. But they were OK with waterfront McMansions in Clearwater, Florida. Needless to say, it’s been a tough, learning experience. Basically, I’m a business owner and I have to pay people all of the time. I dread and hate Fridays.

I was lucky enough to be a teenager in the early 80’s which meant consuming some of the worst teen movies in film history. Typically, they had great soundtracks and that’s what would suck us in. Just like Annette Funnicello and Frankie Avalon beach movies. John Hughes movies are exempt. They were awesomely cheesy. I can still watch them start to finish. One of the most classic crappy teen 80’s movies was The Last American Virgin. It was pretty much the stock 80’s teen movie: three guys, wearing awesome, 80’s cheese threads from Chess King, in a race to lose their virginity, getting venereal diseases and broken hearts in the process. Don’t forget the abortion. Someone always had to get an abortion.

Anyway, the main character, Gary, falls in like with this total whoredog skank named Karen who just likes him as friend so she has sex with his best friend who knocks her up but denies it. In steps Gary who helps her pay for the abortion. The scene that sticks in my mind the most is Gary running around, literally running, scrambling to scrape…no pun intended…the money together. Borrowing money from his boss who owns the pizza parlor and selling his bitchin’ 80’s, all-in-one stereo while U2’s “I Will Follow”, which was a big song a the time and one of the few I could actually play on guitar, played on the soundtrack. In 1982, I couldn’t relate to Gary’s angst. Today, as a small business owner, I can totally relate.

A lot of times, I feel like that guy, running around, trying to raise money to pay for an abortion. An over due license renewal. An insurance premium. Payroll. A bank note. It stresses me out. I hate it. I can feel it aging me. Everyone has their hand out and wants to get paid. Everyone except me. I feel as uneasy as Gary in the movie. Some days I think it would be easier getting the money together for the abortion. But I’m not trying to terminate something. I’m trying to keep it alive.

In the end though, by the grace of God and anything else that will help, it seems to get done. Everyone else gets paid. The world didn’t end after Lehman. I still make a good living in the investment racket and my “Plan B” sputters along. It’s my baby and I’m keeping. Please, papa. Don’t preach.

These Are Some of The Things You Left Behind

Oprah’s gone. Well, not exactly. She’s got her own cable network, inconspicuously called “OWN”, as if that was her goal all along. I’ll admit that I never really watched Oprah’s show. I’m not a fan nor am I an anti-fan. The main reason for this is that I’ve never been able to figure out what Oprah does.

At least once a month for the last I don’t 15 years or so, I’ve asked my wife, at least a couple times a month what Oprah did. “Oh, Oprah’s great!” she replied. I shook my head. “No, sweetie. I didn’t ask how she was,” I said. “I’m trying to get a bead on just exactly WHAT Oprah does. What does she do?”

“She does the show.”

“Yeah, but what does she make? What does she produce? Steve Jobs started Apple and invented the MacIntosh and then the iPod and all of that other stuff.”

“She has really great guests on the show.”

“I know…but…oh never mind.”

Now, my wife is one of the smartest people I’ve ever met, both academically and practically. But it worried me, somewhat, that even she couldn’t explain what Oprah did. However, I looked around my house, mainly on the bookshelves.

Book sales. Oprah’s job was/is to drive book sales. Mostly by people she has on the show. Here are some titles I found.

In The Kitchen With Rosie: Oprah’s Favorite Recipes by Rosie Daley – This was a cook book by Oprah’s personal cook. I’m pretty sure this was the first Oprah endorsed book that was bought. The oven fried chicken was actually pretty good but everything else was too damned hard to make.

Ageless Body, Timeless Mind by Deepak Chopra – This one floated around the house for years. One of us would read it for a bit then put it down. It was a tough, tough read and, frankly, neither of us could figure out what the hell the author was talking about. Something about meditating and not eating hydrogenated fats and transcending into outer space.

Some book by Dr. Phil – Didn’t read it. Don’t plan to. Last time I saw it, I think it was in a corner in the study under a pile of old bills and credit card offers from 2005. It’s by Dr. Phil. Enough said.

You: The Owner’s Manual by Michael F. Roizen, M.D. and
Mehemet C. Oz, M.D. – Ah yes. Another gift from Oprah: Dr. Oz. I’ll be honest. I like Dr. Oz. He said that a doughnut every now and then won’t kill . He also recommends that we have sex for at least thirty minutes four times a week. Doughnuts and sex? That’s genius. My mom gave me this book. I haven’t read it either. I flipped through it a couple of  times with my sons. We laughed at the black and white line drawings of penises.

20 Years Younger: Look Younger, Feel Younger, Be Younger! by Bob Greene and some other people who are obviously better writers than Bob Greene – This is the latest volume. Apparently, Bob Greene is some kind of fitness guru. From what I can tell by the way the menu has changed at our house, it’s mostly a cook book (a lot of ground turkey) which is where our people who Oprah likes who do books journey began all those years ago.

There are worse things you can leave behind: scorched earth, genocide, herpes, a really crappy tip. Books are ok, I guess. Even if you didn’t write them. Old episodes of a talk show probably don’t translate into eternal syndication a’la “Gilligan’s Island”. But it wouldn’t surprise me if there was a Broadway adaptation of “The Oprah Winfrey Show” in the works. If they could get a show out of  a bunch of crappyAbba songs, think of what they could do with Tom Cruise jumping on a sofa.

-Adam Fischbaum