On March 1, 2011, Alpine Capital Bank proudly marked its eleventh anniversary. I would like to take a moment to formally thank the people who have helped shape the ACB community during the past eleven years. Most of all, I extend heartfelt thanks to my steadfast staff for their many contributions to the Bank during the past decade!
To give you an idea of Alpine's employee loyalty, I will share a few statistics highlighting our staff's many years of service. Of Alpine's 16 employees, thirteen have worked at Alpine for four years or longer. On average, Alpine employees have worked at the Bank for six years. And, more than 50 percent of our staff has worked at the Bank for eight years or longer!
Alpine is constantly evolving. In the near future, we anticipate a few exciting new additions to the Bank's operations. In the upcoming weeks, you will receive an e-blast announcing the launch of our newly redesigned website. We also have plans underway to launch new Alpine Visa debit cards in the next few months. Stay tuned for more details!
Our Spring 2011 newsletter is especially invigorating! Please take the time to peruse its contents. Inside, you'll learn about different ways to analyze risk, and gain first-hand insight into the New York luxury real estate market. Also, take a peek at the hidden gems of the New York art scene, and look into the fascinating world of watch collecting. I hope you enjoy this edition as much as I do!
David M. Aboodi
President and CEO
Meet the People
Maria Lavarino is the new face in Alpine Capital Bank's Loan Department in the role of Loan Officer. She has extensive experience in loans and credit, investments, commercial bank branch operations, accounting, and real estate. She spent the first 10 years of her education at Nazareth School, an exclusive school for girls administered by the Hiyas de Jesus. Moving on to college, she went to the Philippine School of Business Administration graduating Magna cum Laude with a Bachelor of Science in Business Administration degree and major in Accounting.
She is also a Certified Public Accountant in the Philippines. She completed the required credits for an MBA at the La Salle University before she became a part time professor of Accounting in her Alma Mater. She has been married for 33 years with 3 children. She is fond of cooking/baking and trying new recipes for her family and friends.
Different Ways to Analyze Risk
By: Justin Frankel and Jeremy Berman - Wavecrest Asset Management
Behavioral finance studies have shown that investors tend to substantially overestimate their tolerance for risk. Most traditional balanced portfolio strategies rely on diversification between different asset classes to mitigate risk exposure, but for wealthy investors, building a portfolio around different risk categories may be a better solution to risk management.
Traditional balanced portfolios still have a concentration of risk in the allocation to equities. Even when multiple asset classes are added (commodities, alternatives), these asset allocation decisions are based on the correlation of those assets to equities or to each other. Disciples of efficient markets believe that market participants always act rationally and information is immediately reflected in market prices. Using this assumption, investors typically seek portfolios constructed to be diversified across many different asset classes, in order to absorb market gyrations. Unfortunately, recent history suggests that this theory is not bulletproof. Andrew Lo, a professor at MIT, is credited with posing a different theory, the adaptive markets hypothesis. This theory suggests market participants are not always perfectly rational, and often make bad decisions. This theory allows for periods of extreme market volatility, during which time many asset classes become highly correlated. If asset classes become more correlated during a crisis, and you think this is more indicative of the current market environment, a new approach to mitigating risk is needed.
During periods of extreme volatility, investors often make panicked and emotionally driven decisions that negatively impact performance. Portfolio diversification should be designed to provide protection against a broad range of potential outcomes. Achieving this diversification comes at a cost, usually in the form of less upside participation during bull markets. More importantly, it also means less downside exposure during bear markets. Avoiding the worst of bad markets allows investors to recoup total losses more quickly. From a psychological perspective, the avoidance of pain should reduce the possibility of panic selling. Since asset class diversification is not enough to prevent catastrophe, we believe that the risk itself should be diversified.
Institutions are already starting to rethink their investment process in order to address the problems of increased correlation. Recently, Institutional Investor reported that CalPERS (California Public Employees' Retirement System) is changing its allocation framework into five new categories: Liquidity / Growth/ Income/ Real Assets/ Inflation-linked Assets. Instead of allocating based on asset classes, they are allocating based on risk categories. They believe that the new structure will improve risk management.
