Author Archives: Emily Halgrimson

Harvard Material

By Lloyd Graff

The recent Kavanaugh spectacle enthralled me as much as any big sports event. It really was the Super Bowl of Senate pillow fights, and I loved it.

Now we have another fascinating slugfest shaping up in Federal Court. It’s Harvard, Yale and MIT against the Asian kids and parents who want to break down the admissions barricades. Harvard and buddies in the Ivy League are fighting fiercely to uphold their right to handpick their Freshman class of 2,000 or so students. They want the right make their schools look how they like. Can you blame them? They are their schools, aren’t they?

Oh, if life were that simple.

Harvard, Yale and MIT are all private institutions, but they are the place Presidents come from, and Presidents want their kids to go there. It ain’t so easy to tell Barack and Michelle that daughter Malia did not make the cut. How about Ann Arbor instead?

Students Protesting Harvard’s Discrimination of Asian Applicants. Courtesy of xinhuanet.com.

According to some sources many other elite schools have higher average test scores than Harvard because Harvard takes into account other factors besides grades. Harvard took Malia Obama. It accepted George W. Bush to business school, a likable “C” student. Jared Kushner, Donald Trump’s son-in-law, got into Harvard after the Kushner family pledged several million bucks to its endowment fund.

Life isn’t fair and neither is Harvard, but the hard question is “What is fair?”

Harvard thinks it should be able to take a terrific athlete who is a smart kid but no genius. It wants to be able to take a Mark Zuckerberg, son of a Jewish dentist in New Jersey, because he is a go-getter and has some special qualities. Harvard wants some African American kids in the class, whether they have perfect SAT numbers or not. The school has an almost equal number of female and male students while the national average of women in undergrad universities in 2017 was 56% according to The Atlantic. Is Harvard so wrong about putting together a more gender balanced class with a mix of rich kids, go-getters and jocks?

Way back in the day when I applied to college I knew that Northwestern had a Jewish quota, and it annoyed me when they rejected me probably because of my religion.

So it hits close to home when Harvard has a big donors slot, an athlete’s category and a “we can’t take too many Chinese and Indian kids policy” with the rationale that we might miss a Zuckerberg or Bill Gates.

In California, at an elite school like Caltech, the last Freshman class had 43% Asian students, but who’s counting? They take a more colorblind approach as a public university.

There is no perfect system of admission to a college like Harvard. The Crimson reported in March of 2018 that Harvard that accepted 1,962 of 42,749 students for its class of 2022. I really do sympathize with school’s dilemma. How do you turn down a charming, African American President’s daughter even if her test scores were not as high as an Indian kid from Louisville? The even harder question — should they? Malia Obama, with her name and upbringing may have a greater opportunity to change the world and bring positive feedback to Harvard than a kid who will probably become a chemistry professor.

The Justice Department is lining up against Harvard, MIT and Yale in this case. Is it correct from a public policy standpoint? I don’t know.

That’s why I’m really interested in what you folks think. Should test scores be the primary criterion for admission to the Harvard student body? Does Harvard or a business have the right to discriminate by body type or the quality of a smile? One day Brett Kavanaugh, Yale and Harvard Law Alumnus, may be the deciding vote on the outcome of this case.

Question: Should Harvard be able to take the students it wants?

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How to Lose a Customer

By Lloyd Graff

You never know when life will teach you a lesson when you least expected it.

I was at the local Farmer’s Market in Homewood, Illinois, last Saturday.  I was hoping to buy the last good peaches of the year.  I surveyed the sellers’ wares, and nothing looked spectacular.  I finally found a batch that appeared okay.  I asked the farmer, a young woman from South Haven, Michigan, how the peaches were.  “They’re good, last ones of the season,” she said.  So I bought them.

I took them home, left them out overnight and tried one the next morning.  Awful.  Mushy garbage.  I threw them all out.  I made a quiet vow never to buy another ounce of fruit from her again.  It was not just that they were bad. It was that she had to have known they were bad, yet sold them to me with a straight face. I am a bit of a fruit fanatic.

