Proudest Moment

The proudest moment of my life occurred yesterday. Strangely, it wasn't anything that I accomplished – I was a mere spectator. It was the insane, overpowering experience of witnessing Towa’s innocent joy and pride of reading his first book to me. 

Towa has had difficulties with reading this past school year. I know when something is difficult and doesn't come easy; you generally just flat out don't want to do it! Towa reminded me yesterday that when you dig in, work your butt off even when you don't want to do it – you go into the world feeling confident and set up for success. 

Towa then promptly asked me if we could get a toy from Toys-R-Us. Best mic drop ever.

Quantitative Easing and the Asset Bubble

Since 2008, the Federal Reserve has been buying financial assets, mostly Treasuries, through a program called Quantitative Easing (“QE”) in a bid to shore up the economy from contraction.

When the great recession struck in 2008, the Federal Reserve reduced the overnight interest-rate charged to member banks (I.e. Wells Fargo) almost to zero to boost the economy. When cutting the overnight interest-rate as far as it could go failed to spark recovery; the Federal Reserve went back to the drawing board.  The Federal Reserve introduced QE, an expansionary monetary policy, intended to lower interest rates and spur economic growth.  Essentially, a tool used to encourage member banks to make more loans. 

To embark on QE, the Federal Reserved created dollars electronically to purchase Treasury Notes and mortgaged-backed securities from the member banks.  The idea is that member banks take the newly minted money and buy assets to replace the ones they have sold to the Federal Reserve.  To understand the enormity of this measure, the Federal Reserve held less than $1 trillion of assets on its balance sheet prior to 2008; as of now the Federal Reserve holds more than $4.5 trillion.

It is my belief that the QE has crated a number of unintended consequences for all types of investors.  There is a looming asset price bubble; which can be seen in the nosebleed valuations of technology companies, common equities, and real estate.  The S&P 500 stock index is now up 173% from the bottom in March of 2009 all the while corporate profitability has barely nudged the needle over the same period.

The eye-popping valuations of technology companies are mirroring the Internet boom that swept over the tech industry beginning in the late 1990s.  

Commercial Real Estate is no exception.  The demand for quality investment properties among all major buying populations is currently off the charts.   Institutional capital has rebounded robustly and foreign capital continues to pour into the market at near record levels.  I do think that the current pricing for commercial real estate is reflective of an imbalance between demand and supply.  There are too few quality assets available for purchase versus the strong demand for real restate among the buying populations.

Rental rates have improved modestly from March of 2009, but only by 15 to 20 percent depending on asset class and location; however, values are approaching pre-2008 pricing for Class A office buildings.   There is a disconnect between property value increases and the improvement in the underlying fundamentals.  We know bubbles are created when investors do not recognize that rising asset prices are detached from the underlying fundamentals. 

The gradual removal of quantitative easing by the Federal Reserve since the beginning of the year has generally been regarded as a return to the normality.  When purchasing assets, the real money is made at the time of purchase – not the sale.  As Warren Buffett stated, “Have the purchase price be so attractive that even a mediocre sale gives good results.” When this tide of Quantitative Easing goes out of this economy, we will truly see who has been swimming naked.  

Guy Stuart Philips Eulogy

 The first thing I will have to do when Guy Stuart Philips and I meet again is apologize for not starting this moment off performing a magic trick he taught me.  My hands simply don’t have dexterity necessary at this moment. 

It occurs to me today that while we are all sitting here today thinking of Guy; he is somewhere already making friends and telling everyone stories about us. One of Guy’s fondest wishes was to be was remembered as a great Son, Brother, Husband, Father, and Friend.  To know that we all thought well of him.  To know he is in a better place.   

The stories of how countless friends spent hours speaking with Guy the past few weeks are heartbreakingly tender.  It meant everything to Guy, as would the presence of so many friends here today. 

Guy was a presence in all our lives.  He was an amazing friend to whom we had an emotional attachment, so strong and lasting, that it defied logic.  Guy Philips had those dual qualities that are so seldom seen, exuding dynamism and excitement, but at the same time touching your heart.  Guy’s friendship was richer and more compelling than words can adequately convey.  

Vera, I can only hope that my wife, Sachiyo, and I raise our son as well as you did Guy.  If the measure of a mother is the content of her son’s character – then Vera you have set the bar very high for Sachiyo and I.  There are no words for this sad, sad moment but know your son, Guy, was terribly loved by all and touched more lives than this room could seat.  

When I first met Guy he was preparing to leave for Ian and Nicole’s wedding.  Guy was absolutely ecstatic about your pending nuptials and proceeded to tell me your entire love story.   The love he had for the both of you was written across his face.  Your brother was a great man; his passing has suspended reality for all of us.  It was way too soon, and completely unfair on all accounts.  We’ve lost a friend, you’ve lost a brother, and I can only begin to imagine your pain.

Guy was the proudest father that I have ever met.  He beamed of joy when speaking of both his sons, Ethan and Chase.   He was so proud that Chase was learning magic tricks and preforming them.  He never missed a moment to tell me how much Ethan had grown and the new things you were learning every day at School.  Your father shared with me how super cool the both of are and how much he loved swimming with you, looking at fish, and he said touching the turtles with you boys was the best.  I know your father loved you both deeply and unconditionally. 

Fiona, we gather today in mourning, but also in gratitude – that you shared such an amazing man with all of us. We mourn Guys’ death, but we are grateful for his life.  It was the character of the man you married that so captured the trust and faith and affection of his friends.  His life reminds us that there is a moral force in this world more powerful than us all. 

My last memories of Guy Philips will be as fond as the first.  None of us, Guy included, would want to be held to account for every moment of our lives.  But how many of us could say that our greatest moments were as magnificent as Guys.  I am positive all the moments I have shared with Guy will forever be cherished and remembered - as I am positive yours will be too.  

I know God has a place for Guy to perform his Magic again, to tell his amazing stories, and smile that boyish smile.  Because God knows, no one is perfect, and God knows there is something special about Guy Philips.

May God bless you all and give you comfort in this difficult time.