In 1985 I was in the United Kingdom for three months and I distinctly remember benefiting from the strengthening dollar against the weakening pound similar to what we are seeing now. The British pound has depreciated in the wake of the Brexit vote to levels not seen since 1985, as the following chart shows:
This next chart shows how the pound has dropped significantly over the past four months since the Brexit vote took place in June.
1985 My Year Living Adventurously
The first chart has a lot of significance for me personally as I mentioned, I was in the United Kingdom in 1985 for three months and benefited from the strengthening dollar/weakening pound. It was my first tangible experience with floating currencies as this was my maiden voyage to Europe. While this post will be somewhat personal in nature and tangential to investing, I do hope it inspires people to invest in experiences over “things” and see the world if you can and encourage your kids to do the same if possible. 1985 was probably the most formative year for me and the most adventurous one as well. Perhaps there is a correlation between the two?
I was entering my junior year in college and was accepted into a study abroad program in England to spend a semester at Oxford. Not only would I learn about the importance of exchange rates but I had my first experience with arbitrage. Time was what I arbitraged. I missed a quarter at UCLA but took a full semester at Oxford and was able to get 24 units of credit while losing the potential to have earned 16 units if I had been at UCLA. The end result was that I was able to get 1.5 quarters of credit while missing only one quarter. I was pretty proud of myself as this would allow me to take fewer classes in my senior year and still be on the path to graduating. Little did I know at the time that this would come back to haunt me later.
Besides learning about the power of exchange rates and arbitraging one’s time, another thing I came to learn, albeit many years later, is that choices we make can have ramifications many years later. A number of years ago we were having a blood drive at our office and we had a mobile truck from the Red Cross to take the blood from our volunteers. Prior to being able to donate one’s blood, each volunteer had to read a list of illnesses and locations around the world during particular times that would prohibit them from donating blood. There are the obvious examples of HIV and hepatitis C that would exclude someone from donating their blood. What I was not expecting, however, was seeing that anyone who was in the United Kingdom in 1985 was excluded as well. Boy was I surprised! I started racking my brain about what was happening then that would exclude millions of people from giving blood. I did vaguely recall a mad cow scare at the time but can’t be sure. I never really did find out what triggered the exclusion but unfortunately, as a result, I cannot be a blood donor.
Prior to embarking on my amazing three-month journey at Oxford, a friend of mine and I fitted ourselves out with our backpacks, Eurail passes, the book Europe on $25 a Day, passports, American Express traveler’s checks, and our eager curiosity and willingness to embrace spontaneity to tour Europe for two months. Here are some of the places we went to as best I can recall from 30+ years ago:
Nice and Cannes
It was quite a trip and I had some incredible experiences. The cold war was in full force in 1985 with Reagan pushing the Star Wars defense system in an effort to bankrupt the Soviet Union. I was a political science major and fascinated by Russian history and the Eastern Bloc and life behind the Iron Curtain. Thus, going to East Berlin was something I eagerly anticipated. Crossing Checkpoint Charlie onto the other side of the Berlin Wall was quite an experience. Once there it was clear that there was a stark difference between the far more modern and free West Berlin and the repressive and dreary East Berlin. I went to a restaurant in East Berlin and there were two choices on the menu. One was a ¾ of a chicken with french fries and the second option was 1/4 of a chicken with french fries. That was it! And the chicken was drenched in salt. A memorable meal, but not for the typical reasons. Consumer choice and satisfaction were non-existent.
I remember sleeping in the Berlin train station in order to avoid paying for a hotel or hostel since we had an early train to catch. I still can’t forget my visit to the Dachau concentration camp and having the unbelievable fortune of seeing it through the eyes of a survivor who we met on the train taking us there. We went to the Hofbrauhaus in Munich and my friend did not do a great job of handling his beer consumption and left an unwelcome deposit in the trash can outside the beer hall at the end of the evening. We also took a nice trip down the Rhine. All in all Germany, east, and west, was quite memorable.
I also recall meeting someone in Italy who ended up rooming with us for a night or two at a hostel and he was obsessed with karate as he was deep in training and kept asking me to try to hit him so he could practice defending himself against me. He was a bit overbearing and his insistence that I keep trying to hit him started to wear on me. Interestingly, where I am at in my life today, I probably would welcome the same opportunity,
Perhaps the craziest thing experience was when my TravelMate left me alone for a few minutes in the cabin we were in that was also being occupied by what turned out to be a crazed Italian man. After some polite chitchat, he pulled out a picture of an African American lounge singer from Detroit and said that she was his girlfriend. I knew something was a little off as he spoke in glowing terms about her despite the chances of him being with her were even less than me being the boyfriend of Sophia Loren.
