Cabot Wealth Advisory Fifth Anniversary
A Favorite Column
J. C. Penney---
Cabot Wealth Advisory celebrated its fifth anniversary recently. While the service is still a youngster compared to our more established advisories, I thought we should do something to mark the occasion. So I went back to the digital vaults, reviewed some of our most beloved columns, and found the following, which was originally published on April 6, 2009. I liked it a lot then, and I like it now, but like any editor, I found a few things to change, hopefully for the better. If you've read it before, I apologize; there IS a new investment recommendation at the end. And if you haven't read it before, I hope you enjoy it!
Music, Music, Music
The seed for this column was inadvertently planted two weeks ago by Paul Goodwin, who is known publicly as the editor of Cabot China & Emerging Markets Report, but in his private life is an accomplished tenor with a serious appetite for classical music.
It started when Paul forwarded a copy of a welcome address delivered in February to the parents of incoming freshmen at Boston Conservatory by Dr. Karl Paulnack, pianist and director at the school.
Boston Conservatory is a "serious" music institution; it works to perpetuate and cultivate the values of classical music, chamber music, opera, conducting, etc.
Famous recording artists Teresa Brewer, Cherilyn Sarkisian and Katy Perry didn't have the benefit of the institute's instruction and we'll get to them later. (If you can identify all three of those women, congratulations!)
But we'll start with the highlights of Dr. Paulnack's speech, skipping the usual introductory remarks:
"The first people to understand how music really works were the ancient Greeks ... the Greeks said that music and astronomy were two sides of the same coin. Astronomy was seen as the study of relationships between observable, permanent, external objects, and music was seen as the study of relationships between invisible, internal, hidden objects. Music has a way of finding the big, invisible moving pieces inside our hearts and souls and helping us figure out the position of things."
Paulnack then goes on to give two big examples of this:
The French composer Olivier Messiaen, who wrote "Quartet for the End of Time" while imprisoned in a concentration camp in 1940.
The way people in Paulnack's Manhattan neighborhood banded together after September 11, 2001 to sing "We Shall Overcome" and "America the Beautiful."
From this, Paulnack concludes that music is "not of 'arts and entertainment' as the newspaper section would have us believe. It's not a luxury, a lavish thing that we fund from leftovers of our budgets, not a plaything or an amusement or a pastime. Music is a basic need of human survival. Music is one of the ways we make sense of our lives, one of the ways in which we express feelings when we have no words, a way for us to understand things with our hearts when we can't with our minds."
(Note those words, "one of the ways in which we express feelings when we have no words," because I'll come back to them.)
Paulnack goes on to mention Samuel Barber's "Adagio for Strings," well known as the background music in Oliver Stone's movie "Platoon." He mentions weddings, which always have music, and notes, "predictably 30 or 40 percent of the people who are going to cry at a wedding cry a couple of moments after the music starts. Why? The Greeks. Music allows us to move around those big invisible pieces of ourselves and rearrange our insides so that we can express what we feel even when we can't talk about it."
Then, closing in on his big theme, he finishes:
"If we were a medical school, and you were here as a med student practicing appendectomies, you'd take your work very seriously because you would imagine that some night at two AM someone is going to waltz into your emergency room and you're going to have to save their life. Well, my friends, someday at eight PM someone is going to walk into your concert hall and bring you a mind that is confused, a heart that is overwhelmed, a soul that is weary. Whether they go out whole again will depend partly on how well you do your craft.
"You're not here to become an entertainer, and you don't have to sell yourself ... You're here to become a sort of therapist for the human soul, a spiritual version of a chiropractor, physical therapist, someone who works with our insides to see if they get things to line up, to see if we can come into harmony with ourselves and be healthy and happy and well.