The next day I went to my favorite farmers’ market to buy apples for the winter’s applesauce.  I went to my favorite fruit vendor, Mr. Hardin of Hardin’s Orchard, west of Kalamazoo.  I bought a bushel and a half of apples from him and then asked if he had any good peaches.  I’ve been buying from him for 10 years, and he always tells me the truth about fruit.  If he’s selling blueberries and too much rain made them look plump and delicious he’ll tell me to wait a couple of weeks when the good ones will be ripe. Hardin knows his apples, and I rely on him.  He told me his peaches were sweet and delicious, and they were.  Every single one.  He earned my business for another year.

By the way, Hardin is the busiest vendor at the market every Sunday. It was a business lesson relearned on peaches.  If you want long-term customers always be straight with them, especially the less-experienced ones who may not know what they don’t know.  Don’t promise more than you can deliver.

Mistakes will always be made.  When Graff-Pinkert resells used machinery we do not get any guarantees from the people who sold us their no-longer-needed machine tools.  Sometimes they answer us honestly if we ask the right questions.  Actually, most people are straight if you know what to ask them and ask it in the right way.  But at an auction rarely do the sellers volunteer information, particularly if it is negative. But if you are in the business of trying to develop long-term relationships you have to tell people when the peaches are mushy when you know they are.

Question: What stories do you have about being duped?

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Swarfcast Ep. 13 – Jason Zenger on “Making Chips” and the Industrial Supplies Business

By Noah Graff

Scroll down to listen to the podcast with Jason Zenger.

In today’s podcast I interviewed Jason Zenger, president of Zenger’s Industrial Supply, in Melrose Park, Illinois, a company that specializes in selling tooling and industrial supplies to the metal working industry. Jason also has a popular podcast called “Making Chips,” which he cohosts with Jim Carr of Carr Machine & Tool.

Jason and I discussed how he eventually came to work at his family’s business and how it has grown and modernized over the years. Rather than simply distribute commodity products the company’s strategy is to become its customers’ single source supplier for tooling and machining accessories like drills, inserts, hand tools, etc.

I see some parallels between Jason’s podcast “Making Chips” and Today’s Machining World’s “Swarfcast” in our focus on similar topics in the metal working industry. Also for those of you baffled by our podcast’s and blog’s name, “Swarf” actually is a reference to the chips and grime in the belly of a metal cutting machine. One major difference between our podcasts is that “Swarfcast” is hosted by machinery dealers, while “Making Chips” is produced in the lens of a tooling and machinery supplies vender, and the owner of a machining company in Jim Carr.

Listen to “Making Chips” at https://www.makingchips.com/, or any apps (iTunes, etc.) where you get your podcasts.

Question: How are tariffs affecting your business?

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Unforgettable?

By Lloyd Graff

I’ve really been trying to stay away from political stuff in this blog, but the Kavanaugh sex allegations are just so juicy I feel compelled to comment.

I was aghast when I first heard that Senator Dianne Feinstein was pulling a “Hail Mary” with the Christine Blasey Ford letter, but the more I read about it and her, the more I felt she really does believe that Brett Kavanaugh, as a 17-year-old prep school basketball player and self-proclaimed virgin, assaulted her, groped her and left her indelibly scarred. Did he really do it while “stumbling drunk”? I doubt we will ever know. But if I were Kavanaugh testifying to the Senate Judiciary Committee, as well as to his wife and children, and Christine Blasey Ford, I would say, “I do not remember ever doing what you accuse me of, but if I did do it when I was drunk at a party as a teenager, I am horrified and appalled, and I ask forgiveness for being such a stupid awful lout.

I think about myself. I am a person who does not drink alcohol but certainly does not have a perfect memory of events 35 minutes ago, much less 35 years ago, and that is without being impaired by drinking. Could a selective fallible memory cleanse an unpleasant event 35 years ago at a noisy party? Absolutely.

Georgetown Prep School Football Team. (Kavanaugh on far left)

So Brett Kavanaugh, you’ve spent three decades trying so hard to be the guy worthy of the Supreme Court, why not step forward and set an example for the country, but even more so for your wife and daughters, by apologizing for something you can’t remember doing but Christine believes you did do. Be a Mensch (Yiddish for “man in the best sense”) Kavanaugh. It may get you your seat, or it may cost you, but you won’t be left with scars like those of Clarence Thomas after Anita Hill testified in his confirmation hearing in 1991.

