SWFG: The Lonely Idea

“The man who wants to lead the orchestra must turn his back on the crowd.”

-James Crooks (1778 – 1860), Canadian politician and businessman

Before joining my business partner, Warren, I was fortunate enough to be an associate at American Funds. My charge was to meet with financial advisors and act as the liaison between them and our investment managers. Regularly, I would speak to shareholders of the American Funds to update them on relevant market topics. Over my 18 years in this role, I had spoken to well over 10,000 individual investors. At almost every meeting I spoke, invariably, there would be a question related to what I refer to as “following the herd”. This phenomenon of investing with the masses was driven by only two things – fear or greed – depending on what was going on in the markets.

I would often tell the following story to share perspective with the particular inquisitor in the audience.

Let’s go back over forty years to the Pacific Northwest, specifically the Seattle area. A young man who had acquired a liking for computing is accepted into Harvard University. After spending a couple years there and making some close friends he comes home for break and announces to his parents:

“I’m not going back to school.”
Mom and Dad:  “What do you mean you’re not going back?  We’re sure that after a little rest you will be refreshed and want to go back.”
“No.  I’m not going back.  Paul and I are going to type code.”

Can you imagine what is going through the minds of Mom and Dad? Their son is not going back to one of the most prestigious institutions in the world? So he can type? This can’t be happening. This has got to be some kind of mistake. No. This is THE biggest mistake anyone could make.

I think we would all agree that this was a very lonely idea chosen by this young man. AND that phrasing is appreciably kind.

Some of you know the end of this story. For those of you who don’t, this simplified story is about Bill Gates. His decision to drop out of Harvard to pursue a computing passion seemed at the time to be a lonely idea. An idea that was, more than likely, only appreciated by Paul Allen and himself. But today we know that the pursuit of that lonely idea enabled him to become one of the wealthiest people in the world. We also know that the pursuit of the lonely idea in life many times does not lead to untold wealth. Sometimes it leads to untold misery.

However, think about a self-made person you know that you consider very wealthy. Once you have that person in your mind’s eye, ask yourself how did he/she build that wealth? What one or two decisions led to that wealth creation? In most every instance, you will discover that it was the pursuit of a well-researched and planned lonely idea at some point in their career. They did not pursue the idea that was popular at the time. If building wealth were as easy as pursuing the popular idea of the time, everybody would be wealthy.

I will highlight a more modest example than Mr. Gates. I know a gentleman who I will call Sam that worked for IBM in the late 1980s. He and IBM were doing very well financially. IBM was known, at that time, to be a very paternalistic company and had incredible employee retention. They really took care of their employees. Sam announces one day that he is resigning to form his own software company. Can you imagine how crazy his colleagues at work think he is? Imagine what is being said around the neighborhood in which he lives?

“Poor Jane(Sam’s wife).  I feel so bad for her.  Did you hear Sam resigned from IBM to form his own software company?  What is that guy thinking leaving a company like IBM?  He’s a fool!”

Lonely Idea? Absolutely. Do all lonely ideas work out? Absolutely not. Though Sam did sell his software company a decade later for just over $20,000,000.

How does this apply to you? Are you leaving room in your portfolio for the lonely idea? Through our Investment Philosophy Synchronizer process, Warren and I make sure we leave room for the lonely idea. Currently one of those lonely ideas is Non-U.S. equities. Are you leaving room in your financial planning for the lonely idea? Through our Family Security Training process we leave room for the unthinkable lonely ideas like death and disability.

One lonely idea in our country is one of the simplest ideas of all. Spend less and save more. Depending on what stage of life you are in that means having a savings rate between 15% - 22% over your lifetime to provide a Marathon Income Plan with which you would be satisfied.* Based on what we see and statistics we read, adequately saving is in solitary confinement.

Thank you for the trust and confidence you have placed in us and giving us the opportunity to provide education to you on your way to building your wealth.

As always, thank you for the introduction of your friends and family that so many of you have made.We are honored to serve you!As a service to our clients, we are happy to act as a sounding board for your friends and family.If any of them should need a second opinion on their financial situation, introduce them to www.striblingwhalen.comor call us at 678-989-0048.

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Regards,

Warren D. Stribling, IV, CFP®
Principal
warren.stribling@striblingwhalen.com

Brian E. Whalen, CFP®, CIMA®
Principal
brian.whalen@striblingwhalen.com

Sources:

*Safe Savings Rates: A New Approach to Retirement Planning over the Life Cycle by Wade Pfau, Ph. D.

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 Brian Whalen and not necessarily those of Raymond James.  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 examples are hypothetical and are provided for informational purposes only. They are not intended to be a recommendation for any particular type of investment. All types of investments involve risk and the potential for loss. Since no one investment type is suitable for all investors, your investment objectives, risk tolerance and liquidity need to be review before we introduce suitable investments to you.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP^®, CERTIFIED FINANCIAL PLANNER^™,   and   in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.