WSJ Drops the Ball on an Opportunity to Discuss Dividend Value and Growth Investing

//WSJ Drops the Ball on an Opportunity to Discuss Dividend Value and Growth Investing

WSJ Drops the Ball on an Opportunity to Discuss Dividend Value and Growth Investing

Every few years a major publication will come out with a story where someone who had a normal job their entire life died with a sizable estate.  This past weekend, it was WSJ’s turn to discuss such a situation.  The article, behind a paywall, is titled, “Route to an $8 Million Portfolio Started with Frugal Living” is about a man, Mr. Ronald Read that despite being a janitor and gas attendant for most of his life amassed a large fortune by almost anyone’s standards,

Mr. Read, a longtime resident of Brattleboro, Vt., died in June at the age of 92. His friends were shocked when they learned his estate was valued at almost $8 million. Long widowed and with two stepchildren, he left most of his money to a local hospital and library.

So how did he manage to pull it off? Besides being a good stock picker, he displayed remarkable frugality and patience—which gave him many years of compounded growth.

He lived modestly, working as a maintenance worker and janitor at a J.C. Penney store after a long stint at a service station that was owned in part by his brother. Those who knew him talk of how he at times used safety pins to hold his coat together and sometimes parked his 2007 Toyota Yaris far from where he was going to avoid having to feed the parking meter.

Besides being a good stock picker? He was able to be in the top .01% of all estates in the country and the author wants to focus on frugality? The fact that he had a 2007 car at the time of his death is not at all interesting when compared to what he probably did in in terms of investing.

In an odd turn of events, the article discusses at length the fact that Mr. Read held paper stock certificates, and how that might not be possible today – LIKE IT MATTERS AT ALL?! Where the focus should have been was the type of stocks he bought.  The author only provides the following information,

Mr. Read owned at least 95 stocks at the time of his death, many of which he had held for years, if not decades. They were spread across a variety of sectors, including railroads, utility companies, banks, health care, telecom and consumer products. He avoided technology stocks.

Friends say Mr. Read typically bought shares of companies he was familiar with and those that paid out hefty dividends. When dividend checks came in the mail, he plowed the money back into more shares, Ms. Bokum (an advisor who didn’t run this portfolio) says.

Among his longtime holdings were blue-chip stalwarts such as Procter & Gamble,J.P. Morgan Chase,General Electric and Dow Chemical. When he died, he also had large stakes in J.M. Smucker,CVS Health and Johnson & Johnson.

How about spending some in depth into information regarding how he invested because that is the story! Not that he might have saved a few bucks by not using metered parking  The Executor should have all the information as to when he bought what shares, and in what amounts, share that information! Maybe someone can determine what metrics he was using because it is likely he had some type of system.

I know that type of piece would take a tremendous more time than the fluff piece offered, but it is the freaking Wall Street Journal!

By | 2015-03-22T23:32:36+00:00 March 23rd, 2015|Investments|4 Comments

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4 Comments

  1. Lazy Man and Money March 23, 2015 at 9:45 am - Reply

    What if he wasn’t a great stock picker? What if he was just average?

    Let’s presume for a minute that at age 62 he had a million dollars invested. In all likelihood he had more than that due to his frugal living and saving habits.

    We’ll apply some rule of 72 and presume his money doubles every 10 years… around a 7% return.

    At age 72 he’d have 2 million. At age 82 he’d have 4 million. At age 92 he’d die with 8 million.

    He may have been a great stock picker, I don’t know, but just playing Devil’s Advocate here.

    • Evan March 23, 2015 at 10:36 am - Reply

      Very interesting point! Maybe he wasn’t great, but even then the story could have been about being persistent and sticking through tough markets rather than whether he chose to park where there was no meter.

  2. Dividend Growth Investor March 23, 2015 at 2:14 pm - Reply

    Hi Lazy,

    So what if he was just an average stock picker? Would it have mattered if he died with $10 – $13 – $16 million, rather than “just” $8 million?

    Unfortunately, I doubt his strategy had been codified anywhere. However, based on the limited list of holdings I saw on the WSJ article, it looks like he did what many dividend investors I know do these days:

    – Buy what you know at a good price
    – Diversify in many companies from as many sectors that make sense
    – Dollar cost average through thick and thin
    – Reinvest your dividends selectively
    – Be as passive as possible and do not churn portfolio holdings

    If you find a strategy that suits your personality, and that can achieve your goals and objectives, then why take on increased risks? The smart thing to do is to stay the course.

    • Evan March 31, 2015 at 9:06 am - Reply

      “Unfortunately, I doubt his strategy had been codified anywhere”
      – Probably not, but if they had paper certificates and what sounds like a mountain of information you could probably back track to figure it out.

      That was the real point of my post/annoyance. They could have taken this as a real undertaking and made it a REAL story instead that same old garbage of “guy who is cheap has a ridiculous estate with no natural heirs.”

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