My new friend decides he has had enough talking about his imaginary girlfriend and puts the picture down and then suddenly out of the blue he pulls out a small knife and throws it towards me across the short distance separating us. It hits the fabric to the side of me that all occupants lean against when sitting on the train. Not only is it problematic that he’s throwing a knife at me, but it’s even more so since it didn’t stick in the fabric and bounced off and nearly hit me. I looked at him with what must have been a horrified look on my face and he said in his thick Italian accent, “Don’t worry, I was in the circus!” That didn’t give me much comfort.
I had to figure out an exit strategy. Now this is definitely something that has applicability to investing and business. Always think about how you can get out of a deal or investment when structuring it. John Malone is famous for being obsessively focused on this and it has served he and his investors well over the years.
Fortunately, he decided to leave very soon so I didn’t have to execute on an escape plan. Rather than leaving our cabin through the door and exiting where everyone else did, he opened the window as the train was coming into the station and leaped out of it and exited that way. To each, his own and I was just glad he left.
I very much enjoyed seeing the amazing history in Europe and being exposed to the different cultures that were so close in proximity. The transportation system was outstanding and it truly made me appreciate leaving the friendly confines of the United States and seeing how other people live and what they value.
The experience at Oxford was incredible. The history, architecture, traditions, love of learning, and being in a global center for teaching and knowledge transfer was heaven for me. I also met some wonderful people in my program. The highlight was when a friend of mine and I were walking down the street in Oxford and saw in the window of a travel agency a sign advertising a trip to Moscow and Leningrad (now Saint Petersburg) for 200 pounds ($300 at the time, remember those exchange rates) inclusive of airfare, hotels, and food. What a deal! Like me, he was fascinated with the Soviet Union and, while everyone was going to Spain or Portugal to spend their one week vacation in the sun, we decided to go into action and head east.
We soon found out why the trip was so inexpensive. December in Russia is not for wimps or the faint of heart. It was brutally cold. I now understood why Napoleon and the Germans failed in their invasions of Russia. The Russian winters were too brutal and when not fighting for one’s homeland, the armies just didn’t have the fortitude to persevere versus the Russians who were prepared to die for their beloved homeland.
Boy was that a trip, though. I could devote an entire blog post to what happened there. From meeting some locals we hung out with in Leningrad to secretly meeting with Soviet Jews who were banned from emigrating to Israel to getting lost in Leningrad and getting very sick from the water, that trip was one of the most memorable and impactful of my life.
While at Oxford I got to see one of my music heroes, Pete Townshend, perform at a very small theater in London accompanied by David Gilmour of Pink Floyd fame. The theater held approximately 3,000 people and it was quite an amazing show. It actually came out on video later in the year and I saw myself in it during a crowd shot, which was pretty cool.
It just so happened that earlier in the day on November 2nd, 1985 there happened to be an anti-apartheid rally taking place in London so my friend and I decided that would be an interesting experience to go into London earlier to participate in this. It was quite an event, especially when someone threw a stone and broke a window at Barclay’s Bank as the march went passed there and the crowd became very vocal and angry as we went by Number 10 Downing Street, which was the home of Margaret Thatcher. Beware of the power of a large group of highly emotional people. Fortunately, the global pressure became strong enough to result in South Africa ending this terrible practice.
Meanwhile, the one football season I am out of the country, my Chicago Bears had their most outstanding year ever by going 15 and 1. The Monsters of the Midway were back in ferocious form led by Buddy Ryan’s 46 Defense, which to this day is without question one of the greatest defenses in history. I got to follow them from afar via some international news coverage and the paper (yes papers were read often back then). At least I was home in time for the Super Bowl. Interestingly when I went home to Chicago in December, not long after the trip to the Soviet Union, I came to realize that the weather was equally brutal. No wonder why Chicago has so many Russian immigrants. It feels like home!
Enough of living in the past. I strongly encourage you to go see the world, don’t plan every minute of the journey if possible, meet the people, study architecture, learn languages, observe how cultures differ, what they excel at and value. All of this can help you not only become a more inquisitive and interesting person but it should help you become a better investor and lead a more fulfilled life.
Earlier I mentioned that having taken 24 units at Oxford would come back to haunt me. So why was this the case? Prior to graduating from UCLA, each student has his or her transcript reviewed by one of the counselors to make sure they are on track to graduate. They review the total number of units you have taken and if you can complete the 180 units required to graduate in time, whether you have taken the right courses for your major, and completed enough electives. They also look to see if you met the very obscure requirement that the vast majority of your last 90 units be taken at UCLA and not another institution. This was something I was obviously not aware of prior to going to Oxford. When the counselor saw that I had 24 units from another institution she said I would not be able to graduate without an appeal. Needless to say, I was a bit panicked. I went right into action, worked on my appeal, and was, fortunately, successful.
So there you have it, a brief chronology of one of my most formative and adventurous years. And to think it was all triggered by the rapid and dramatic depreciation of the British pound.
Over to You:
Where did you travel in 1985? Did you study abroad during your college years? How did your adventure affect you?