The Hearst Castle (and fortune)…Your Weekly Update

Late last week, one of your authors visited the central coast of California to speak to a regional chapter of the National Association of Insurance and Financial Advisors. Even if you’re yawning right now (completely understandable), please read on!

While there, an inspiring visit to the Hearst Castle ensued late in the day. Inspiring, because the visit caused this week’s Update to take a turn we think you’ll find most interesting.

Perhaps you’ll conclude as we did that the Castle’s former owner, William Randolph Hearst, provides a fascinating study on wealth, the bad and the good. As well, perhaps you’ll even take away a clue or two about how to manage your own resources better.

Best always,
Lee and Jeremy

P.S. On the corporate earnings front, it was a good week, so you’ll enjoy catching up on the markets a bit too! L & J


This Week’s Quote:

“Keep your mind on the objective, not the obstacle.”
― William Randolph Hearst


JL Davis Thoughts This Week:

By the time he died in 1951, William Randolph Hearst had long since begun a steep decline as the preeminent media baron in U.S. history. But one of the jewels of his life, Hearst Castle, was in full bloom—and it still is today. Late last week, we toured the Castle, which Hearst gave to the State of California in the 1950s.

Words cannot describe either the scale or the beauty of the place. Dubbed by Hearst himself as La Cuesta Entada (The Enchanted Hill), the Castle features 56 ornate bedrooms, 61 bathrooms, and 19 sitting rooms. There are 127 acres of gardens, incredible indoor and outdoor swimming pools, tennis courts, a full scale movie theater, an airfield, and the remains of the world's largest private zoo. Built on 270,000 acres in the hills above San Simeon, California, it took architect Julia Morgan 28 years to complete (1919 to 1947) for Hearst. In addition, the 90,000 square foot structure, which was frequented by celebrities of film, business and politics, has three guest houses and the world’s longest portico, at over one mile long. You can see the beauty of the Castle for yourself at http://hearstcastle.org/.

Hearst himself was a prolific buyer of art, acquiring thousands and thousands of priceless objects, the bulk of which are on still on display there. Every room features the finest treasures imaginable, up to and including entire ceilings taken from European monasteries and castles. The paintings, tapestries and sculptures are breathtaking.

But perhaps the real story of the Castle may be the one only partially told there, that of the owner. William Randolph Hearst was one of the most powerful American magnates of the 20th century with influence in media, publishing, politics, film, and art. He initially came by his wealth the old fashioned way. He inherited it. And though he’d never be richer that the original “Mr. Hearst,” mining legend George Hearst, William made a remarkable run in his time.

He was one of the richest Americans for a number of years in the early 1900s, having created a newspaper and publishing empire as well as extensive real estate holdings, from a small portion of his father’s estate. A sizeable part of the empire is still in operation today as the Hearst Corporation.

Simultaneously revered and reviled, Mr. Hearst rode the incredible wave of his riches into the Depression, which ravaged his empire and initiated his decline. Married, with wife Miriam living in New York, yet living with his long-term mistress, he had five children. Their subsequent 16 marriages produced 15 grandchildren (yes, Patty Hearst was one, she of 70s bank robbing fame). Yet he still possessed significant wealth at his passing; the Hearst Foundation he founded has current assets of over $800 million and does much for charities today.

Regardless of the ups and downs of individual fortunes like that of Hearst, or the economic times that impact them, American capitalism seems to be the one constant that not only produces vast wealth, but seems to distribute it far better than any other system devised in history. So, here’s to Mr. Hearst for leaving his Castle for all to view, and much of his fortune to others.

Lee & Jeremy**

http://www.hearstfdn.org/about/about-hearst-foundations/
http://en.wikipedia.org/wiki/Hearst_Castle
http://finance.yahoo.com/blogs/talking-numbers/222-years-interest-history-one-chart-173358843.html


Market Week: April 21, 2014

The Markets

Despite the holiday-shortened trading week, domestic equities managed to recapture virtually all of the ground lost the week before--and more important, the gains were across the board. Even the tech and biotech sectors that have suffered recently showed signs of stabilization, while the S&P 500 managed to return to positive territory for the year.


Last Week's Headlines

• Springtime for retail: Shoppers emerged from hibernation and returned to stores again in March, according to the Commerce Department. Retail sales rose 1.1% from February, and were 3.8% higher than in March 2013. Auto sales were up 3.4% for the month and up 9.5% from March 2013. The figures were hailed as confirmation that frigid winter weather was a major factor in previous months' sluggish sales.
• China's economy grew 7.4% over the last year, according to the country's National Bureau of Statistics. That represents a slowing from the previous quarter's annualized 7.7% rate, and is slightly below the targeted 7.5% growth for all of 2014. It also represents the nation's slowest quarterly growth in 18 months. Chinese officials said weaker winter demand from the United States for exports and a sluggish housing market were major factors in the decline.
• Consumer prices rose 0.2% in March, helping to cut the inflation rate for the last 12 months slightly to 1.5%. The Bureau of Labor Statistics said the biggest increases were seen in the costs of food and shelter. Grocery prices overall were up .5% for the month and 1.7% for the year, while restaurant prices are up 2.3% since March 2013. The 2.7% increase in the cost of shelter since last March in part reflects rising home prices. Meanwhile, energy costs declined 0.1% in March, led by a 1.7% drop in gas prices.
• Housing starts improved in March, rising 2.8%, but were nevertheless almost 6% lower than March 2013. The Commerce Department said building permits--an indicator of future activity--fell 2.4% for the month but were more than 11% higher than the previous March.
• U.S. industrial production grew 0.7% in March, driven largely by mining and the utilities sector. Also, the Federal Reserve revised February's 0.7% gain upward to 1.2%; it was the highest monthly growth rate in almost four years. The increases represent an annualized 4.4% growth rate in Q1. Meanwhile, the Fed's April Empire State manufacturing survey slipped 4 points to 1.3, but the Philly Fed's survey for the month rose from 9.0 to 16.6, its highest reading since last September and the second consecutive month of gains.
• The nonpartisan Congressional Budget Office said the federal government's cost of expanding health-care coverage under the Affordable Care Act (primarily from providing insurance premium subsidies) will be $36 billion in 2014--roughly 12% less than the amount predicted in February--and almost 7% ($100 billion) less than the $1,487 billion previously estimated for the next 10 years.
• The weekly earnings of full-time American workers during the first quarter were 3% higher than a year earlier; according to the Bureau of Labor Statistics, that's the fastest annual growth since 2008 and was more than double the 1.4% increase in the Consumer Price Index over the last 12 months. The report said the increase put inflation-adjusted median weekly earnings at $796, their highest level since Q2 2012.


Eye on the Week Ahead

Data on home sales and manufacturing could suggest whether a spring rebound is in store. Many of the major Nasdaq tech companies will release Q1 earnings, which could influence whether last week's rally shows some ongoing strength.

Data sources: All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. News items are based on reports from multiple commonly available international news sources (i.e., wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: U.S. Treasury (Treasury yields); WSJ Market Data Center (equities); Federal Reserve Board (Fed Funds target rate); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold, NY close); Oanda/FX Street (currency exchange rates). Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2014