********

I have very positive memories of this year’s International Machine Tool Show.

I felt grateful just to attend IMTS. Ten years, exactly, since leaving St. Francis Hospital after almost dying of a heart attack and undergoing quadruple bypass surgery, I walked McCormick’s halls for hours with a purpose.

At 73, with the experienced eyes of a writer and used machinery dealer, my goals were different than those of a person trying to decide between buying an Okuma or Mazak. Spindle rpm and software were of little interest to me. I was interested in the people, the captains and lieutenants of manufacturing who managed the exhibits, and the foot soldiers like myself who schlepped around the endless corridors.

I talked to Bruno Schmitter of Hydromat about his son who is finally working full time with the company. I connected with Mindy Mikami of Okuma, who sets up the company’s spectacular exhibit every two years and then hauls it back to Charlotte, North Carolina. The Okuma folks were all worrying about how hard Hurricane Florence would affect their homes and travel plans.

I talked to Mette McCall, who has worked so hard to put Universal Robots on the map. She told me about how Odense, Denmark, has become the robot capital of the world. She’s Danish but now lives in Mobile, Alabama. Before robots Odense was known primarily as the home of Hans Christian Andersen.

I was very happy to catch up with Michi Tajariol, whose family owns TAJMAC-ZPS, which builds its machines in Zlin, Czech Republic. Michi lived with our family and worked at Graff-Pinkert when he was 23 years old for three months. He has a close relationship with my son Noah, and he and I also have much more than a business relationship. I caught up with Michi at the ZPS booth the day before he was leaving to return to Europe. We embraced, talked about some business, but mostly talked about the important family stuff that we could access without preliminaries. Life and death, marriage and divorce, cancer, birthdays of kids, the stuff that counts. This is business too, because relationships give you access.

Finally, perhaps the most important of all my meetings at the show was spending good time with my brother Jim after a long cold period.

These are the things I’ll remember from IMTS 2018.

Question 1: What are your favorite and least favorite memories of high school?

Question 2: What left an impression on you at IMTS 2018?

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Swarfcast Ep. 9 – Russell Ethridge Small Business Lawyer

By Lloyd Graff

Scroll down to listen to the podcast with Russell Ethridge.

Today Brett Kavanaugh is being interrogated in hearings of the Senate Judiciary Committee as he attempts to thread the political needle to become a U.S. Supreme Court Justice.

In today’s podcast I interviewed Russell Ethridge, a solo practitioner lawyer in Detroit, who also listens to cases as a judge two days a month for the humongous sum of $15,000 a year. He believes the legal system must work for the guy accused of drunk driving for the second time and the secretary in the local real estate firm accused of embezzling $65,000.

Russ has been Graff-Pinkert’s lawyer for 25 years. I got to know him when he was spending a stint in Jamestown, New York, representing a French multi-national called Valeo. He sold Graff-Pinkert 13 Wickman multi-spindle screw machines for more money than I wanted to pay. Good negotiator.

Russell Ethridge

Ethridge has a knack for quickly assessing the nub of the issue in a potential legal hassle and pointing to a way out with the least aggravation possible. Many lawyers like to milk a case for the billable hours. Russ thinks the opposite way, always looking for the smartest, most efficient resolution of the problem.

Russ’s Dad was the Editor of the Detroit Free Press in its heyday in the late 1960s and ’70s. In Russ’s younger days he worked as a reporter for a tiny paper in West Virginia close to where his grandfather practiced law for 60 years.

Russ’s grandfather had a one man retail legal practice, which to some degree was a model for Russ. In the podcast Russ discusses the impact his grandfather’s funeral had on him when he observed the huge cross section of people who talked about how his grandfather had helped them over the years. Russell Ethridge—lawyer, judge, one man band—continues his legacy.

Question 1: Is our legal system rigged against the little guy?

Question 2: Would you prefer to pay a lawyer by the hour or by the job?

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The Machinist Gig

By Lloyd Graff

How much would you pay for a bottle of clean water if you were thirsty and could not find drinkable water? How much would you pay for a room if you had no place to sleep?

How much would you pay for a programmer for your CNC machines if they were down there was nobody to hire?

