From The Daniel Island News

Penny wise and pound wiser
By Dalton Williams
Mar 20, 2008 - 10:28:15 AM

My lovely wife, Grace, announced, "Fifty cents off paper towels. A dollar off laundry detergent."

Following a ritual, she was clipping coupons from the daily newspaper. She then files them by category (groceries, pharmacy items, etc.) in a plastic organizer she keeps in her car.

"If you watch the pennies, the dollars will take care of themselves," she often remarks, paraphrasing Ben Franklin.

I sat at the kitchen table, which was completely covered with year-end statements and receipts, trying to assemble the foundation of our tax return. Chaos was gaining an upper hand over order in the endeavor.

"Hello and toodle-loo. Gotta run," my Aunt Toogie cooed as she swooped into the kitchen.

"Where are you off to?" I inquired.

Toogie stopped to add some tissue and mints to the contents of her purse. "If you must know, Mister end-a-sentence-with-a-preposition," she huffed, "I’m going to Bob Ellis. Big sale on shoes today."

Grace looked up and smiled, "Have a nice time, Dear. Will you be seeing Brevard?"

"We’re meeting for lunch at the Palmetto Café at Charleston Place," Toogie replied, as she exited toward the garage.

"Sounds like a fun time," Grace observed as she resumed cutting coupons.

"I hope she has the money," I answered, trying to find my calculator under the piles of loose papers. After a pause, I added, "You know, she did buy that new sports car. I just wonder if she is managing her money wisely."

"Well, why don’t you talk with her?" Grace suggested. "You have a head for those things."

I smiled at the compliment as I continued to search for the calculator.

After dinner that evening as Grace was putting dishes into the dishwasher, Toogie worked a sudoku puzzle. I stood nearby, slowly swinging my arms back and forth trying to replicate the proper arm movement from yesterday’s golf lesson.

"Are you finding the lessons helpful?" Grace asked.

"I think so."

"Not enough shoulder rotation," Toogie barked, without looking up.


Toogie put down the puzzle. "You’re sliding your body backwards rather than rotating your shoulders. Your swing is then off plane."

When I didn’t respond, she chipped in, "Those lessons are a waste of good money!"

Sensing an opening, I piped up, "Thanks for the golf tip, Toogie. Speaking of money I may be able to return the favor."

"Oh, really? Now you’ve gone from Tiger Woods to Warren Buffett? Fire away," Toogie quipped.

"I was just thinking," I tip-toed in. "You appear to be spending quite a bit of money lately. Lavish holidays, new car, shoes today. What with the current economic news, would you like me to look over your investments?"

Before she could answer, I added, "You know, the proper allocation between stocks, bonds, savings and CDs, that sort of thing."

"Sure," Toogie replied, setting the puzzle aside and reaching for a piece of paper. She scribbled a few notes, and then looked up as she placed the sheet in front of me.

"I started readjusting my portfolio about two years ago," she explained, "then made substantial changes last summer when indicators we were pointing toward the onset of the mortgage crisis."

"You mean house prices?" I inquired.

"No, mortgages," Toogie answered. "You know, CDOs bought and sold by financial institutions. I got out of a couple of hedge funds that messed with that junk."

"You…you…were in hedge funds?" I sputtered.

"Yeah, but I dumped them before the kaka hit the fan," she replied, pointing toward her page of notes. "So today, I’m invested about 15 percent in cash, 20 percent in gold, oil and commodities, 20 percent in European currencies, and the balance primarily in high-grade fixed income stuff, but very short term. Three years max."

My head was spinning trying to digest what she just said. Finally, I asked, "You bought shares in European companies?"

"No," Toogie retorted, "I bought European currencies. Actually, forward contracts. You know, Euros, British pounds."

"She bought Euros!" I proclaimed in a flabbergasted tone to Grace.

Hanging up a kitchen towel, Grace replied, "Yes, Dear. I heard."

"The pound has done pretty well," Toogie continued. "It was about a buck seventy two years ago and is close to two dollars today. The Euro has done even better. Up from a dollar twenty, two years ago, to over a buck fifty today."

"She bought Euros!" I repeated.

"Yes, Dear," Grace smiled as Toogie droned on, "You just had to know the dollar exchange rate was going to stay low to stimulate exports."

The conversation was a blur. Finally, I managed to ask, "Commodities? You mean like barrels of oil?"

"No way," Toogie answered. "Metals and petroleum futures, and some selected stocks in the sector. Like John Deere. Great Ag play. Stock has doubled over the last eighteen months. Global demand for their products is strong so an increasing portion of their results comes from overseas. As a result, their reported results get a boost from the effects of dollar translation."

I wasn’t sure I comprehended all she had just said but responded, "So you didn’t just hold stocks?"

"Heck, no," Toogie scoffed. "I’ll probably move back into more equities in the latter part of this year. But, year-to-date, the Dow is down around 10 percent. One would have done better investing in Forever stamps at the post office!"

I closed my eyes, rubbed my forehead, and stammered, "Did…Brevard…advise you?"

"Heavens, no," Toogie shot back. "He and I never discuss money. Too personal, but I don’t mind talking about this with you. You’re family. After your Uncle Harold died," she continued, "I had to manage financially for myself. So, I decided I better bone up on this stuff. That why I read your Wall Street Journal, watch CNBC, things like that."
After a silence, she asked, "So, what do you think?"

"Looks…ah, pretty good," I stammered. "I…I approve."

"Thanks, Dalton," Toogie smiled, and then added, "May I add one more thing?"


"Try not to lift your right elbow on your take away. It causes you to shift your weight to the front foot. Even Warren Buffett would know that is a guaranteed ticket to a reverse pivot."


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