Certain investments do better than others at different points in a market cycle. Our goal in portfolio construction is to look at specific risks and create zones of protection to buffer against them. Think of your portfolio as a multi-lane highway. During intense rush hour traffic, some lanes move while others do not. This can be infuriating if you always feel like you are in the wrong lane, which can lead to frequent lane changes with terrible timing. Ultimately, the more times you change lanes, the less likely you will time it correctly, leading to a slower trip. Proper diversification should be like having a car in each lane. No matter which lane is moving, you are moving. While it's impossible to be in many cars at the same time, it is possible to be in many investments at the same time.
In an environment where so much is interrelated, asset class diversification is not enough to prevent wealth destruction. Irrational behavior leads to volatility across all asset classes, making it necessary to diversify against systemic and structural risks. Keynes is credited with saying, "When the facts changes, I change my mind. What do you do, sir?" The global economic landscape has changed. Greater connectivity throughout the world and the faster pace of information flow has had disruptive effects on the markets. We think a new investment environment requires new theories that take a more proactive approach to managing risk.
Justin Frankel & Jeremy Berman have over 20 years of combined institutional experience trading, building, and marketing structured investments and equity derivatives. They are the founders and managing partners of Wavecrest Asset Management, and recently managed different components of the structured investments business at Morgan Stanley. They believe a disciplined approach to risk-managed investing leads to smoother returns and less volatility, and manage both a hedge fund and separate accounts based on this investment philosophy.
Hidden Gems of the New York Art Scene
By: Rebecca Taylor - J. Paul Getty Trust
Regular visits to the Metropolitan for an exhibition of Renoir masterpieces or to the Whitney for the latest Biennial is par for the course for most New Yorkers, but beyond the Upper East Side, there are many exceptional gems in NY that are worth a little extra effort to seek out. Here are a few worthy of any "must-see" list:
The New York Earth Room (1977)
Address: 141 Wooster (Soho)
Hours: Wednesday - Sunday, 12-6 p.m. (closed 3-3:30)
While many art pilgrims traverse dirt roads in Western New Mexico to experience a Walter de Maria earth work (Lightning Field, 1977), New Yorkers have one (actually two) in the neighborhood. De Maria's The New York Earth Room is an interior earth sculpture, or more precisely 250 cubic yards of dirt that occupies 3,600 square feet of floor space on Wooster Street in Soho. This masterpiece has been on view since 1980, thanks to the Dia Art Foundation, and is the only surviving Earth Room that De Maria created. While you're in Soho, also check out De Maria's Broken Kilometer (1979) on West Broadway. (Photo Credit: Walter De Maria, The New York Earth Room, 1977. Long-term installation at 141 Wooster Street, New York City. Photo: John Cliett. Copyright Dia Art Foundation.)
Meeting (1986) at MoMA PS1
Address: 22-25 Jackson Ave at 46th Ave (Long Island City)
Hours: Thursday - Monday, 3:30 - 6 p.m.
Sitting on a bench in a white cube-shaped room sounds insufferably dull, but not when it's a site-specific installation by James Turrell. With a large rectangular opening in the ceiling (imagine a large skylight without glass), Turrell transforms the cube into the perfect space to appreciate the intense hues of the sky at sunset, observe the flight pattern of planes leaving La Guardia, watch a flock of birds flapping in formation, or retreat into one's own thoughts. Meeting is one of Turrell's series of "skyspaces," which are all similarly enclosed spaces with rectangular or rounded holes cut into the ceiling exposing the open sky. I challenge you to sit silently in the skyspace for five minutes (though you'll probably stay an hour without realizing it); who knows who you'll *meet.* (Photo Credit: Exterior View of MOMA PS1, Long Island City.)
FLAG Art Foundation
Address: 545 W. 25th Street (Chelsea)
Hours: Wednesday - Saturday, 11 a.m. - 5 p.m.
Perched on the 9th and 10th floor of the Chelsea Arts Towers, The FLAG Art Foundation is a new exhibition space for contemporary art which organizes a handful of exhibitions per year. If the current exhibitions of Josephine Meckseper and Gerhard Richter are any indication, this beautiful venue (with equally beautiful views) will quickly become a favorite of Saturday gallery hoppers in Chelsea. (Photo Credit: Exterior of Chelsea Art Towers/Flag Art Foundation.)
101 Spring Street (Donald Judd's Studio)
Address: 101 Spring Street
To visit contact firstname.lastname@example.org
From the outside it's a one-of-a-kind SoHo architectural gem, a 5-story cast-iron building designed by Nicholas Whyte in 1870, but its landmark status is less about the architecture, though stunning, and more about its famed longtime resident, artist Donald Judd. Judd purchased the building in 1968 and it remained his New York residence and studio until his death. This was Judd's laboratory for experimentation and the place where he first realized his concept of "permanent installation," whereby the physical context of a work (location, positioning, etc.) plays a critical role in understanding the work itself. The works on view in 101 Spring Street are exactly where Judd installed them prior to his death - a time capsule of Judd's vision awaiting the modern visitor. (Photo Credit: Installation view of the Judd Foundation, 101 Spring Street, New York.)
EFA Project Space
Address: 323 West 39th Street, 3rd Floor (Midtown West)
Hours: Wednesday - Saturday, 12- 6 p.m.
The Elizabeth Foundation for the Arts (EFA) is a terrific non-profit devoted to helping artists develop their practice by providing access to space, tools, and interaction/dialogues with other artists. In 2008, they launched EFA Project Space to allow for the dynamic exchanges between artists to become more explicit in special projects and thematic exhibitions. In addition to the project space, EFA periodically hosts open studios, an incredible opportunity to meet the artists in their creative space and understand their practice and process more intimately. (Photo Credit: Wayne Coe at the opening reception of EFA's exhibition, I like the Art World and the Art World Likes Me, completing his temporary sand painting "Manhattan Sand Painting Project.")
Rebecca Taylor is a Senior Communications Specialist at the J. Paul Getty Trust, a contemporary art history instructor at UCLA extension, an arts writer, and an active member of the Los Angeles art scene. Previously, Rebecca worked at The Museum of Contemporary Art, Los Angeles (MOCA) and at the Ace Institute of Contemporary Art in Los Angeles. Rebecca received her M.A. in Modern Art, Connoisseurship, and the History of the Art Market from Christie's in New York and her B.S. in Business Administration with emphases in Marketing, Finance, and International Business from Chapman University in Orange, California.
Never a Dull Market
By: Pauline Johnson-Brown - Corcoran Group
New York is the city that never sleeps and neither does its real estate market-at least not for long. In 2008, New York City real estate fell from proverbial grace, losing its position as a can't-lose, guaranteed to appreciate investment. Now, Manhattan brokers are optimistic that the market is facing a turning point. Even as the recession forced most of the nation to endure a prolonged lull in home sales, Metro New York's housing market showed persistent signs of life. Whether selling a starter studio in a fourth floor walk up, or a luxury townhouse on the Upper East Side, each signed contract since the fall of Lehman Brothers, stood for one more vote of confidence in the everlasting value of New York.
With historically low interest rates and stabilized housing prices, Manhattan's luxury real estate market, including properties valued over $4 million dollars, presents buyers, brokers, and lenders a window of opportunity. Seeing signs of sustainable economic recovery, many investors peered into their stock portfolios, and feeling more flush than they did in the days following Lehman's collapse, made their move. They want to buy while the prices are hot and the lenders have freed up credit.
Due to a limited supply of the most sought after product, high end properties in particular have held value well. The high-end buyer is not only looking for a smart buy, but also the top quality amenities and finishes afforded by New York's luxury lifestyle. With the right address, buying in Manhattan still says, "I've arrived." Add historically low mortgages rates to Wall Street bonuses, and those well-heeled buyers have made quick work of absorbing much of New York's top tier housing stock.
Real Estate specialists anticipate that competition for top-quality product will only increase from here. Not only do we have the influx of buyers looking for bargains, we have fewer projects coming to the market as well. As a result, demand for the luxury real estate product is greater than supply, and in many cases causing bidding wars that drive up prices.
Today, sales activity continues to see positive momentum. According to the Corcoran Group's Manhattan Monthly Snapshot of February 2011, market-wide sales increased in February, with Condo sales up 21% and co-op sales up 35% from January. Moreover, the market-wide average price per square foot reached an average of $1,167. This is the highest average price per square foot that Manhattan property has demanded since just before the market turned in August 2008.
There are encouraging signs for the housing market. Still, regardless of economic fluctuations, New York is never a dull market. Our city is resilient because our product is unparalleled. The diversity, the energy, and the opportunity we offer is distinctly New York, and that's an asset appreciated by all types, across the globe and in this economic climate.
John Jacob Asto's quote says it all: "If I could live all over again, I would buy every inch of Manhattan."
Pauline Johnson Brown is an Associate Broker at the Corcoran Group, located at 660 Madison Avenue, New York. Pauline has been in the business of real estate brokering, as well as buying and selling for her own account, both nationally and internationally since 1982.
Investing in Time
Michelle Halpern - Antiquorum
More and more investors with an interest in collecting luxury goods-anything from fine art to historically significant objects-are turning specifically to timepieces as a way to invest in something both meaningful and possibly more valuable in the future. As confirmed by recent auction results for important timepieces, luxury watches are not only beautiful on the wrist; they also have the potential to appreciate over time.
Historically, certain brands have consistently increased in value over time. This is notably true of Patek Philippe timepieces in good condition, which frequently achieve high prices at auction. For example, the results of Patek Philippe ref. 2499 third series, seen over a decade, are telling: In 2000, a Patek Philippe ref. 2499 third series was sold by Antiquorum for SFr. 185,000 (US$ 102,675). A year later, in 2001, the same reference went for SFr. 388,500 (US$ 222,999). In 2007, the reference achieved an impressive 794,500 SFr (US$ 651,490), and in November 2010 another example sold for an amazing 1,082,500 SFr (US $ 1,093,325)!
Antiquorum, the world's premier watch auctioneer, has sold high-end watches since 1974. By cultivating a thriving international collector's market for timepieces, Antiquorum has carved its own unparalleled niche in the auction world. Auctions are held in New York, Geneva and Hong Kong twelve times a year. Of the 85 timepieces that have sold for over one million Swiss Francs, Antiquorum sold an impressive 51.
A Few Antiquorum World Records:
2002: Antiquorum set the all-time world record for a wristwatch at auction, selling a unique 1939 platinum Patek Philippe World Time Ref. 1415 for US$ 4,026,524 (SFr. 6,603,500) - more than double the previous world record.
2004: Another record for a modern watch was made when the unique Patek Philippe white gold Calibre 89 sold for SFr. 6,603,500 (US$ 5,002,652).
2009: In March, a Zenith pocket watch, sandals, glasses, bowl and thali having belonged to Mahatma Gandhi sold for the astounding record price of $2,096,000. This same year, yet another world record was made when a Patek Philippe yellow gold Caliber 89 went for 5,120,000 SFr (US$ 5,048,320), making it the most expensive watch sold in 2009 by any auction house the world over.
Alpine Capital Bank and Antiquorum invite you to join us on June 7th for a preview of the watches offered in Antiquorum's June 8th auction, followed by a special seminar where Antiquorum Director & Watch Expert Charles Tearle will explain the important factors to consider when investing in a luxury timepiece. Charles, who has been in the watch business for over 21 years, began his career in London at Somlo Antiques and went on to become the watch expert at Bonhams in San Francisco. Three years ago he joined Antiquorum as a Director, Watch Expert and Auctioneer. Charles appears as a watch expert on "The Antiques Roadshow." He is also regularly quoted on horology in international publications and writes a quarterly column for Elite Traveler Magazine.
We hope to see you June 7th at 6:30 p.m. for an evening of watches and cocktails at Antiquorum's US headquarters at 595 Madison Avenue, NYC.
For more information, please contact Jillian Hall, Marketing Associate at Alpine Capital Bank, via email JHall@alpinecapitalbank or phone (212) 328-2593.
After graduating from American University in Washington DC with a degree in International Relations, Michelle Halpern initially worked in Public Relations and later as an event planner. She became fascinated by the excitement of the auction world and the beauty of rare timepieces, and in 2004 she joined the Antiquorum Team as Marketing & Communications Manager.
Previous Event - David Cutler, Ph.D.
On January 13, 2011, Alpine hosted a cocktail reception with a particularly fascinating special presentation by guest speaker David Cutler, Ph.D. Currently the Otto Eckstein Professor of Applied Economics at Harvard University, Professor Cutler discussed the future of health care in America. Professor Cutler has earned significant academic and public acclaim for his work in health and public economics, and is the author of Your Money or Your Life: Strong Medicine for America's Health Care System, published in 2004 by Oxford University Press. In the wake of recent health care reform passed in 2010 and a potential universal health care proposal pending in Congress, Professor Cutler's presentation provoked meaningful dialogue and debate amongst Alpine Capital Bank clients.