We are apparently in a period, or on the cusp of one, in which there are almost no skilled machinists available. In such an environment the logical thing to expect is that men and women with skills that the market demands will begin to auction their expertise to those who will pay the most. We may be entering the “gig economy” for machining people with quantifiable expertise. Smart entrepreneurs will develop websites that sell manufacturing skills by the hour or by the day. Businesses have employed freelance specialists for many years, but today’s Google economy is empowering more individuals than ever before.

The machining world has thrived in the land of the reliable and predictable—long-term clients, machinery that lasts for decades, dedicated employees who spend a career with one firm. It has worked pretty well for both employers and employees in a period of employment stasis.

Ten years ago, some companies in the machining world would have extra workers paint the floors when there was no production work. They had core people who they believed in and who believed in them. Today, life is quite different. Skilled people who dutifully worked loyally for humane owners have retired or died in many cases.

Private equity firms with professional managers own many medium sized manufacturing firms and are acquiring more every day. Their mission is to pay off debt, build equity and sell the businesses to the next firm in line. They have a short-term horizon which affects their view of employees. I would think that they would buy into the idea of a gig economy where employees auction their services, if that was necessary.

Traveling Knife Sharpener in Paris.

I think the gig economy has plenty of negatives for both employers and workers. I write this as somebody who has hired many gig workers for both Graff-Pinkert and Today’s Machining World. Paying for hotels and rental cars for the pricier freelancers can bite.

For workers, shifting to new work environments is scary and can wreak havoc with family life and relationships. Stable businesses with long-term employees develop community and rapport. Gig people are often not accepted easily in that milieu.

I think we have a real predicament in the machining world in late 2018. There’s lots of business, but not enough skilled people in the wings to hire. Owners and managers have a logical reluctance to upset the status quo by hiring new people for $10-$50/hour more than steady, loyal current workers. Meanwhile, they see contracts for the plucking or projects running late or unfulfilled.

Silicon Valley has lived with this dilemma for a long time. Workers have been drawn to the riches of the Valley, but the side effect has been sky-high housing prices and cost of living. The buses on Highway 280 and 101 are filled with folks who commute long distances for the wages in Palo Alto and Mountain View.

Most of the manufacturing in the Bay Area has moved to Nevada, which is causing a similar mini-inflation in Reno and Vegas.

For the moment, I expect a significant bump up in wages in the machining world. It will be hard to stomach for employers, who are dealing with tariffs and escalating metal prices. The result may be more work heading to Mexico and possibly China and Europe. But American manufacturers are extremely resourceful. They have weathered 20 years of headwinds. They will train young people, get by with fewer workers and hire the pricey experts when absolutely necessary. We will see the machinist as entrepreneur in isolated situations, but I doubt it will become the norm in the near future.

Question: In the future will more skilled machinists quit full time jobs to become freelancers?

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Trump’s First IMTS

By Lloyd Graff

Today, a blog about America—the politics and economics—as we head toward IMTS and Rosh Hashana (the Jewish New Year), which start on the same day in September.

Business in the machining world is thriving, though automotive is having just a little heartburn—not worthy of a Nexium, just a couple of Tums. The tariffs are barely biting yet, but the smell of them is screwing up the metals market that was smokin’ before President Trump shocked everybody by choosing to pick on aluminum and steel in order to wake up China and push a NAFTA deal through. Couldn’t he instead have chosen to penalize something like pickles and wrapping paper to make the point that America has been too nice for 25 years, and “we’re not going to take it anymore”?

Tariffs will cause a bit of a stink at IMTS 2018, but nobody, including Trump, knows if they will be a factor a year from now. The Chinese want to finesse it until Xi meets The Donald in November, and a new leader in Mexico may want to get off to an upbeat start in his tenure by negotiating a NAFTA compromise. With midterm elections in November and a bitter Supreme Court fight coming Trump could use a victory lap on his tariff gambit.

