Bogle, Buffett, and . . . the neighborhood grocer?
Those were among the individuals cited by Morningstar.com Discuss forum participants when I asked them to name the person who had the biggest influence on their investment philosophies.
Not surprisingly, plenty of posters cited heavyweights such as Jack Bogle, Warren Buffett, and Bill Bernstein as being particularly important in shaping their investment views. But other respondents mentioned individuals closer to home--their personal financial advisors, parents, first bosses, and yes, the neighborhood shopkeeper--as having imparted valuable investment advice that has stood the test of time.
To read the complete thread (a fun one) or share your own investment guru, click here (http://news.morningstar.com/articlenet/article.aspx?id=613717).
'He Makes It Easy and Sensible'
In terms of the raw tally, John C. Bogle, the founder of the Vanguard Group, received the most mentions within the thread--17 shout-outs as of the morning of Oct. 4. He was followed by Warren Buffett (15 mentions), the Morningstar crew, Morningstar's Josh Peters, William Bernstein, and Peter Lynch. In addition to Buffett, other value-investing adherents were prominent on the list, with Seth Klarman, David Dreman, and Ben Graham each receiving repeat mentions.
Taylor Larimore cited Bogle as the key investment influence in his life--not surprising given that Taylor has long been an active participant on Morningstar's Vanguard forum as well as on Bogleheads.org. He wrote, "Without any question, Jack Bogle has been the biggest (and positive) influence on our investment lives. My wife, Pat, and I would frequently say: 'We live in our home that Jack built.'"
Djones425 concurred on the Bogle pick, writing, "He makes it easy and sensible."
Ditto for ColonelDan, who's a believer in Bogle's "sound and convincing advocacy of simplicity."
For Drill001, Bogle stands out not just for his investment philosophy centered around simplicity and low costs, but for the quality of the firm he helped shape. "After reading many of [Bogle's] books and articles over a long period of time, I believe in low fees and indexing but in good money managers as well. I also believe in Vanguard's culture and stewardship that puts the investor first."
'Hats Off, Mr. Buffett'
What list of great investment philosophers wouldn't include Warren Buffett? Not this one. Bill1234 wrote, "During the great recession, [Buffett's] was the voice of calm reason in the midst of abject fear. He bucked the trend, spoke plainly, and talked of a brighter future. Hats off, Mr. Buffett. You talked the talk and walked the walk."
Several posters said that Buffett had clarified for them the difference between speculation and investing.
Said theDumberOne: "Buffett made me understand that investing is buying a piece of a solid business, not trading in and out of stocks."
Proxysteve concurred. "Through Buffett, I am reminded that investing is ownership in a business. There are real business behind the shares you own (directly or indirectly through mutual funds), with real assets, real cash flows, and real value creation that you are investing in. More importantly . . . the price you pay for that ownership does not always correlate to its true value. While [Buffett] did not originate these ideas, he is still one of the best at stating these simple facts."
Thanks to Buffett as well as Peter Lynch, Peter5 says, "I recognize I own businesses not just stocks, I think very long term, I know what I own and why I own them, and I can explain my rationale for each stock holding to a third-grader."
Duanej also cited Lynch as a key influence. "In his books, interviews, and Worth magazine articles he clearly explains investment concepts in simple terms than anyone can understand."
Asset-allocation guru Bill Bernstein also received numerous mentions. Darwinian wrote, "[Bernstein's book] The Intelligent Asset Allocator has successfully led me through panic and recovery."
Darwinian also cited Burton Malkiel as an enduring influence, noting that the author's Random Walk Down Wall Street "guided my investments successfully through inflation, boom, and bust."
For Dakahuna1, David Dreman's writings made an impact. "Reading Contrarian Investment Strategies in my dorm room in the mid-80s is why I became a value investor."
Frank Armstrong, author and founder of investment-advisory firm Investor Solutions, was an influence for several respondents. "When it came time for me to get involved in the markets," rfalcon wrote, "I downloaded his book, Investment Strategies for the 21st Century. The concepts I learned there have been reinforced over the years, but Armstrong's book shaped my early views about many aspects of investment."
'I Owe That Advisor a Hearty Thank You'
Although the discussion included many well-known investors, individuals also tipped their hats to their personal financial advisors for putting them on the right path.
Meeting with a financial advisor helped FidlStix get down to business. This poster shared, "Twenty years ago I had an investment advisor, a representative of a large investment company, who during a meeting stuck in front of me a report on my probable future financial condition. At the time, I was a totally disengaged and abysmally ignorant noninvestor who let this advisor make decisions for me. I was saving 3% of my paltry salary in a 401(k), balance $2,000.
"That financial report included a chart that graphically laid out the miserable retirement staring at me in 15 or 20 years. The advisor explained to me in no uncertain terms that if I didn't start taking saving for retirement more seriously, 90% of our income would be Social Security, with no wiggle room for travel, eating out, or perhaps even meeting our bills. His lecture had two huge effects: it induced me to kick the 401(k) set-aside up to 7% immediately, and it thrust me into educating myself on how to invest. I owe that advisor a hearty thank you for lighting a big fire under me."
