Investment Strategy

Investment lessons from the Mona Lisa

Here I am in Paris, doing some sightseeing. It’s cold and grey and the tourists are relatively thin on the ground. This is great news for those that don’t like queueing (that’s me). It’s also a reminder that the best investments are usually found when most other people are looking elsewhere.

For the past few days, I’ve been traipsing around the French capital with my kids. They’re in the middle of their long summer holidays from school, living as we do in Buenos Aires in Argentina.

The Argentine capital is still referred to, occasionally, as “the Paris of the south”. That’s due to the huge influence around a century ago of imported French architecture. In those days, Argentina was still rich, and yet to discover the destructive joys of political populism.

So, it seems apt to show my kids a little of the French capital. Since we were already visiting family in England for Christmas, it only involved a couple of hours on a train to get here from London.

It’s probably the fourth time I’ve been in Paris, as far as I can recall. Once was merely in transit, as a teenager. Once was visiting friends that lived here, about 20 years ago. Then again, around four years ago, visiting other friends while en route to an investment conference. And now, with pure family tourism in mind.

We’re staying on the “left bank” of the river Seine, between the Pont Neuf and the Pont Saint-Michel, and within sight of Notre Dame cathedral. I discovered that the “left” and “right” banks of the river refer to the direction that the water flows towards. In our case, it moves from right to left.

And boy is it flowing. Heavy rain has swelled the river to such an extent that river cruises have been cancelled. The police and fire services were out in force when we arrived, including dry-suited divers. They were looking for the body of a man who had fallen into the water somewhere upstream.

They’ve now given up the search, but security services are still ever present in central Paris. Foot patrols of heavily armed soldiers, in groups of three, mill around. Cars full of gendarmes in balaclava face masks speed past, with sirens wailing. Giant policemen stroll about with machine guns at the ready.

This is modern Europe, faced with the ever present threat of terrorism from Islamic fundamentalists. Still, it’s probably much safer than most places in the world.

Some things in Paris are as I remember them. Yesterday we went up to Sacré-Coeur. It’s a large church with a gloomy interior but a spectacular view of the city from the steps outside.

On the return journey to the hotel, I noticed that the taxi driver was midway through four books. These were various titles by Charles Baudelaire, Jared Diamond, Émile Zola and Paul Verlaine. The French clearly retain a liking for things intellectual. (Mind you, his car was German and not French. It was a recent model E-class Mercedes.)

Other things about this town have surprised me.

Once upon a time, I used to speak passable French, it being the first foreign language taught in English schools. Nowadays, through lack of use and later displacement by Spanish, my French has decayed. But I give it a go when I can, sometimes with mildly amusing or embarrassing results. (The Argentine piece of my brain often substitutes the French “oui” with the Spanish “si”. This keeps the kids entertained.)

Here’s one thing that’s definitely changed in the past couple of decades: the French are far more willing to experiment with speaking in English than they used to be. Which is handy when I stumble.

Another is that Parisian waiters are more efficient and friendly than I remember. Service in restaurants has generally been speedy on this trip, and even with a smile.

The street beggars are inventive. I noticed a scam that I haven’t seen before.

There’s a beggar near here who sits on a relatively narrow piece of pavement between a wall and a lamp post. The spot is adjacent to a pedestrian crossing, and just around the corner from a busy tourist bridge. It’s congested with foot traffic, especially with tourists that are either gazing up at the monuments, or feeling slightly lost.

When I first saw this guy I wondered why he’d chosen such a pinch point. It seemed like a place where people would have too much else to deal with to notice a beggar. I soon realised it was totally deliberate.

We were waiting to cross the road when I first heard the sound.


The beggar had a small, plastic pot – cut from the bottom of a disposable water bottle – placed about a foot in front of him, and containing a few coins. An unsuspecting Asian tourist had kicked it while passing, sending the money flying down the sidewalk.

With much embarrassment, the tourist collected the coins, handed them back to the beggar, and added his own contribution. In the space of about one minute, this scene was repeated with two more victims. “Kching! Kching!”

It was a clever scam. There was no stealing, just the serial shaming of the unsuspecting. Once we’d crossed the road, I took the time to explain it to my kids. Hopefully, that’s one rip off that they’ll see coming.

In terms of its place in the world, France’s best days are probably behind it. The historical splendour of central Paris is merely a reminder of this.