A word about the Brett Kavanaugh pick for the High Court. I don’t think the President truly cares if Kavanaugh is confirmed by the midterms. Trump paid his dues this time to the anti-abortion team by picking a strong Catholic with a Jesuit school education. His Gorsuch pick was the crucial one for him so he chose a pleasant, get-along, political guy who could smile his way through the Senate confirmation. Kavanaugh is another shrewd charmer, but the Democrats are totally dug in against him, and I doubt Republican Senators Collins of Maine and Murkowski of Alaska will vote for him even if he has soap in his mouth when questioned on his published opinions reflecting his views on Roe vs. Wade. If they vote against confirmation and Senator McCain abstains or votes against Trump’s pick, Kavanaugh is toast. This would allow Trump to pick somebody like Gorsuch who cannot be as easily categorized as Kavanaugh. I am making the assumption that the Republicans will hold the Senate in November. It is quite possible the Dems take back the House, however, from what I read.

The Democrats have a ton of money pouring into the House races, and a lot of old Republicans have walked away. The Dems have an enthusiasm edge and probably can overcome the gerrymandered districts they face.  It’s what we call democracy.

******

Getting back to business, the country and Trump have been lucky and smart in his first two years. The economy had some momentum eight years after the deep recession had devastated the country. President Obama fortunately was such an ineffective leader during his second term that he could only slow the economy down, not derail it.

Trump has been so quixotic and disinterested in Congress that he was unable throw out Obama Care. By losing the fight and being shrewdly disinterested in health care politics he was able to focus on getting a giant tax cut passed, with big positives for business. To the Democrats’ dismay the economy has roared since its passage. The economy has stunned the growth doubters by showing 3.9% unemployment and 4% growth last quarter. These are numbers many folks on the Left and Right thought we would never see again. Reducing government regulation and pooh-poohing the climate change fanatics without much push-back from the real people in both parties has shown mainstream politicians that environmental causes have little national traction, while economic well-being does.

Low unemployment makes strange bedfellows. The Dems portray Trump as a racist, yet Black unemployment, even in the worst areas, is shrinking. People getting out of jail can actually find jobs. The real minimum wage is rising rapidly even without legislation because companies will pay up if they need workers. Home sales growth is slowing in some areas because fewer folks are moving to find work, though the prices of existing homes are still being pushed up because family formation is finally rising again. Money is pouring into the United States with the repatriation of corporate profits that have been stuck overseas by repressive American taxation. The Fed is trying to push up interest rates, but the 10-year bond which dictates home mortgages continues to resist 3% because the world wants to buy the U.S. 10-year.

Most people think Trump is a scoundrel, personally. I think the Mueller investigation is a witch hunt even though it is demonstrating quite vividly that politics is a very dirty business with a lot of scummy folks. Is that news? If Mueller could nail Trump we probably would already know it.

Personally, I think Trump’s immigration policy is deplorable and bad politics. It appears that Attorney General Sessions is a nut on the topic of keeping America as much like his image of his idyllic Alabama as possible. I wonder if the Administration’s goofy anti-foreigner stance is an effort by Trump to keep Sessions on the reservation. A President always wants to keep the Attorney General on his team.

You probably disagree with some of these opinions. I’d love to read your comments and hope to see you in Chicago for IMTS. It’s going to be a lively one!

Question: Has Trump hurt you or helped you economically?

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So You Want to Buy a House?

By Lloyd Graff

I heard a National Public Radio piece recently on the shortage of homes on the market. The reporter, Ben Marcus, was reporting from Denver on his local market, which is seeing prices skyrocket. He focused on the rehab boom. Rehabs on bathrooms, kitchens and basements, along with home additions are going nuts in the Mile-High City. The parallel phenomenon is that very few new or used homes are coming on the market despite ferocious demand. A partial explanation Marcus honed in on was the large number of homes bought during the recession which were converted to rentals. The fat and happy owners are now unwilling to sell units because they are making such a sweet return renting them out. If they sold them they would owe capital gains taxes and be faced with a difficult task of replacing their rising investment with a comparable or better one.

*****

I look over my own front yard and see several lovely suburban homes that my neighbors can’t give away. I see well-manicured single-family dwellings mostly built in the 1970s and 1980s—some ranch style, some two story—on 12,000 to 20,000-square-foot lots.

Kitchen renovation

The area is quiet, well policed and modestly taxed by Chicago (Cook County) standards. Average family income is over $100,000. So why is this a housing desert? The easy answer, and everyone knows it, is RACE. The neighborhood is 70% African American and 30% White with a smattering of Asians, Latinos and maybe a stray Inuit or Apache.

