It is with great sadness that I report the death of one of our own, John Kuhn, of a heart attack. He was beloved by all who met him. He was a great family man, a great scholar, a great athlete, a great writer, and a creative person who was loved by everyone who met him. I had the pleasure of giving him some happiness from time to time with instructions in tennis.

He was a good man, always optimistic, totally busy with a hundred interests, always learning new things and always striving.

Charles Pennington writes: 

I was very fond of John. I knew him mostly from limited visits, however, even in that amount of time it became clear that he was a very good man, just as you describe, and curious to learn new things. He would chat with me about programming. Mr. Kuhn had a good tennis game as well, and he always got out on the court and gave everyone an enjoyable game. It's very disappointing to hear of the loss. I hope we can convey to his family our appreciation for him. 

Laurel Kenner recalls:

John Kuhn was wise and funny. I only met him in person once, but he went out on a limb for me in a personal medical matter, treating me like a family member. It happened in 2005 and I was scared. John heard about it, and arranged for me to go up to Harvard, where his niece Lisa is an important physician who specializes in the pertinent field. I went up to see her, and she was wonderfully kind and superbly efficient. She was so good that I went back to her for a follow-up just two weeks ago. She squeezed me in. No problem in either case, but a lesser doctor might well have messed things up. 

Here are some of John's posts that show what a great storyteller he was, what a smart guy, and what an individualist. I'm sorry for this loss.

At: 1/29/05 14:18

"I trade for myself," I say if asked, as it helps me not touch client portfolios of common stock which can often do better if left alone. Another thing I no longer mess with is home financing. After much diddling in the past, I’ve converted and would recommend a fixed mortgage. When things go awry, the last unpleasantness one wishes to heap on current troubles is a rising monthly mortgage outlay.

Increasing costs happen anyway. Heat, water, electricity, etc. Where I live, real estate taxes compound at over 5% per annum (since I installed my first computer tracker about 11 years ago) despite prop 2 1/2. Communities roll with the economic times and when times are good, the town managers are ingenious at coming up with vital "extras", new fire house, new high school, etc., which the town approves in haste. These become part of the compounding base. Your real estate taxes will go up each year and if your experience is like mine, always by more than you expected.

The only thing that has grown faster than real estate taxes is home value. Again a vindication of a good principle: if you are young, get the biggest house you can handle.

In the past few years the most consistent mis-estimate has been expectation of increasing interest rates. Again now the sentiment is heavily tilted against duration by the bond gurus. Perhaps they will be wrong again. But all this tells me, after living in all kinds of unpredicted rate environments, is that consistent accurate prediction constantly confounds the experts.

It is very hard to move to a fixed rate at say 6 3/8 having passed on a 5 3/8. But if you have a fixed at 5 3/8 that is not several years old, it's easy enough to roll it to a lower fixed.

At: 4/25/05 10:14

Times have changed: I worked in Paris (Banque Morgan as it was then called, Place Vendome) in 1960. In those days the extreme strength of the dollar combined with very cheap prices to make even the best meal equivalent of half a dozen Big Macs. Perfectly potable wine $.20 the bottle. At the bank you were fed free lunch, usually outstanding quality. And you could get a bottle of wine for an extra 30 cents.

We lived at the time 50 km south of Rome on a nice hunk of land with a beautiful farmhouse acquired for $12k. Good governance was seldom discussed. Even there the food was too distracting as was the stunning beauty of the Italian countryside.

Buffet was already buying stocks for the long haul. Our villa would have been a good spot to park some money as well. We put 10k in and due to dad's death in '85, had to sell for $300,000. 1985 was a while ago. Dad was always a bit lucky and his time to depart this mortal coil was one more example, as thence the cost of living in Europe, with dollars or even local currency, began a very earnest escalation, and the quality of his life, physically, socially, and financially was beginning to decay. And contemporaneously with his death the idyllic period when in Rome one could live like a king with relatively little died too.

I'm not sure if one can't point to overall degradation of currency worldwide combined with prosperity of a more real sort creating a far more intense competition for just about everything. Locally this year, to provide the creature comforts our students deserve along with paving the cracks in the road, it's another $500/year from this taxpayer. Real estate taxes here have compounded at 5.5% under prop 2 1/2 over the past dozen years. To insure myself and wife with good health plan, $16,000 a year. Data I have read recently on the lack of advance of most of the workforce in terms of real wages for many many years suggests that the challenge for all of us is to stay at the top 5% of the wage earner universe, or learn to appreciate less worldly pleasures — and shop at Wal-Mart.

Secrets and Lies

For the biggest of the older bucks, it's the stock market front and center now and forever. And the biggest of the bigs not only own stocks, they own investment management companies, venture capital companies, and now LBO companies. The maximally moneyed types have been doing VC investing at least since I was in my teens, 40 years ago. That's in the US. Also I had a wealthy Swiss client 20 years ago who kept a rolling stable of a dozen money managers around the globe, weighting the contributions on performance and strength of the local currency.

When I was sacked, the agent comforted me with, "Well, you outlasted all but three of the of the dozen on board when you started." They paid the highest fees, found the best managers and those that did not keep up, "aufwiederluege." Hundreds of millions in the old days, when that amount could really spend.

Still, one of the best way to make big money is to print it. That's VC with other people's money, ownership participation and performance fees. If you can hit a really long ball, it can become a gift that keeps on giving. I just Googled the first WASPy VC name I ever came across, Greylock Partners, and up popped a list of three of its best competitors, and on top of that list was the second VC name that had come to mind, Accel Partners, much younger but of similar lineage. I think too of Bessemer and Morgan Stanley. Even J. P. Morgan. It may not take money to make money, but it sure helps. When William Weld ran for the governorship of my fine state of Massachusetts, he was asked by a reporter, "Where are you going to get the money to finance your campaign?" Weld, displaying his intuitive grasp of the common touch, replied, "We don't get money, young lady. We have money!"

The old rich get blasted for a variety of reasons, not all without merit. But whatever their faults, they endure, as they've long known the basic secrets in plain sight about the stock market, not only about the long-term upward compounding of the market, but also the huge benefits available with leveraged compounding that redounds from the judicious application of huge chunks of other people's money.

When I was about 40 I started to wonder, "If the market mostly always goes up, why aren't there more management companies out there owning stocks and claiming the pleasing increases in clients' portfolios were the result of the intense sweat of their own brows?" And collecting the ever-increasing fees the market mistress hands out with pleasing generosity irrespective, within tolerable limits, of whether one's relative heap had been "naughty or nice." Now that there are more mutual funds than stocks and the hedge fund population is at all time high, what was in my youth a mysterious and seemingly almost private realm is now the province of all.

It reminds me of professional golf. We see the names of a handful of top players, and are ignorant of the others in the top 150 beavering away in the sun, making from one to several million a year.

In the money management game, there are thousands of me-too companies, nowhere near the top 150, providing tens of thousands of portfolio managers and analysts and support staff with very nice lifestyles despite the well-broadcast reality that investing directly in the S&P is available almost for free and does better than most of the money managers. The market supports so many. I'm most amazed by the crumb feeders: remora getting paid for their variations on the books.

Jeff Beckwith adds:

I am very sorry to hear that John is no longer with us. I too was a recipient of his counsel. About this time last year I asked for advice on a particular situation my family was facing and John responded. He sought out a couple of his long-time friends from college to help with answers and in the end provided my wife and me with some very cogent and valuable information that helped clarify our decision on the matter. The world lost a very good man. 


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