Ray Bradbury was a visionary. His uncanny powers to “predict” the future gain recognition with each passing decade. He had a fascination with magic in his youth that reinforced his desire to become a writer. As a magician, he understood that magic was anything but just that. He did not pull his predictions about the future out of a hat. He looked around and saw the characteristics of the people in his day and extrapolated them. As investors, we need to look around and find figures, facts, trends, and hypotheses that are based on more than just hunches.
General Mills’ (GIS) successful growth is a product of effort, not magic. Earning have increased steadily since 2005, with dividend payouts doubling over that period. A CAGR of 7% over the last 10 years and a beta of 0.5 make General Mills one of the most stable companies in the market. Recent negative news regarding the Yoplait yogurt business and fluctuating commodity costs have brought shares down from their highs in January. It will take an investor with vision to see past these temporary setbacks and look towards the bright future for General Mills.
For 69 years, he wrote every single day. Successful writers constantly practice their craft. If they did not, their work would suffer no matter how gifted they are. While watching our portfolio closely every single day may not be the best thing for income oriented investors, reinforcing our strategies and beliefs is crucial for staying true to our principles. Here are several books I recommend cycling through on a regular basis:
- Benjamin Graham’s The Intelligent Investor is a classic that is as true today as it was in 1949. It helps maintain a long term outlook on the market, and reminds us of the timeless truths contained in the book.
- The Strategic Dividend Investor by Daniel Peris is an excellent book that reinforces the importance of dividends and sticking to high yielding companies. While it is essentially an advertisement for his mutual fund, there are many gems of wisdoms contained within.
- A book often overlooked by investors due to its association with trading is Alexander Elder’s book Trading For A Living. Investors can skip the sections on technical analysis, but his insight into the psychology of investing is critical. He delves into the depths of the human psyche as it deals with fear and greed. His money management discipline is superb and it would be wise for investors to heed his advice.
- When I first started learning about investing I went through theMorningstar Workbook Series. They are a great way to stay sharp on fundamental analysis. It is also enlightening to see their total oblivion to the impending doom in the financial industry, as banks like Citigroup (C) and Bank Of America (BAC) have wide moats and are considered some of the safest stocks in the market back in 2006.
While he preached the dangers of media disconnecting us from each other, he was very involved in cinema, TV, and radio. He even ran his own show, Ray Bradbury Theatre. His understanding of living a healthy balanced life is one of the most important lessons for investors. I often find myself researching a market perspective exhaustively, being convinced it is the best path, and getting burned out shortly after. Maintaining a balanced perspective on the market will not only help with diversification and stability, but it will keep our emotions from swinging and will sustain us for the long haul.
His most famous work, Fahrenheit 451, has been cited extensively by scholars over the years. Common themes included government control, religion, repressed desires and more. But Bradbury made his own interpretation clear. In his words:
In writing the short novel Fahrenheit 451 I thought I was describing a world that might evolve in four or five decades. But only a few weeks ago, in Beverly Hills one night, a husband and wife passed me, walking their dog. I stood staring after them, absolutely stunned. The woman held in one hand a small cigarette-package-sized radio, its antenna quivering. From this sprang tiny copper wires which ended in a dainty cone plugged into her right ear. There she was, oblivious to man and dog, listening to far winds and whispers and soap-opera cries, sleep-walking, helped up and down curbs by a husband who might just as well not have been there. This was not fiction.
Ray did not foresee the evolution of social media. “Who do you want to talk to? All those morons who are living across the world somewhere? You don’t even want to talk to them at home,” said Ray about internet chatrooms. Facebook (FB) capitalized on our addiction to media and brought it into the social realm. Video games are now played on-line with others, creating virtual friendships that are meaningful to many. Investors may believe strongly about certain things, but to be successful we sometimes must see things from a different perspective.
A few years ago I visited a Children’s Place (PLCE) clothing store. I was considering investing in it due to its solid fundamentals and discounted price. When I went into the store I could not believe anyone would buy these clothes. I did not buy the stock, only to see it double shortly thereafter. What I failed to realize was there are other consumer styles aside from my own. The company was not even targeting my age group, and I had no business making a call on their products. Taking an objective view is often important, especially for trendy companies.
Conclusion: As investors, we are constantly bombarded with interpretations of the market. New books, shows, articles, black box programs, gurus and other distractions confound us every day. Ray said, “[Television is] a really dreadful influence on all of us. Don’t ever look at local television news again. It’s all crap. There’s no news, there’s no information. It’s negative, negative, negative. You look at that, and you think the world is coming to an end.” We have worked hard to build our own interpretation of the market, something that every successful investor must do. We cannot forget who we are as investors, regardless of the noise around us.