In my day job, I am a used machinery dealer who spends his days assessing the values of machine tools, looking for mispriced lathes and mills.

I’m also a huge baseball fan and I love to analyze Major League Baseball trades, looking for the next Justin Verlander deal that locks up a pennant for Houston while leaving Detroit with three very young prospects, a jockstrap and a pair of used socks.

If a house sells for $800,000 in a fairly White suburb 28 miles north or west of downtown Chicago but sells for $200,000 next door to me in the south, when if ever, will the price disparity begin to narrow?

I am an “expert,” I think, in pricing anomalies, but this emotional one defies my reasoning. I do not know the algorithm of race. I have spent many years trying to nail it down in an analytical way, but I cannot get my arms around it.

What I observe in my area is that the older White people are dying or moving to sterile institutions that cater to their needs. The wealthiest ones are moving to downtown Chicago, Florida or Arizona, or where their kids live if they like one another.

Some African Americans from Chicago or other cities do buy into my neighborhood, but lenders may not see the area as particularly attractive for appreciation. Young Whites seemingly are afraid to be pioneers. So, the enormous price differential continues, even in good economic times despite rising home prices all over.

Racial fear, animosity, naiveté and stereotyping are all at play, yet racial intermarriage is on the rise and Barack Obama was a two term President not long ago.

Things are “a changing”? Well, maybe. But when the spread narrows $100,000 between my home and a comparable one in the the North or West Chicago suburbs I will begin to believe it’s happening

Question: Is it stupid to buy a home?

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Junk or Treasure?

By Lloyd Graff

David Killen is an art dealer in the Chelsea neighborhood of New York. He is also a treasure hunter of the modern variety, a profession a humble used machinery dealer like myself connects with.

David is the kind of guy who frequents flea markets and auctions, not just because he needs inventory for his own bi-monthly auctions of prints and Tchotchkes, but because he loves the hunt. He’s 59 now and has been schlepping around art fairs and Swap-O-Ramas for 50 years. He thought that one day he might find an overlooked stash of value. It looks like he finally did.

Late last year at an estate sale in Ho-Ho-Kus, New Jersey, Killen bought the contents of a locker in a warehouse. The property had been owned by Susanne Schnitzer, who was the partner of Orrin Riley, a prominent art restorer who had restored several paintings by the Dutch painter Willem de Kooning. Riley died in 1986, and Schnitzer was run over by a garbage truck in New York City in 2009.

Schnitzer’s friends from New Jersey were her executors and they ultimately tired of paying the warehouse fees on the odds and ends in the locker. They had an auction house peruse the contents before they sold it, and it was pronounced “junk.” A bunch of prints of little value.

Killen lives for times like this. The rules of the game in situations of this nature are that the bidders get a glimpse of the contents but cannot analyze the goods in depth.

It’s a lot like bidding on a warehouse crammed with the flotsam and jetsam of 50 years of screw machining.  ACMEs, Davenports and New Britains caked with chips, clotted oil and crud, chip conveyors and stock reels askew, making for an obstacle course tougher than an an American Ninja Warrior challenge. I’ve seen men fall into the base of 8-spindle ACMEs, never to be heard from again.

Untitled XXXI, Willem de Kooning, Painted 1977. $21,165,000 at Auction.

David Killen knew the locker’s contents had the “junk” judgement by the fancy auction house, but he also knew the history of Orrin Riley being a confidante of de Kooning back in the 1970s when nobody knew his name. A guy like Killen develops a nose for value over 50 years. Did he have special inside knowledge about the locker? No. I can say this confidently because he hauled the contents out last December in his own truck and didn’t even check everything out immediately. It was just another collection of dusty goodies that he would auction off in his sweet time.

But then he saw the wooden boxes that said de Kooning printed on the outside. Maybe these weren’t prints. He had suspected there could be some gold in the locker when he bought it, or he would not have paid $15,000. He knew the background of Orrin Riley, who had done restoration work on de Kooning and begun the restoration department for the Guggenheim Museum. Riley was “big time.” David Killen’s nose for treasure smelled something sweet.

