Invest like Peggy Guggenheim

Even investors have mythic heroes

Warren Buffet leads their pantheon. The gifted money-maker bought his first share at 11, invested in land at 14, and took control of a textile mill at 35.

The name of the mill was Berkshire Hathaway. It might sound familiar. Buffett used the mill as a holding company for investments in Coke, Heinz, Apple, American Express… the list goes on. 

Buffet is a “value investor”

The “value investing” philosophy is the open secret to his success. He buys underpriced, but solid, companies then holds them for the long term.

Sticking to that course led him to riches. And, if that wasn’t kick-ass enough, since amassing a personal fortune of $100 billion, he’s done his utmost to give it away.

Small wonder he’s a Zeus-like figure to capitalists the world over. But I have another name for their Mount Olympus…

I nominate the heiress Peggy Guggenheim

When the Second World War broke out, Guggenheim was investing. She strode through Paris with a shopping list in the handwriting of art critic Herbert Read. Her portfolio grew by “one picture a day”.

She fled the continent after spending $40,000. But she had the beginning of a billion-dollar art collection: work by Picasso, Miro, Magritte, Man Ray, Dali, Klee, Chagall and other members of the avant-garde.

Were these shrewd investments?

They certainly paid off: Guggenheim ended her days in a palace on Venice’s Grand Canal (private gondola included).

But she wasn’t aiming for wealth. And there was no market for the pieces she bought. At least, there wasn’t when all of France was subsisting on rations, behind blackout curtains.

The spending spree came at a hinge point in Guggenheim’s life. (Her life had enough to resemble a squeeze box.) Guggenheim had just shuttered a gallery in London. The works hadn’t sold, so she resolved to set commercial concerns to one side.

Instead, she’d collect – for lack of a better phrase – weird stuff that stood the chance of being historically significant:

I felt that if I was losing money that I might as well lose a lot more and do something worthwhile.

The sentiment would make Buffett shudder

But, really, Guggenheim was preparing to hold for the long term. You can see what I mean the next time you’re cruising the Grand Canal…

Stop at Guggenheim’s 18th-century palazzo. She opened it to the public in 1951. You’ll be greeted by artworks by Cubists and Surrealists, many of which were snapped up during her wartime Supermarket Sweep.

Culture vulture or pure vulture?

Was it ethical, buying from artists who were halfway out the door, anxious to flee German invasion? I think so.

The Nazis would have burnt the pieces as “degenerate”. And who else would have protected them? The Louvre refused to store Guggenheim’s collection because it was “not worth saving”.

That seems remarkable to modern art lovers. But, as Warren Buffett said, it takes time to appraise value:

In the short run, the market is a voting machine but in the long run, it is a weighing machine.

Guggenheim was ahead of her time

We should be grateful to a woman who committed herself to “serving the future instead of recording the past”.

And Buffet might understand Guggenheim’s offering to posterity better than most billionaires. In 2006, he pledged to give away 99% of his wealth. Legacy must have been on his mind.

So, let’s end with more words from Buffett, “the Oracle of Omaha”. See how his wisdom finds a model in Peggy Guggenheim’s life:

  • “Never invest in a business you cannot understand.” Peggy had many tutors. She befriended Marcel Duchamp in Paris. And the artist – famous for submitting a urinal to an exhibition – “taught me everything”.
  • “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Few would give a monthly stipend of $150 to their uncle’s maintenance man. But that’s how Peggy Guggenheim persuaded Jackson Pollock to paint a mural for her apartment. The rest is art history.
  • “The asset I most value, aside from health, is interesting, diverse, and long-standing friends.” Guggenheim settled in Venice after years in Paris, London and New York. She had friends in all corners of the globe. Stravinsky, Cocteau, Capote and Gore Vidal all dropped in on l’ultima dogaressa, the last female doge.

What a splendid use of money.

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