| | Opportunities Lost… But Not Forgotten
by Brandon Chapman, CMT | As a kid, my family would head about 60 miles north to Salt Lake City to what I would consider an old mansion near the city for an extended family reunion. | We would play outside for a while and then go exploring the interior of the home to find curious doors that led to interesting parts of the home. I was amazed by the size of the home and wondered, "How is this part of my family?" | I didn't find out until years later. | On my mom's side of the family, there were two relatively famous uncles in the field of economics. Her uncle, Lionel Thatcher, taught at University of Wisconsin and the University of Maryland; her other Uncle George taught at Miami University in Ohio. Lionel was a Republican and worked in the Eisenhower administration and George was a Democrat and helped advise President John F. Kennedy. | | You can imagine the discussion at the dinner table. My mom recalls lots of disagreement on policy and other economic, political, and social matters. | However, there was one area of agreement between them: A particular stock that went public on January 2, 1962. | What was the company you ask? | It was International Business Machines (IBM). | | My grandmother's brothers approached her and my grandfather about a "can't-miss" opportunity. They called my grandmother "Sis" and offered to loan her $10,000 to buy shares as part of its IPO. | My grandfather came from a poor family in my hometown of Payson, Utah. His father died when he was in high school, and he later became a teacher like his father before him and several of his siblings. He eventually went to Indiana to work on his PhD in music and taught music at a university in California before becoming an administrator. | For my grandfather, the idea of investing in a company was completely foreign. The idea of borrowing money from his brothers-in-law, he considered dangerous and irresponsible. | I don't think he ever looked back at the opportunity he missed investing in IBM… except when my grandmother reminded him of it. | While my great uncles were at the apex of the economics profession during their tenure as professors and advisors in economics, the real family money came from their investment in IBM stock in 1962. The home I still remember 40-plus years later was a result of a savvy investment in a great company that paid off bigly! | | How It All Ties Together Today | People's idea of investing has changed. Borrowing money to make a trade isn't anathema and, by the time I entered the financial industry in the 1990s, it was even considered a smart thing to do. | Investors have been replaced by traders. Good companies for investment have been replaced by meme stocks, FOMO and YOLO. Even HODL is about having a "diamond hands" unbreakable grip to hold companies that have no earnings and cash flows. | Times have changed, but, like anything, move in cycles. The meme, FOMO and YOLO cycle may be coming to an end as more sound money principles take hold. A return to investing basics may actually pay off as we hopefully move away from the failed policy of socializing our investments through the process of investing in funds. | Maybe, just maybe, the sun is setting on the inflationist agenda and a new horizon of buying good companies is just emerging. I'm not always an optimist, but I find myself wanting to believe. | However, unlike my grandfather, I'm willing and ready to take some degree of risk where it's deserved and warranted; hopefully you are too. Great fortunes are started and made at times like these. |
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