Last week Killen made an announcement to the press that he owned six authentic, but unsigned de Kooning paintings. They were authenticated by Lawrence Castagna, an art restoration authority who had worked both for Riley and as a studio assistant for de Kooning. Castagna feels confident that six of the paintings are the real thing. Willim de Kooning died in 1997, and his foundation in Manhattan does not authenticate works by the artist.

Killen also found a painting by Paul Klee, the famous Swiss painter.

The most recent comps on the seven original works of art, though the de Koonings are unsigned, would indicate a value of around $100 million for the group. What a haul for a struggling art dealer who deals mostly in nice prints.

As a lifelong treasure hunter who has never found a de Kooning myself, I love this story. I am not jealous of David Killen. I am thrilled for him.

His story is about the chase, not the pot of gold at the end of the rainbow. I could have done a lot of other things in my career, but the machinery treasure hunt and all of the fascinating folks I’ve met along the way has kept me passionately in the game. I love it as much as ever, probably more, because I am acutely aware of the time limits we all have.

I really hope the de Koonings are the real thing, but honestly, I don’t think it will change David Killen much either way. At least I hope not.

Question: Have you ever discovered hidden treasure?

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Pull the Goalie

By Lloyd Graff

Malcolm Gladwell recently put out a brilliant episode in his “Revisionist History” podcast series about his Number One rule for living — “Pull the Goalie.” (Click here to listen)

Gladwell interviews two of his buddies, Clifford Asness and Aaron Brown, successful Wall Street money strategists. They analyze everything. It’s what they do for a living and just for the heck of it. They test their offbeat theories with mathematical precision, looking for the absurd that carries the germ of truth. They love being “disagreeable,” espousing truth that defies the conventional wisdom and makes “normal” folks feel extremely uncomfortable.

They recently published a paper in which they argued that the hockey strategy of pulling the goalie to add an extra attacker when down by one goal with only one minute left on the clock was stupid. They argue that the goalie should be pulled with 5 minutes and 40 seconds left if a team needs to tie the score and force overtime. If the leading team scores on the unguarded net, so what, you would have almost surely lost anyway with the time worn strategy of pulling the goalie with only a minute left. If you end up losing the game by two or three goals instead of one, who cares. At least you gave yourself the best possibility of winning. They claim their calculations prove the “pull the goalie” strategy handily.

It makes exquisite sense if you think about it—in hockey and in life. The conservative “follow the conventional rule” approach is a recipe for failure and mediocrity. Innovative intelligent risk pays.

Courtesy of www.theglobeandmail.com

In sports, we see numerous examples of conventional wisdom being overturned today. The move to 3-point shooting, in some cases more than 50% of the time, has changed the NBA game radically. It is not uncommon to start a fast break and then pitch the ball to the corner for an open 24-footer, rather than rush to a contested goal near the basket.

In baseball the starting pitcher is now expected to go a maximum of six innings because “stuff” often starts to fade as the hurler reaches 100 pitches. Also, Major League hitters slug significantly better against pitchers they have already seen twice in a game.

In football the Philadelphia Eagles demonstrated that going for it on 4th down is often a better strategy than punting or attempting a long field goal.

But aside from sports, the “pull the goalie” approach is useful in business. I think people are too fearful about changing jobs and careers, and bosses are too careful about firing people. The comfortable path is to stick with the same company, the same team, the predictable career path, the boss you know. But if you think pulling the goalie is your rule for life, then making a shift before the conventional wisdom or your buddies tell you to do it might well be the right course.

Malcolm Gladwell uses another “pull the goalie” example in the podcast by bringing up horror film plots where a mother and two young children fall victim to a home invasion by a psychopath. When it becomes obvious to the Mom that she can’t protect her family from the intruder and her only chance at saving them is to flee the scene to go get help, what should she do?

Society as well as natural parental instinct would say that a mother should NEVER leave her kids when a predator is in the house.

But theoretically she should “pull the goalie,” do the unthinkable, the thing for which she might second guess herself forever. Otherwise, everybody dies instead of trying that one last chance to save the day.

The life lesson is to consider the odds, accept being uncomfortable, ignore the ostracism of your peers. Doing what’s easy, going with the crowd, might get you killed.

Question: When would you pull the goalie?

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