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Christmas 2021


Island of Misfits                 

I’ve had the fortunate pleasure of working the past 6 or 7 years with a client named Rudolph.  He actually prefers ‘Rudy’ which is kind of amusing for a 98-year-old man.  Rudy doesn’t have a red nose but does possess rosy cheeks which underscore his cheery demeanor. He’s sharp, quick witted, lives independently, still drives and is in excellent health.  He’s basically got a clean sweep over me.

 

A consummate gentleman, Rudy takes a very thoughtful approach to life, including his finances.  He never made huge sums of money but had a very solid working career & saved diligently.  For his efforts, he has amassed a very comfortable nest egg he will never approach out-living.  Our meetings are little treasures: he doesn’t realize what I take away from them.  He should be charging me.

 

We most recently met this fall.  After reviewing his concerns, I meekly asked him about his approach to investing.  Rudy replied: “I try to keep things simple, not make rash decisions, save what I could & buy quality companies I understand.”  Vague, but ingeniously simple I thought.  Sensing some bewilderment on my face, he said “maybe if I showed you what I tried to avoid, it may make more sense.”  I’m game.

 

We boarded his Chris-Craft and anchored up.  “Where are we going Rudy?”  “The Island of Misfit Investors” he replied.  I also couldn’t help but notice a stowaway near the stern: “oh that’s Hermey: a toymaker turned wannabe dentist.”  Hermey gave me a 3-minute oral checkup and a bill for $75.  He’s learned quickly.

 

Upon arrival at the Island, we were greeted by a flying lion, King Moonracer. It seems the King’s job is to oversee the island and help rehabilitate all the faulty investors. Since he’s kind of the Oracle of the Island, we called him Warren in honor of Buffett.  After a brief tour & proof of vaccination, he began to introduce the inhabitants.

 

We first met Cynical Charlie in the Box.  He just moped around muttering how the world is always ending.  Charlie would never invest because he could always find a reason not to: the economy, politics, society, you name it.  He was in a perpetual state of negativity.  Warren had repeatedly tried to educate him on the long-term effects of investing and compounding returns.  Time is your friend he would say.  Then he shared this chart with us.

 


 

We then had the pleasure of meeting Sally the Spotted Elephant.  Sally’s problem is she likes obscure investments, similar to herself.  She started telling us that she’s loaded up with comic books and cannabis.  Sally seemed very engaging and intelligent.  “That’s the problem: she thinks she can outsmart the markets and doesn’t diversify” noted Warren.

 

Next, we were introduced to Square Wheel Timmy the Train.  It seems Timmy plans and plans what he wants to do but never actually does anything.  He’s stuck.  While not negative like Charlie, he wants to time things perfectly.  Everything has to be just right.  Warren explained this is unrealistic and certainly not possible. “We’ll get him there; he’s just got to fix that wheel and get moving.”


 

Warren then led us to Carl the Cost Basis Camel.  I had a feeling what Carl’s issue was.  Carl is obsessed with what he pays for an investment.  Never selling until he made a profit.  I then noticed Carl had 3 humps.  Warren shared: “that’s where he stores all his old losers that he refuses to sell.”  I asked about the economic benefits of tax loss harvesting.  Warren simply said: “We’re trying to educate him on wash sale rules and tax efficiency – but you can only lead a camel to water.”  

 

Rudy pointed out a pond nearby. “Oh, that’s where Bella the Bird that Swims lives.” Warren quipped. Huh? “So what’s her story?” I asked.  “She suffers from Herding.  She was a poor flyer so she thought she’d join a school of fish”.  Warren continued: “Bella lacks confidence and just follows the lead of others for her investment ideas.  We’re trying to get her to do her own research, ask questions and turn off the television.”

 

While we were at the pond, we also met Freddy the FOMO Frog. I guess Freddy just jumps from one investment idea to another without regard for his personal financial plan.  Freddy is very personable & hates to be excluded.  He’s even been caught trying to swim with Bella and her friends.  “He’s like a fart in a skillet; probably needs to talk to CBD Sally.” Warren mumbled.

 

Sensing some fatigue, Warren requested just one more visit.  We met Anecdotal Andy, the Cowboy who rides an Ostrich.  While charming, Andy tends to live in the past.  Telling stories about how great investors his pappy and grand pappy were.  “My pappy never sold a stock” he drawled. “Bought the Nifty 50[i] and never looked back. Damn near doubled his money every year.”  I asked Warren if Eastman Kodak & Sears were part of the 50.  He just nodded while grooming a wing.  “He’s oblivious: doesn’t even realize he’s riding an ostrich.”  

 

It was now getting dark.  Rudy and I don’t like to sail at night - so we didn’t have time to meet Billy the Boat that can’t stay afloat.  I sensed he was just a bad investor.  “His portfolio is always taking on water” Warren ribbed.  After a collective groan, Rudy, Hermey and I piled into the Chris-Craft and shoved off.

 

“So, what did you learn?” Rudy probed. “I guess pretty much what you originally shared.  Keeping things simple, saving, not getting too emotional and just staying in the game.  Oh, and there’s a lot of missteps you can make but just making a few good decisions can more than cover them up.”  Rudy then offered: “Remember to enjoy it. Travel.  Share.  Spend it on others.”  Well said Rudy. 

 

Merry Christmas.

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