Uncle Jack’s investment philosophy

Berkeley, Calif. is a neighbor of Oakland, Calif., though today, a visitor would think the two cities were on different planets.

IFO’s father, as she has mentioned before, was a pretty tough guy from Pittsburgh, Penn.  He was the baby of his family. Of the remaining three brothers, the two older ones were minor gangsters of the 1920s and the next one to my Dad was a perfect angel. The nun’s loved him.

Dad didn’t say what the nuns thought of his other brothers, but he took the first name of his oldest brother as his own middle name when it came time for his confirmation. IFO’s uncles were the most interesting men she had ever met – um, has ever met. They are gone, but the memories of them linger like the last rays of a brilliant sunset.

We don’t know where Uncle Jack Kelly fit in exactly, having been quite young when the complex family connections were spelled out. But IFO and her folks loved them, probably because they brought back memories of the 20s and 30s, when all were young and rambunctious.

Uncle Jack’s mother, Aunt Sadie, was a tough old lady and loads of fun. She lived with Jack and his wife and kids in the late 1950s in Oakland, Calif.

Uncle Jack took IFO to a chamber music concert one time while IFO was at CalBerkeley. What a surprise that was! IFO thought her mother was the only person in the family with any highbrow culture.

Uncle Jack worked in steel and educated IFO on U.S. foreign policy. “We were selling steel to Japan right up until Pearl Harbor,” he told IFO, furiously.

He had a sure-fire way to make money, he said. When you are standing at the roulette wheel in Reno or Las Vegas, just stand next to a high roller. You know the House will let him win for a while before they turn the table on him. Bets on the same numbers/colors he does, win a few times, then walk away. He didn’t say whether he ever actually did that.

IFO was thinking about this strategy recently when she was considering whether to advise single investors to buy stock in just one company. If the investor has been following IFO’s advice about research, know the CEO, dividends, forget high flyers, etc., s/he should be able to find a good one.

She can get to know that company intimately. If possible, she can visit the company campus; sample the company’s product(s).  She can study the quarterly SEC filings and even go to an annual meeting.

IFO and her DDH went to an annual meeting once and were so negatively impressed by the board of directors that DDH sold all of his stock in that company the next day! He was well aware of Peter Lynch’s  famous dictum, “Buy a business that any idiot could run, because sooner or later, any idiot probably will.”

With only one company to concentrate on, a stockholder can get to know it like the back of her hand.  She can save the dividends and start looking for her next purchase.

That’s not as fast as Uncle Jack’s strategy, but it’s a heck of a lot more educational and safe!

Advertisements

About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
This entry was posted in Advanced, Individual companies and tagged , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s