Over the years many people have asked me, how did I get into this business?
The story involves my maternal grandfather who back in the 1930’s was a revenue agent for the federal government. He was responsible for traveling around Oklahoma and north Texas seeking out and breaking up illegal stills. He loved telling stories about his adventures chasing after moonshiners. One story, confirmed by my mother, was when he came home from work one evening and the family car was riddled with bullet holes. It turns out that he was recruited to hunt for the outlaws Bonnie and Clyde and was caught up in one of their many shootouts!
However, as a government employee, he didn’t make a lot of money. And with a wife and 2 children to support during the great depression money was understandably tight.
However, if and when he had money left over at the end of the month he bought shares of stock. Some of the companies he bought stock in were, (but not limited to), IBM, US Steel and GM. He also ran into a gentleman during his travels by the name of King Gillette who had an idea to develop a disposable razor for shaving.* My grandfather bought stock in that company as well.
But his friends all laughed at him. ‘Look at all of the movers and shakers who lost millions of dollars in the stock market crash of 1929 and are now in bread lines,’ they said. ‘You’re crazy, you’re just throwing good money after bad.’ But my grandfather believed in America and American industry and kept on buying. He was never a plunger, bought quality, and held on for the long term. His only ‘lucky pick’ of stock that I know of is when the government approached King Gillette and offered him a contract to provide disposable razors to all the American troops during World War II. I don’t have to tell you what his company’s stock did after that event.
And as a side note for those trivia buffs out there; if you had bought just one share of IBM back in 1919 when the company went public you would have bought the most expensive share of stock on the New York Stock Exchange at $50.00 per share. However, if you held that one share and reinvested all the dividends into additional shares with all of the stock splits, as of January of this year your one share would be approximately 3520 shares with a market value of nearly $587,000!** But keep in mind it took 98 years to do that. And think of all of the national and global catastrophes that have occurred in the past 100 years:
- The stock market crash of 1929
- The Great Depression
- World War II
- The Korean War
- The Cold War
- The Cuban Mille Crisis
- The Kennedy Assassination
- The Arab Oil Embargo
- The First Gulf War
- The Second Gulf War
- The Housing Crisis
- The Great Recession of 2008
These are but just a few reasons why many people don’t invest in the stock market and prefer “safe” investments. But the numbers speak for themselves.
What is the point of my story? Throughout his life, my grandfather was never a rich man. But when he died, he left several million dollars to his family. How did he do it? He wasn’t highly educated but took advantage of investment concepts and strategies that were little known at the time but widely known now and still hold true today:
- Dollar Cost Averaging
- Buy quality
- Hold for the long term
- Buy when prices are down
- Reinvest and take advantage of the power of compounding
Simple stuff right? But how many of us actually do it? Now am I saying you should all run out and buy IBM, US Steel, GM and Gillette? Absolutely not. What I am saying is to take advantage of investment concepts that are time tested. Don’t go chasing after the latest hot stock. In other words, have a plan, don’t get greedy, be methodical, be disciplined, think long term.
When I was a young boy, I was fascinated by my grandfather’s success in accumulating wealth. He never won the lottery nor received any large inheritance. He accumulated money just a little at a time. Learning about how he did it is what got me interested in a career as a financial advisor. Here’s to you Grandpa, you taught me well.
If you do have any questions regarding the subjects discussed in this article or your own personal investments, please contact me at 480-296-9556 or email@example.com.
Rudy Eidenbock, Financial Advisor, RJFS, Office: 480-307-9909, Cell:480-295-9556, Fax:480-907-1413, 4111 E. Valley Auto Dr. #104, Mesa, Arizona 85206, www.puritywealthadvisors.com, firstname.lastname@example.org
Purity Wealth Advisors is an independent firm. Securities offered through Raymond James Financial Services Inc. Member FINRA/SIPC
All investing involves risk and you may incur a profit or a loss. There is no assurance that any investment strategy will be successful. Dollar-cost averaging cannot guarantee a profit or protect against a loss, and you should consider your financial ability to continue purchases through periods of low price levels. Raymond James Financial Services and its employees may own options, rights or warrants to purchase any of the securities mentioned. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Rudy Eidenbock and not necessarily those of Raymond James.
The hypothetical example is for illustration purpose only and does not represent an actual investment. Past Performance does not guarantee future results. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment.