Magical Things
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As I grew older, I began to extract some answers. Grandpa, my parents explained, had grown up very poor during the Great Depression, and the lesson he learned was that saving money was extremely important. Since coming home from the war he had been saving money out of every single paycheck. He had invested his early savings to purchase a large tract of land in rural Missouri. The current property that he owned was only a small slice of the original. At one point he had owned nearly all of the adjacent properties surrounding the house. He had sold off many of them for a profit as more and more families moved into the area following the war. After getting his money and more out of his real estate purchase he naturally wanted to reinvest his money. But he didn’t want to be a real estate developer. So he bought government bonds. And he continued buying bonds with his savings until a better opportunity came along:
Stocks.
Government bonds generated a fixed and relatively low yield. But stocks were magical things. The way stocks work is that you buy them, and then they go up. And up. And up. You could get rich that way, making money as the stocks became more and more valuable. After discovering stocks Grandpa mostly lost his interest in government bonds and real estate. He started directing the savings from his postal job towards stock purchases. There was one catch with the stocks however. Every time he bought a stock he had to pay a commission.
Grandpa hated paying commissions. HATE-ED. Every time you pay a commission you have less money after the purchase than before. Paying commissions feels like death by a thousand cuts. But there was no way he could enjoy the magical upside of stocks without paying some commissions. He had to pay to put his money into stocks. But he could avoid paying money to take his money out. The way to do that was to never sell a stock. Ever. So his investing strategy had been to buy stocks and hold them. And as it turned out, that was good strategy.
Throughout the ’80s and ’90s while I was making my childhood visits to see them each summer, the stock portfolio he had built over the course of his career was rapidly appreciating in value. He had invested in companies he knew and understood. Some of them went on to become dragon stocks like Walmart and Tyson Foods. That pretty much explains why Grandpa was so focused on the stock market. His garden was making him rich in vegetables. His fishing was making him rich in crappie. But those were just means to an end. It was the stock market making him rich the way he really wanted.
In Money.
