Reflecting on his time as a cab driver in Cambridge, Mass., years ago, Paul Solman, business and economics correspondent for “The NewsHour with Jim Lehrer,” believes the job taught him the “relationship between work and pay.” The experience also gave him quite a bit of insight into how businesspeople think. He told Consumers Digest that he discovered how to earn more by manning certain cab stands at certain times of the day and that he learned other strategies to maximize his pay. Operating a taxi also clued him in to how intrigued he naturally was to the basics of economics.
When it comes to explaining his personal investment stance, this six-time Emmy award winner mentions psychiatrist George Ainslie’s book “Breakdown of Will.” The book’s premise, Solman says, is that there’s a competing group of “Pauls” within him—one that will take that piece of pizza if offered and another who knows he shouldn’t. The longer term goal of a healthy diet is more important, but short-term temptations are hard to resist.
Solman believes in the lure of immediate gratification, and that’s why he thinks that investors sell in a panic when the market falls rather than sticking with their long-term plan. Understanding this and his own panicky nature, Solman has protected his savings by thoroughly diversifying. He believes this puts him in a situation where he can easily resist temptation no matter what happens. One-third of his savings are in Treasury inflation-protected securities and I-bonds. Thirteen percent of his portfolio is in art, mostly European, which serves as a hedge against the falling dollar (as well as a way to enjoy an investment, he points out).
He has targeted 19 percent of his portfolio at foreign stock mutual funds, and 12 percent is split between two U.S. stock mutual funds. The remainder: 9 percent in a foreign-bond mutual fund; 6 percent in a Treasury bond mutual fund; 3 percent in money markets and T-bills; 3 percent in a U.S. bank account that has the money invested in Chinese currency; and 2 percent in a traditional U.S. bank account.