Updates, Redux January 27, 1997January 31, 2017 Do Ties Cut Off Blood Flow To The Brain? “Want to destroy a good programmer?” one of you wrote me last month. “Put him in a tie. Maybe it cuts off the blood flow to the brain?” This touched a chord with Robert Brown, who responded as follows: “Several years ago I read of a study, I believe out of Cornell, which addressed this question. Using what is apparently a standard test for general mental attention, they had subjects indicate at what point they could no longer detect flicker in a rapidly flickering light. (Possibly analogous to clock speed on microprocessors.) Turns out subjects wearing ties lost track of the flicker significantly sooner than those with unencumbered jugulars. The proposed conclusion was indeed that neckties were restricting blood flow to the brain. Since I don’t have details on the study this probably needs to be considered an urban legend (or worse). But I must say I agree that my mental state is affected by my attire. (My favorite attire anecdote, which I think came from an old Dale Carnegie book, is about a woman with a terminal illness who had been in a ‘sanitarium’ for many years. As her condition was deemed hopeless she was sent home to die. Her only clothing for many years had been a drab hospital gown, so they bought her a brighter civilian outfit. The story goes that just putting on that new outfit so changed her whole outlook that she welled up with optimism, came back to life and returned to health.)” So wear a cheerful tie. Thank you, Robert. Charity and Taxes. This correction from Alan Levit: “I was interested to see that you described $90,000 as 10% after-tax to a family with a $500,000 income. I don’t see it quite that way. Let’s assume that the combined marginal state and federal tax rate is 50% (close enough for those of us in NY or CA). The family’s after-tax income is $250,000 if they contribute nothing, and $205,000 if they make the $90,000 contribution. The reduction is 45,000/250,000, or 18%. Let’s give those 90K contributors all the credit they deserve!” He’s absolutely right, of course. At any tax rate, it works out to 18%. My tie was obviously too tight as I wrote that. Piggy’s Kid Brother, Peeper. Previously, we learned a little about Paul Felix Warburg, known to all in the family as Piggy. He’s the one who got in trouble with his dad for investing in some cockamamie scheme that became known as “television.” Thanks to Dave Davis — and to his reading of Ron Chernow’s excellent family history, The Warburgs — we now learn that the youngest of Felix Warburg’s sons, Edward (nicknamed Peeper), had an early appreciation for modern art. In the summer of 1929, he took a trip to Germany and made an interesting acquisition. Chernow’s account: “Having turned twenty-one in June, Eddie had inherited money from Grandpa Schiff [famed Wall Streeter Jacob Schiff]. A friend who worked in a Berlin gallery showed him Picasso’s BLUE BOY. This downcast, pensive figure enchanted the young Harvard undergraduate who plunked down seven thousand dollars for it. On the trip home, he worried about Felix’s reaction and decided to reduce the amount he had paid by half. When Eddie told the customs officer that he had paid thirty-five hundred dollars for the painting, the man gasped. ‘You bought a $3,500 picture? You mean you actually paid that for this? Sonny, I’m going down the dock, and when I come back, you change that figure to $1,000.’ Piggy was there to add comedy to the scene. ‘Thanks,’ he told the customs officer. ‘You see, we find it cheaper to let him do this than to keep him at Bloomingdale’s.'” Bloomingdale’s was a posh loony bin of the time. In truth, if BLUE BOY would be worth $20 million or $40 million today, then it has appreciated at 12.5% or 13.5% from its 1929 purchase price. Nothing like the annual rate of gain most Americans expect from the stock market these days, but extremely brisk nonetheless. Thought of another way, if a buyer in 1929 would have been satisfied with 6% annual appreciation, he could have paid $380,000 instead of $7,000 and still seen his investment grow to $20 million by 1997. And really, 6% is not so awful. But can you imagine the look on the customs guy’s face if he had declared a $380,000 purchase price?