"Frankly, ladies and gentlemen, I expect you not only to master music; I expect you to save the planet. If there is a future wave of wellness on this planet, of harmony, of peace, of an end to war, of mutual understanding, of equality, of fairness, I don't expect it will come from a government, a military force or a corporation. I no longer even expect it to come from the religions of the world, which together seem to have brought us as much war as they have peace. If there is a future of peace for humankind, if there is to be an understanding of how these invisible, internal things should fit together, I expect it will come from the artists, because that's what we do. As in the concentration camp and the evening of 9/11, the artists are the ones who might be able to help us with our internal, invisible lives."
For the audience of parents, the speech was no doubt quite effective; it made them feel good, even noble, to spend money (tuition at Boston Conservatory is $30,400 a year) to send their offspring to the institution. And the fact that the speech lives even now on the Internet, with universally positive commentary, attests to the power of its message. People--and professional musicians in particular, who are profoundly attuned to music--love the idea that music can bring peace to the planet.
But color me skeptical. Sure, Paulnack made excellent use of examples as a tool of persuasion. Lord knows we all recognize the power of music to pull our heartstrings in movies and at weddings.
But he was necessarily selective in his examples. He refers, of course, to beautiful classical music composed under difficult circumstances, but ignores martial music, which has long accompanied men to war. And he ignores the role of popular music totally, despite the fact that it's enormously more prevalent and influential in our culture--and in every culture--than Boston Conservatory's serious music.
More important, his speech was notably lacking in both logic and science. Paulnack refers to the Greeks as a wise culture, but then says, "Music has a way of finding the big, invisible moving pieces inside our hearts and souls and helping us figure out the position of things."
What does that mean, scientifically? I don't think Paulnack cares; most important to him is that it feels right. But I care. So I looked. I found a very good explanation for why music is such a powerful force in our lives, and I want to share it with you.
But first I want to return to the three female recording artists mentioned earlier.
Teresa Brewer was born Theresa Breuer in Toledo, Ohio, in 1931. She never took music lessons; she couldn't even read music. But she began singing as a child and had a #1 hit in 1950 with "Music, Music, Music," written by Stephen Weiss and Bernie Baum. It sold over a million copies and became her signature song. It goes like this.
Put another nickel in
In the nickelodeon
All I want is loving you and
Music, music music
I'd do anything for you
Anything you'd want me to
All I want is kissing you and
Music, music music
Closer, my dear come closer
The nicest part of any melody
Is when you're dancing close to me
Put another nickel in
In the nickelodeon
All I want is loving you and
Music, music music
In her career, which lasted into the 1990s, Teresa recorded nearly 600 song titles. She recorded with jazz greats Count Basie, Duke Ellington, Dizzy Gillespie and Bobby Hackett, and she died on October 17, 2007, at her home in New Rochelle, New York.
Cherilyn Sarkisian was born in El Centro, California, in 1946 and became famous in 1965 (at age 19) when "I Got You Babe," recorded with Sonny Bono, became a #1 Billboard hit. We know her as Cher. She never finished high school, but she's now 62 and in the midst of a three-year $60 million gig at Caesars Palace in Las Vegas.
And Katy Perry? Born as Katheryn Elizabeth Hudson in 1984 in Santa Barbara, California, she's hot today, thanks to songs like "I Kissed a Girl" and "Hot N Cold;" each has sold over three million copies. She never finished high school, either. Ask your kids or grandkids about her.
Then there's me. Both my parents are very musical; even now they play professionally as a duo, my father on clarinet and my mother on accordion. In their music room stands a refurbished orchestrion, a machine made by the Nelson-Wiggen Piano Company of Chicago in 1916 that plays when you drop a nickel in the slot ... just like Teresa Brewer's nickelodeon. Most recently, I heard it play "Petite Fleur," a great jazz tune from the 1920s.
It's similar to a player piano, powered by electricity, and with additional components actuated by vacuum hoses. It reads a perforated paper roll, and includes not just piano but three drums, cymbal, banjo, xylophone, wood block, triangle and castanets. I think it's pretty cool. It's not amplified, but when it's turned up loud (the way my father likes it) you can't even hold a conversation in the room!
But I'm not a musician. Sure, like my four siblings, I had years of piano lessons, starting at an early age. I played clarinet through high school--and I still play it once a year, in the neighborhood Fourth of July parade where we play only three songs, "Avalon," "Battle Hymn of the Republic" and "Chinatown."
But no one would ever think of paying me to play. And the truth is, I'd much rather listen to professionally played music--live or recorded. I think Apple's iTunes is one of the greatest inventions of the decade.
Now let's get back to the real topic, the idea that music might save the world, and if not, the question of why music is such a powerful force in humans.
The title of this column is "Music, music, music." I made it up ... simply by stating the topic three times. But not really, because at the moment I conceived that three-word phrase (or perhaps before), my brain found a memory of a lyric, combined with a melody, and before you know it, I was singing (in the my head) the lyrics to Teresa Brewer's song, which had been implanted there many years before.
How did I save that memory ... without even trying? How have I saved memories of hundreds--thousands--of other songs, both serious and trivial? How is it possible that I can struggle to memorize the license plate on my wife's car or a 10-digit phone number yet can easily remember a song after a couple of hearings ... and retain that memory for many years? And why does music affect us so emotionally ... to the point where we can imagine it might be the force that saves the world? Finally, what is the point? Evolutionarily, why did we develop this capability to create and respond to music?
I've been wondering idly about these questions for quite a few years and I think I've finally been presented with some answers, thanks to a wonderful book by Daniel J. Levitin titled, "This is Your Brain on Music."
The book says, "Daniel Levitin runs the Laboratory for Musical Perception, Cognition and Expertise at McGill University, where he holds the James McGill Chair and the Bell Chair in the Psychology of Electronic Communication. Before becoming a neuroscientist, he worked as a session musician, sound engineer and record producer, working with artists such as Stevie Wonder and Blue Oyster Cult. He has published extensively in scientific journals and music magazines such as Grammy and Billboard."
In the book, Levitin begins by reviewing the concepts of pitch, rhythm, tempo, contour, timbre, loudness and reverberation, then moves on to cover meter, key, melody and harmony, all the while using examples like Handel's "Messiah," Don McLean's "Vincent," Busta Rhymes's "What's It Gonna Be?!," Beethoven's "Pathetique," the Beach Boys' "Barbara Ann" and "Twinkle, Twinkle Little Star."
He covers octaves and scales, noting the variety of scales used both around the world and in different types of western music. He covers chords. And he covers transposition, noting that all of us, without any musical training can sing "Happy Birthday" in any key, because we're so familiar with the relationships between the notes ... but that most of us will always sing songs for which there is one definitive version, like Norman Greenbaum's "Spirit in the Sky" or Neil Diamond's "Sweet Caroline," in exactly the "proper" key.
And then he digs deeper into the brain's function, discussing the frontal lobe, the temporal lobe, the parietal lobe, the occipital lobe and the cerebellum.
None of these lobes is individually responsible for music processing; it's a group effort. But it's notable that, "The emotions we experience in response to music involve structures deep in the primitive, reptilian regions of the cerebellum vermis, and the amygdala--the heart of emotional processing in the cortex."
This is not to say that all music simply presses our "primitive" buttons. The most enjoyable music that we listen to engages our frontal lobes to a large degree, as we intellectually embrace the music while working to predict what will come next, based on several factors.
"What has already come before in the piece of music we're hearing;
"What we remember will come next if the music is familiar;
"What we expect will come next if the genre or style is familiar, based on previous exposure to this style of music."
In fact, the most enjoyable music is at once both familiar and engaging.
Paulnack writes, "The appreciation we have for music is intimately related to our ability to learn the underlying structure of the music we like--the equivalent to grammar in spoken or signed languages--and to be able to make predictions about what will come next."
Tempo and rhythm are generally predictable in western music; foot-tapping--sometimes an involuntary activity--is evidence of the neural importance of that.