The Eiffel Tower, which I finally managed to go to the top of, is a pretty good illustration. It was finished in 1889, and remained the world’s tallest man-made structure for 30 years. That is, until the Chrysler building in New York took away its crown in 1929.

When it comes to matters of business and economics, France often gets a bad press these days. The unemployment rate is 9.8% and government debt is 123% of GDP – both higher than comfortable levels.

The place has a reputation for high taxes, endless bureaucracy and overly protective employment law. In fact, about 11 years ago I worked on the corporate acquisition of a financial derivative trading business with offices in 12 countries. It was a condition of the purchase that the Paris office – and only the Paris office – was not included in the final deal, given the anticipated legal complexity and cost of shutting it down.

Despite all of that, it’s worth remembering that this country of 64 million people is still the seventh largest economy in the world. It ranks between India and Brazil.

French stocks haven’t done too badly either, at least over the long run. If you’d bought them 40 years ago you’d have made the same return on your money as if you’d bought US stocks. Both the MSCI France index and the MSCI USA index averaged 11.7% a year since 1977, including dividends and measured in US dollars.

Markets aside, my focus has been on other matters in recent days: culture, architecture and art. That sort of thing. And so, for the first time, yesterday I visited the famous Louvre museum.

Lessons from the Louvre

The Louvre is a huge place with a long history. Once inside, there’s certainly no shortage of things to see. But its most famous resident is probably the Mona Lisa, painted by Leonardo da Vinci in 1503.

This is perhaps the most celebrated painting in history. It’s certainly one of the most valuable. As such, people come from far and wide to see it.

Personally, I don’t see what all the fuss is about. When I got up close to this masterpiece, my main thought was that the subject has much bigger hands than I expected. The kind of hands that wouldn’t look out of place on a bricklayer. Other than that, the portrait is quite small, measuring just 77 centimetres (30 inches) by 53 centimetres (21 inches).

This is not to say it’s not a skillful piece of artwork. And it’s an improvement on the ancient Greek statue of the Venus de Milo – also housed in the Louvre – which doesn’t even have arms, let alone hands.

But, with so many fine objects to choose from under one enormous roof, it’s unclear to me why these two deserve their special fame. Aren’t people allowed personal taste in matters of art, or must we just like what we’re told to? (My personal favourite was a 5,000 year old Egyptian sphinx, carved from pink granite and kept in an alcove in the basement.)

You might ask what all this has got to do with investment. Let me explain.

Paris is one of the most visited cities in the world. The Louvre is one of Paris’s top tourist destinations. The Mona Lisa is the top attraction inside the Louvre.

As such, I was warned to expect a mob of people. Instead, I found easy movement.

There was literally no queue to get into the Louvre. Once deep inside the bowels of the museum, instead of finding a 50 person deep crowd in front of the Mona Lisa, all jostling for a glimpse, it was more like five deep. We were in the front row in less than a minute.

This is mid-winter, the least popular time of year to come to Paris. It’s cold and bleak. The skies are grey. Few people want to be here.

The result, for those that do come, is that far more is achieved in much less time. The same price of entry to the main attractions is rewarded with twice as much enjoyment as during high season. In short, the return on investment – of time and money – is much higher.

It’s much like value investing. That’s the lonely furrow ploughed by the true contrarians of the investment world. Value investors are the ones that actively avoid the market mob. If they see a crowd they duck for cover.

Why? Because they know that mobs usually mean a lower return on investment. You’ll get more bang for your buck when most people are elsewhere. You can only get a bargain when something is out of favour.

Whether you’re planning a holiday, or setting up your investment portfolio, remember that you’re much more likely to get a good deal if you avoid “peak season”. Doing your research ahead of time will tend to get you a better outcome.

That’s true of going to visit “old big hands” at the Louvre. It also includes buying stocks for profit. And I’m not sure why else you’d want to buy them.

Stay tuned OfWealthers,

Rob Marstrand


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Rob is the founder of OfWealth, a service that aims to explain to private investors, in simple terms, how to maximise their investment success in world markets. Before that he spent 15 years working for investment bank UBS, the world’s largest wealth manager and stock trader with headquarters in Switzerland. During that time he was based in London, Zurich and Hong Kong and worked in many countries, especially throughout Asia. After that he was Chief Investment Strategist for the Bonner & Partners Family Office for four years, a project set up by Agora founder Bill Bonner that focuses on successful inter-generational wealth transfer and long term investment. Rob has lived in Buenos Aires, Argentina for the past eight years, which is the perfect place to learn about financial crises.