Ottis Ballenger, a retired neurosurgeon from Greenville, South Carolina, and his wife, Ann, recently returned from a 10-day cruise to five islands in the Caribbean. They got a chance to soak up the tropical climate, enjoy gourmet food and mingle with other retired couples. But the biggest draw, they said, was the professional investment advice they received on board.
"The tourism part is really secondary now since many of the ports we are visiting we've seen before," said Ottis Ballenger, who has been on six ocean cruises with investment themes in as many years.
PHOTO: NY TIMES NEWS SERVICE
The Ballengers are part of a growing class of travelers known as "investment cruisers," often wealthy retirees who spend their days at sea mostly below deck discussing serious subjects like mutual funds, bonds and commodities with financial experts. In their case, the expert was Louis Rukeyser, the host of "Louis Rukeyser's Wall Street" on CNBC.
Rukeyser is considered a pioneer in seminars at sea, having been a host for them since 1998. Similar cruises, to name just a few, are offered by MorningstarAdvisor.com, Jim Lowell's Fidelity New Economy Investor, Forbes, and BusinessWeek, in a partnership with Standard & Poor's Eric Graves, the vice president of group sales for Crystal Cruises of Los Angeles, on whose ships many of these cruises take place, said the investment seminars attracted from 300 to 800 people a cruise, filling a significant portion of many ships, and represented "the fastest-growing segment of our group business."
"I can tell you that 10 years ago this investment cruise phenomenon didn't exist," Graves said.
Of course, part of the attraction is the chance to meet people like Rukeyser; Steve Forbes, the editor in chief of Forbes magazine; or Marshall Loeb, a CBS MarketWatch columnist. (Ballenger said he had sat next to Rukeyser at the blackjack table.) But cruise passengers say most of the investment lessons or stock tips come from the accompanying panel of experts, including independent professionals and senior-level business journalists.
"There is no one line of investment thought; I have seen so many of these financial people disagree with one another," said Marjorie North, a society columnist for The Sarasota Herald-Tribune in Florida and a repeat customer of the Forbes Cruise for Investors. She said she and her husband, Bill Hirons, a former executive at DuPont, planned to take North's grown daughter, Christina, 30, a lawyer, on a Forbes investment cruise to Alaska in June.
"We think it is time she learned to invest," she said, "and these seminars are better than a book."
North says the investment cruises have helped make her more comfortable about investing in these rough economic times. The Ballengers, too, say they feel better equipped to handle market fluctuations, even though their portfolio, like those of many other investors, has suffered losses in recent years.
Investment cruises can provide benefits beyond stock tips and investing lessons. Passengers may qualify for group discounts of 25 percent or more off regular cabin rates, with prices starting at less than US$5,000 a couple. The Ballengers said they paid about US$13,000 for their Caribbean cruise and got a deluxe stateroom with a veranda that might otherwise have gone for more than US$17,000. The trip left Fort Lauderdale the day after Thanksgiving.
To attend the seminar part of the cruise, they paid an additional US$895. (At least one cruise organizer has waived such fees lately; cruise bookings in general have been down because of the weak economy and lingering fears of terrorism.)
A few investment cruisers may even be able to write off part of their trips on federal income tax returns, as they do for conventions and seminars held on land. But be forewarned: There are many restrictions. According to the IRS, each taxpayer can deduct up to US$2,000 of investment cruise expenses in a calendar year, but only if the cruise seminar relates directly to his trade or business. The law also mandates that cruise ships visit only US ports and that they sail under an American flag. (Ordinary investors like the Ballengers generally do not qualify for such deductions; those who think they may should contact a tax professional.)
Charles Githler, founder and chairman of InterShow in Sarasota, Florida, which organizes many investment cruises, said that several repeat passengers on InterShow investment cruises reported being able to deduct all or part of the cruise costs by tying them to their business. Likewise, he said, he knew of customers who managed large family investment accounts or trusts and could write off a portion of the trip.
The seminar-at-sea concept appeals not only to information-hungry investors but also to the financial advisers themselves. The T. Rowe Price Group, based in Baltimore, has been setting up investment cruises for its mutual fund clients since the late 1990s. "Since we are a no-load mutual fund company, we don't get a lot of chances to speak to people face to face," said Steve Norwitz, a company spokesman.
In October, T. Rowe Price took a small group of investors on a fall foliage trip up the Eastern Seaboard for nine days. The cruise was organized by Continuing Education Inc. of St. Petersburg, Florida, which arranges accredited conferences for investors and professionals, including physicians, lawyers and architects. Passengers receive credits for courses.
Michael Murphy, editor and founder of the California Technology Stock Letter, who has been on several cruises, said he enjoyed meeting with clients as well. "I get two things out of the cruise," he said. "First, there are often some very sophisticated investors who have made a lot of money or know a lot about some sector of technology, especially niches in medicine. Second, I want to see face to face what people understand and what confuses them, what worries them."
Among the discussion topics on recent investment cruises were the weak economy and its impact on Wall Street, asset allocation in a bear market and how to spot investment charlatans.
The formats for the seminars are similar, although informal access to guest speakers outside scheduled seminar hours can vary. Prospective passengers may want to do some homework to find the program that is right for them.
Cruise organizers generally arrange their speakers and topics months in advance, so prospective passengers can nail down how much time will be spent in seminars versus time on shore. Generally, the seminar portion takes place only while the ship is at sea. Depending on the length of the cruise, three to four full days of seminar time is standard.
Featured speakers are not always on board for the duration of the trip. Murphy, the newsletter publisher, acknowledges that he did not typically stay for an entire cruise. (He said there was no "quicker way to be totally out of touch with the market than to get on a cruise ship.") Forbes also stays for only a portion of each cruise, according to conference organizers.
Prospective passengers may also want to consider the amount of scheduled time for questions and answers after the sessions -- and whether there will be soirees outside the formal seminars at which presenters and investors can mingle.
Rukeyser says the guest speakers he chooses for the cruises must be highly approachable people, like Joseph Battipaglia, the chief investment officer at Ryan, Beck & Co in New York. One former investment cruiser described how Battipaglia, when stopped in the hallway on one cruise, discussed her portfolio with her for a half-hour.
For his part, Battipaglia said he had come to welcome such interaction. After all, these people could be future clients.
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