But he notes that we also like surprises in our music. The Beatles' "Yesterday," for example, violates the western convention of four-measure or eight-measure phrasing by placing the main melodic phrase in seven measures; the construction intrigues us, though we may not know why.
Within the space of just two pages, Levitin refers to The Beatles' "For No One," Steely Dan's "Chain Lightning," Aretha Franklin's "Chain of Fools," The Carpenters' "Please Mr. Postman," The Rolling Stones' "As Tears Go By," Stevie Ray Vaughan's "Pride and Joy," Elvis Presley's "Hound Dog," The Allman Brothers' "One Way Out" and Creedence Clearwater Revival's "Lookin' Out My Back Door."
But it's not all pop and rock. Levitin is equally at home describing Miles Davis and John Coltrane, jazz artists who ask a little more from their listeners, and give a little more in return.
Along the way, he notes that children's brains develop from birth to understand and appreciate the music around them. That the popular conception that the left brain is analytical and the right brain artistic has some merit but is oversimplified. And that hemispheric specialization does increase as we age.
He discusses "ear worms," the song fragments that get stuck in our heads, telling us that professional musicians get these more commonly than non-musicians, and that people with obsessive-compulsive disorder are more likely to report them, too.
Digging into the connections among various brain centers and analyzing the order and amplitude of stimulation and activity, he concludes, "far more than language, music taps into primitive brain structures involved with motivation, reward and emotion."
Going on, he writes, "The story of your brain on music is the story of an exquisite orchestra of brain regions, involving both the oldest and newest parts of the human brain, and regions as far apart as the cerebellum in the back of the head and the frontal lobes behind your eyes. It involves a precision choreography of neurochemical release and uptake between logical prediction systems and emotional reward systems. When we love a piece of music, it reminds us of other music we have heard, and it activates memory traces of emotional times in our lives."
He also addresses the myth that some people have an innate talent for music. What's required, he says, is practice. In any field, roughly 10,000 hours of practice is required to become an expert. That's three hours a day, seven days a week for nine years. And with music, the earlier you start, the better, because those neurons become less amenable to programming as you age. For Cher and Katy Perry, dropping out of high school to focus on music was a smart career move.
In his last chapter, Levitin gets to my biggest question. Why music? What evolutionary advantage was or is conferred by music-making and music-enjoying?
And the answer is this. Recognizing that humans evolved musical capabilities long before speech capabilities, imagine the simplest drum-beating and rhythmic grunting combined with primitive dance movements. Prowess in these musical activities, just like a peacock's tail, signaled to members of the opposite sex that the practitioner was so healthy that he or she could afford to "waste" time and energy developing a purely unnecessary attribute. In short, the most impressive musicians and dancers got the most sex. Look at "American Idol" and "Dancing With the Stars"--two programs I've never watched--and tell me what's changed. Music is what helps you get the girl (or the girl get you)!
Levitin didn't write this first. Charles Darwin wrote it in "The Descent of Man" in 1871. "I conclude that musical notes and rhythm were first acquired by the male or female progenitors of mankind for the sake of charming the opposite sex."
There are still doubters. No less an authority than Steven Pinker, professor of psychology at Harvard, wrote, "As far as biological cause and effect are concerned, music is useless. It shows no signs of design for attaining a goal such as long life, grandchildren, or accurate perception and prediction of the world. Compared with language, vision, social reasoning and physical know-how, music could vanish from our species and the rest of our lifestyle would be virtually unchanged."
Levitin counters, "The genes that exist in you today (with the exception of a small number that may have mutated) are those that reproduced successfully in the past. Each of us is a victor in the genetic arms race; many genes that failed to reproduce successfully died out, leaving no descendants. Everyone alive today is composed of genes that won a long-lasting large-scale genetic competition."
"In contemporary society, interest in music peaks in adolescence, bolstering the sexual-selection aspect of music. Far more 19-year-olds are starting bands and trying to get their hands on new music than are 40-year-olds."
Of course, music has evolved as humans have evolved. At many levels it has become elevated beyond its sexual, evolution-advantaging roots. The students at Boston Conservatory studying Chamber Music and String Pedagogy are giving their frontal lobes more of a workout than did our ancestors who beat on hollow logs while dancing around the fire. And pianists who master Bach's "Goldberg Variations" are unlikely to have groupies in the front row of concerts tossing underwear at them. The educated people in their audiences are focused on achieving pleasures of a "higher" level.
But those well-established neural circuits in the primary regions of our brains, which govern pleasure and emotion, and which developed over millennia, are still extremely powerful. Because of them, it's relatively easy for us to memorize songs--and to recognize people's voices--while it's still hard for us to memorize license plates and phone numbers; numbers just haven't been around long enough for our brains to become proficient with them.
In short, the past thousand years of civilization, in which we've made a tremendous amount of progress, thanks to our frontal lobes, have done little to diminish the powers of the primal regions of our brains ... especially in young men and women.
One of the highlights of my week was a video (currently circulating on the Internet) of four young men in Ukraine, dressed in suits and ties, playing acoustic guitar, string bass, accordion, marching bass drum and tambourine ... and playing Katy Perry's "Hot N Cold." Their performance is a bit rough, but they're having fun, and I'm betting the 18-year-old girls waiting backstage don't care if these young men have been to music school!
So, Dr. Paulnack was right when he said that music is "one of the ways in which we express feelings when we have no words." Music predates speech in the human evolutionary chain, so its messages frequently need no words.
But can it save the world? Well, it's a nice thought. But recognizing music's roots, and music's continuing grip on our senses, I'm skeptical.
If we REALLY want world peace--more than we want economic growth, land, food, shelter and clothing--the best course might be to recognize that half the population of the earth has a genetic disposition toward peace ... and put them in charge! I'm talking of course, about women, but that's a whole new topic. ---
Back to 2012. That 2009 column on music was followed by a recommendation for gun-maker Sturm, Ruger (RGR), which had recently been recommended by Cabot Top Ten Trader. Since then, the stock is up a very impressive 234% ... and the future of the company looks bright. But I wouldn't buy it here; the stock looks a bit extended, so I'd wait for a lower-risk entry point.
The stock I do recommend today is a bit unusual; in fact, to a small extent, I'm surprising myself! But its selection comes from following a methodology that's worked before, and will absolutely work again, more often than not.
The company is J.C. Penney (JCP), long dismissed as just another mid-level retailer. And it couldn't be more mature. The company was founded by James Cash Penney 110 years ago, and now has stores in 49 states. So where's the opportunity?
Succinctly, in new management.
Specifically, in Ron Johnson.
He spent 16 years at Target, where he became Senior Merchandising Executive.
He moved to Apple in 2000, where he pioneered the concept of Apple retail stores, as well as the Genius Bar concept. Those, as you know, have worked out extremely well.
And in June of last year he joined J.C. Penney, where he's been making changes fast.
One change is the new logo, clearly designed to tap into American spirit.
Other changes include a new pricing strategy, promotions built on a monthly calendar; changing merchandise layouts from endless racks to a series of 80 to 100 brand shops; the evolution of the monthly "look book" and the return of Ellen DeGeneres as a "brand partner."
It's almost certain the changes will help.
And if they help even a little bit, the stock should do well, because the stock has been dormant for a long time ... and it's cheap, selling for roughly half of one year's sales.
And if the changes help a lot, for example by boosting profit margins from the 1.9% of the past twelve months to perhaps double that, or goosing revenue growth rates from the 1% in 2011 to something substantially higher (double-digits would be awesome), the stock could soar.
As to the stock's technical action, JCP roared to life after management's investor presentation on January 26, spiking from 34 to 41, and it's been trading roughly between 40 and 42 since. You could buy here, and hope for the best, or you could take a trial subscription to Cabot Market Letter, whose editor Mike Cintolo first recommended the stock.
For details, click here.
Yours in pursuit of wisdom and wealth,
Cabot Wealth Advisory
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