Born on Christmas day in 1871 Russia, Alexander Scriabin was an extremely gifted musician with gigantic ideas. Trained in his youth under the same tutelage as Rachmaninoff, this brilliant composer published his musical works around the beginning of the twentieth century.
Scriabin purportedly suffered from Synesthesia, a condition in which one type of stimulation creates the sensation of another, such as when the hearing of a sound brings to mind a certain smell or colour. This is a legitimate condition, but Scriabin seems to have embraced it with rare enthusiasm. He even produced a musical scale associated with colors, assuming that other enlightened individuals could also make these same sound-colour associations.
Taking the matter to what may have seemed like natural conclusions to him, Scriabin envisioned a mammoth composition which would last fully seven days and nights, encompassing bold music, stunning visuals, evocative aromas, dancing, chanting, marching, and so on.
He entitled the work-in-progress: Mysterium. Here is how he described it:
"There will not be a single spectator. All will be participants... The cast of performers includes an orchestra, a large mixed choir, an instrument with visual effects, dancers, a procession, incense, and rhythmic textural articulation (i.e. chanting)."
Scriabin envisioned the multi-media, multi-sensory orchestral work to include great pillars of incense to emit synthetic fragrances appropriate to each musical movement, bells hanging from clouds, coloured lights, and other spectacles, all set in a remote majestic temple location in the Himalayans. He expected the experience to be so emotive that it would transfigure its cast into more enlightened souls and literally usher in the end of the world, replacing the human race with nobler beings.
It was a grand idea - too grand. He could never more than scratch the surface of its creation. After twelve years of effort he came up with a bold rough draft of a seventy-two page prelude. In April 1915 Scriabin developed a blemish on his lip which became infected after he nicked it shaving. The infection grew, and eventually killed him at the young age of forty-three. The talented artist with great dreams of creating a globally-transformative masterpiece died from a pimple on his lip.
A disciple later tried to convert the prelude sketch Scriabin left behind, devoting some twenty-eight years of his life and career to it, but only completing in into a three hour long work. With the combined total of forty years in the making, (by two extremely talented musicians) the effort absorbed roughly four-and-a-half man-years of work per minute of finished product, or roughly a month's work per second of output.
Bummer.
I reverence the efforts of inspired artists. I am in awe, literally moved to tears by some of their work. But, for most music lovers and investors, our tastes tend to be a little less mystic, thriving on accessible, straight forward ideas.
Although likely without the eccentric flare of Scriabin, some investors still manage find ways to overcomplicate finances while overlooking the obvious risks that could cause them significant grief. To illustrate this point, here are some very simple ideas put forward by a man who, despite his advanced education, always shows a knack for uncomplicated truth. Many say he is better at investing than any other.
According to Forbes Magazine, Warren Buffet was worth some 58 billion dollars last fall, nearly all of it gained by following such platitudes as noted here:
1) "Beware of geeks bearing formulas."
2) "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ."
3) "Risk comes from not knowing what you're doing."
4) "It is not necessary to do extraordinary things to get extraordinary results."
5) "Buy companies with strong histories of profitability and with a dominant business franchise."
6) "Derivatives are financial weapons of mass destruction."
As you can see, Buffet's style is decidedly not mysterious. And it works.
One other idea which can and should guide our efforts to save for the future is clearly identifying our personal risk appetite. All this usually refers to is how much of your portfolio you should have invested in the stock market.
Two main factors influence this:
1) Your age: The older you are, the less time your portfolio has to recover from stock market corrections.
2) Your personal reaction to swings in the value of your investments.
Even blue-chip stocks are subject to more fluctuations in value than something very stable like a GIC or investment-grade bond. But this is not to suggest that one is better than the other. If you had invested one hundred dollars in five year GIC's in 1950 and rolled it over through to December 2012, you have more money now than if you had sat in cash, but not a lot. You would have had relatively few worries about value fluctuations along the way.
If on the other hand you had invested the same hundred dollars in the broad stock market, you would have accumulated a good deal more. To one investor this more attractive return is worth the additional risk, but to others, the periods of volatility would have been far too frightening in the short term to stomach.
Which investor are you? Are you somewhere in the middle? An hour with an inquisitive advisor, and an annual review touching base on how your portfolio risks feel today, are simple, but crucial elements to the symphony of ideas which can form your portfolio. Don't overlook them. Otherwise you might hear numbers which mysteriously feel red, or see returns which evoke the smell of bad cheese.
Mark Ryan is an adviser in Prince George with RBC Wealth Management, Dominion Securities, and can be reached at [email protected].
