Starbucks, Stocks and Smooth Jazz: What Kenny G Teaches Us About Long-Term Investments

You Know the Musician, But Do You Know the Investor? Here’s What You Can Learn from Kenny G’s Investments

You, like many people around the world, are probably very familiar with the feeling of walking into a Starbucks for a mocha Frappuccino, the barista calling names over the  sound of mellow saxophone jazz as students and startup owners meet at cafe tables. But did you know that the same person delighting your ears is also the one responsible for your coffee?

That’s right. Best-selling smooth jazz musician Kenneth Gorelick, affectionately known by his stage name, Kenny G, doesn’t know much about coffee. But he does own some. As an early investor in the Seattle chain, Gorelick’s stock soared after the company’s IPO—up 12,000%. Gorelick has even said he was part of inventing the iconic Starbucks Frappuccino.

While you may not be able to read sheet music, you may be able to better read the markets. Gorelick’s long-term investments are a sound strategy that investors can learn from, so we highlight them below.

So, Listening to Kenny G Can Help You Make Money? Sounds Great!

Rumor has it that Gorelick’s investments have made him more money than his iconic music career. Though we can’t confirm that’s true, while we know him for his famous grooves, Gorelick’s investment portfolio may be the real star. In addition to his ownership in Starbucks, he’s also made a successful investment in United Airlines, Apple, Microsoft and others.

You may not be able to sell out concerts, but could you become just as successful in the markets? Though a recent study shows that listening to soothing beats like Kenny G’s can help you make rational investing decisions (no, seriously), why don’t you listen to Kenny G’s investment advice?

Kenny G Investment Advice for Any Investor

Take the following helpful advice based on Gorelick’s investments and media interviews.

Long-Term Investments

Patience is a virtue. One of the reasons for Gorelick’s success is his habit of buying and holding stock for the long term. In fact, Gorelick still keeps a number of his original shares in Starbucks. Holding stocks allowed him to achieve compound annual returns, and even though he watches the stock market every day, he doesn’t purchase stocks with the intent of selling right away. Instead, he finds high-quality businesses, like Starbucks, and invests in that company and hangs on, much like Warren Buffet.

Long-term investing has its benefits. Short-term trading can lead to missed opportunities if you sell prematurely. Long-term investing rides out the immediate ups and downs of market volatility and allows you to experience the historically inevitable rebounds of the market. Plus, you’ll pay less in capital gains taxes if you hold your stocks for more than one year, as the long-term, maximum capital gains tax rate is lower.

Portfolio Diversity

Kenny G knows that a diverse investment portfolio is important—and safer. He even exhibits this common sense perspective to mitigate risk in his own life. In a 2015 interview with CNBC, Gorelick mentioned that he did not want to study music in college and went on to major in accounting. As an artist, he warns other artists. “A lot of people don’t get to be out there as long as I have. It can end any time, so be smart,” he states.

The phrase “Don’t put all your eggs in one basket” comes to mind here. Gorelick diversified his skill sets early on to mitigate risk in a career where popularity can quickly diminish. And this line of thinking can also set your portfolio up for success. Don’t just invest in one or two stocks. Don’t just invest in one type of asset. Consider alternative assets in addition to mainstream assets. Diversify your portfolio.

[Editor’s Note: To learn more about choosing stocks and diversifying your portfolio, check out the clip below from Financial Poise webinar Alpha, Beta & Other Key Concepts.]

Humility

Though Gorelick boasts that he himself chooses the correct investments 80% of the time, he still does not shy away from asking for expert advice. He admits that he still consults his financial advisor before making any substantial investment and surrounds himself with smart people with experience.

Due Diligence

Kenny G stays away from “friendly” tips. After one successful investment recommendation made by a friend, Gorelick chose to take another friendly recommendation, which subsequently cost him a big loss. Lesson learned: do your own homework, and don’t cheat off a friend. Speak to an advisor and continue to do your own regular research. Kenny G pays attention to his investments. Gorelick’s assets aren’t just left to the professionals to deal with. In fact, he spends significant time watching over them himself, as any investor should do. After all, if your music career doesn’t pan out, you won’t be playing the blues.

Taking Risks

Investing in his own areas of interest means Kenny G doesn’t always take the safest approach. He still takes appropriate risks. As we can see from his portfolio, he has shares in giants such as Apple and Microsoft, but he isn’t one to shy away from new approaches in business. His music was one of the first CDs carried at Starbucks locations in 1994. Starbucks’ music-selling model attracted big names, like Paul McCartney and Joni Mitchell, before the company stopped selling music in 2015. (Starbucks still dips its toes in music with streaming playlists).

Not all of us can be successful jazz musicians like Kenny G, but if we take note of his investment strategies, we may see our own portfolios grow and flourish the same way that his long-term investments did.

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[Editor’s Note: To learn more about this and related topics, you may want to attend the following webinar series: Personal Finance & Investing Fundamentals 1.0 and Personal Finance & Investing Fundamentals 2.0.]

©All Rights Reserved. February, 2021.  DailyDAC^TM, LLC d/b/a/ Financial Poise^TM