First, I want to ask you to forgive me if this investment tip is a little self-indulgent. My father, Peter, passed away last Thanksgiving week at the age of 85 due to complications from Parkinson’s Disease. In 2003 I did an investment tip about some of the lessons I learned from him and how they’ve helped me in my investment career. On this Father’s Day, I’ve decided to do an expanded version of that investment tip. I want to give you a thumbnail sketch of his life, then I’ll share some of his very practical advice that I received over the years. Along the way you’ll also get a sense of his silly sense of humor.
My father came to the United States as a refugee in the late 1930’s from Germany. He served in the army for his adopted country in the South Pacific during World War II. He then attended UCLA on the GI Bill. He went into banking and rose to be the president of a local Southern California bank. His story is a bit of a Horatio Alger story, literally from the bottom to the top. Later in life when my father would meet with a business person who would be talking about his two (or so kids) my father would say “Gee, wish I had 2 kids”. He’d be asked, “Oh, how many do you have?” “Six!” my father would reply. On top of everything else he raised six kids.
Here is some of the advice I received from my Dad over the years and how it applies directly to the investment process.
A company has to make money to be a viable investment.
As he often said tongue in cheek “We’re losing money on every sale but we’re making it up in volume”. It’s that delusion that led to the whole internet craze and crash. It’s one he warned about many years ago.
Make sure you’re getting the straight story.
Sometimes I’d tell him about some great deal because so and so said it was. He’d ask “How do you know they are telling you the truth?”. Asking that one question would have kept an investor out of Enron.
Go where the opportunities are.
My Father has always been creative when it comes to opportunities. When I was in high school wondering about how to meet girls, he suggested taking a stenography class. He said “Who cares if you fail the class as long as you meet some girls?”. In investing (and dating for that matter) it makes sense to look for potential investments where the pickings are ripe and the competition is light (how many other guys were taking stenography in those days?).
Be prepared for opportunity.
My Dad was always looking around for opportunities, and being ready when those opportunities presented themselves. One day my father asked me for some business cards and I didn’t have any with me. He told me “A business man without a business card is like a carpenter without a hammer”. How can you take advantage of a situation if you’re not ready? You need to have already done your research and have cash in hand if you’re going to make an investment at the right time.
Don’t overlook the obvious.
My Dad’s favorite riddle: What looks like a box, smells like a lox and flys? Answer: A flying lox box. Sometimes we try to go too far afield to guess what’s going to happen with our investments instead of just doing the simple thing. This one idea might save you a lot of time, trouble and worry.
My father got me interested in the stock market by giving me a copy of Louis Engels’ “How To Buy Stocks” when I was 11. So he’s directly responsible for my tips, which I hope you’re finding useful. Thanks to my Dad, from all of us.