Carrie said books from investment gurus have helped shape her investment philosophy, but no one has been more helpful than her sister, a certified financial planner. "She was there to answer questions when I started out investing in my 20s."
For BMWLover, seeing an investment advisor demonstrate the courage of its convictions left a big impact. "My biggest influence was an investment advisory at the firm that managed the pension portfolio at a former job. The firm had a value discipline and stuck to it even during the 1999-2000 period when value was very out of favor. They took a lot of heat, but in hindsight they showed that sticking to the discipline and not chasing the pack works in the long run."
Mbresler has an investment advisor to thank for showing him the way on income-producing securities. "Several years ago, my wife and I met with a financial advisor who was very big into master limited partnerships and dividend-paying stocks, and opened my eyes to dividend investing. Up until that time, I assumed we would have to sell stocks and mutual funds every quarter or so to supplement Social Security checks when we retired."
Similarly, a healthy contingent of posters say they've learned a lot from Morningstar's resident dividend guru Josh Peters, editor of Morningstar DividendInvestor.
Trey91 wrote, "There's no doubt in my mind that Josh Peters of Morningstar has had the biggest influence in my investing. Over the years I have tried all kinds of investing and really never found anything that really worked until I found Josh's dividend program on Morningstar. Now I have a steady dividend flow and best of all I don't sweat the day to day moves in the market. Most of all I sleep better at night."
Other respondents noted that their Morningstar.com subscriptions have been particularly influential. Bitsotree wrote, "Articles and videos have given me the basic education to understand the ins and outs of investing and it is through Morningstar that I discovered the industry smart people such as Wally Weitz, Buffett, Bill Gross, and Jeffrey Gundlach. Analyst reports by people like Bridget Hughes and Eric Jacobson have proven invaluable. Morningstar members Darwinian, Yogibearbull, McMontana and many others always have some sage advice to offer."
Simajima is also a believer. "Unlike a lot of websites that try to keep you on edge with their scare tactics, Morningstar seems to want to help the common investor."
'No Market Hotshot Ever Had as Much Influence'
For other individuals, their influences have been closer to home. Parents, siblings, and colleagues have taught crucial lessons not so much about investing, but about the merits of working hard and saving diligently.
Fathers received frequent mentions. Rllucky wrote, "It has to be my dad. From a very early age he always encouraged me to work hard, save, live within my means, and invest for the future."
Rickydeee learned valuable lessons by watching his dad's behavior. "He grew up during the Great Depression while raising his two brothers, graduated high school only to serve in World War II, used the GI Bill to work through college while supporting a wife and two of his eventual four kids, and invested conservatively to retire comfortably. His example made my early retirement possible."
Evolence learned a similar set of lessons from his grandfather, who was of that same generation. "The irony is," this poster wrote, "my grandfather has never owned stocks in his life. He lived through the Great Depression, so that imbued a certain fear in him of losing principal. His investment repertoire wasn't advanced, but he still had plenty of money. He achieved that by hard work, frugality, and diligently saving what he didn't spend. Those are life-long lessons that ultimately matter more than asset allocation, expense ratios, price/earnings, and so on."
PatrickBr's big influence was his mom, who invested in real estate and other assets at a time when women didn't typically engage in those activities. This poster wrote, "I learned from her four very important lessons: 1) assets are to be used to create more assets; 2) save, save, save; 3) don't let fear keep you out of the game; and 4) if you are wise and diversified, losses, while painful, are just part of the process . . . not the end of it."
Povdds picked up onthe merits of delayed gratification from a former manager. "[He] argued me into a great habit: putting aside monthly savings through payroll deduction. No investment guru, no journal writer, no market hotshot ever had as much influence as the person who simply convinced me to defer gratification and to save."
This poster went on, "By saving as he suggested, I soon realized the value of time, regularity, and compounding. He somehow got through my youthful arrogance (and my protests that 'I just can't afford it now'). As promotions later came in I rolled the money into savings, never noticed the 'missing money,' and saved enough after eight years of work to pay for professional school instead of graduating with a mountain of debt. I've tried to repay his enormous kindness by doing the same for young coworkers ever since."
And finally, the grocer.
Rossby wrote, "I would pick Mr. Jennings, the owner of the small town's best grocery store, owned and operated by the Jennings family. I was just a teen, a part-time sacker/stocker, but glad to have a job.
"One Saturday around noon time he took me out of the front door onto the corner of the town square. He pointed across the square to the best department store in the county, in business for a century, and run by well-respected and wealthy folks. He explained to me why they were successful, in essence, because they saved their money when they got a raise and lived within their means.
"Funny how that has stuck with me. I can almost smell that busy day on the town square in the Midwest when every one came to town on Saturday. It has served me well."
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