The best-selling Grammy Award-winning jazz musician makes as much money from trading as selling his music.
When Kenny G wakes up in the morning, he watches Starbucks. But the saxophonist doesn’t drink coffee. Instead, the man whose real name is Kenny Gorelick obsessively checks the company’s stock price.
Gorelick was one of the first investors in the Seattle-based chain. He was introduced to Starbucks chief Howard Schultz through an uncle, before the company went public, and soon bought a stake. Shares are up more than 12,000% since beginning public trade. That success helped spark a stockpicking habit that consumes his attention as his music earning potential is eaten away by digital music, which pays less than physical album sales, and online piracy.
These days, Gorelick spends his mornings in front of his computer screen, trading blocs of shares of the approximately 30 companies in his portfolio. Over the last decade, he has earned about as much money from stock trading as from music.
“Most people in the music business don’t make as much money as we used to,” says Gorelick, who topped the contemporary jazz sales charts for several years running in the 1990s and whose 2010 album cracked jazz’s top ten. “You have your 1% of Beyonce and U2, who are playing stadiums, who are going to make tons of money. I’m going to put myself in the normal category of a music person who has been successful.”
Gorelick, who holds a degree in accounting from the University of Washington, has been more fortunate than other musicians when it comes to the income he’s lost to streaming and digital downloads. His 2010 album, Heart and Soul, sold nearly 12,000 copies in its first week, with an unusually high 86% of sales contributed by higher-priced CDs. His next solo album is due later this year.
From saxblowing to stockpicking
Even though stockpicking keeps Gorelick’s finances solid, picking stock winners is not easy. “I have a good batting average but I’m definitely not perfect,” he says, adding that he asks people he considers smart about what is happening in their fields. If he comes across a company that looks promising, he watches it for a while, reading coverage of the companies and doing other research, and then might buy on a dip.
One of his biggest recent winners was a stake in Potash Corp of Saskatchewan Inc, one of the world’s largest fertiliser exporters. He heard about the company from a friend in Canada. The friend was a successful stock picker and that “made his advice easy to follow,” Gorelick said. He watched the stock for two months, and bought significantly when it dipped one day to around a split-adjusted US$30 per share in 2010.
The shares shot up to a split-adjusted US$62 per share the following year as the company fought off unsolicited takeover bids. Gorelick sold on the way back down, at US$60 and below. “I made a lot of money on that stock,” he says.
Nearly the opposite happened with his stake in biotech Dendreon Corp, recommended by a friend. Gorelick began buying shares around US$35 in early 2011. Not long afterward, the company announced that sales of its prostate cancer vaccine Provenge were not meeting expectations. Gorelick sold for less than US$5 a share. It now trades at less than US$2 per share. “I don’t listen to tips from friends as much anymore,” jokes Gorelick.
Gorelick still has “a fair amount” of his original shares in Starbucks Corp and watches the stock price every day. Yet he tries to keep himself from getting caught up in every change of the ticker. “I can get emotional in my music, but try to make more sense when it comes to trading.” – Reuters