The curious case of Grace Groner and Richard Fuscone
By Manu Nedunkandathil, CFP
Morgan Housel, an acclaimed author and columnist writes about two individuals, Ms. Grance Groner and Mr. Richard Fuscone in an interesting blog, “Why you are so bad with your money” on www.fool.com. Two contrasting lives but big lessons to learn for us investors.
Meet Grace Groner. She was born in 1909 in rural Illinois, America. She was orphaned at the age of 12 and taken care of by a prominent family of the community. She never married nor had any children. She graduated in 1931 entering the workforce at the peak of great depression. She joined Abbott Laboratories as a secretary in 1935 and worked there for the next 43 years.
She had a pretty simple life. Lived in a single bedroom cottage willed to her, bought cloths at rummage sale, never owned a car. But when she passed away in 2010, she left behind over $ 7 million dollars in charity to her alma mater, the Lake Forest college.
And then there is Richard Fuscone who filed for bankruptcy within weeks after Grace Groner passed away. Richard Fuscone went to Dartmouth which is consistently among the highest ranked universities in the United States. Earned his MBA from Chicago and had a very successful career. He was so successful that he retired in 2000 by the age of 40 to pursue personal interest and charity. At the time of his retirement, he was the Vice Chairman of Merril Lynch, Latin American division.
So how did a pro loose it all and a seemingly under qualified secretary beat the pro at his own game to come out as the winner. It seems education and knowledge are just a pale shadow in front of personal behaviour.
Grace Groner did nothing out of the ordinary. In 1935, she purchased three stocks of Abbott Laboratories, the company where she worked for $ 180. She held on to it through recessions and wars, not worrying about market crashes for the next 75 years and even continued to reinvest the dividends.
Patience and consistency always triumphs. Just the way water cuts through the rock flowing over it through the years, patience and perseverance is sure to get rewarded be it in life or investing in the markets.
For some these qualities come naturally. But for most of us mortals, these qualities have to be cultivated. So, how does an average investor build these qualities?
The good news is that there is a solution. To be a successful investor in the market, one does not need to master the complicated finance formulas and functions. It is as simple as breathing.
The easiest way one can master these qualities is to set goals for your investments and invest in a well-diversified portfolio. These goals can be anything like building retirement corpus, savings for children’s higher education or any long-term goal to which one can identify a need and an emotion.
Linking goals to the investments will make sure that you stay the course till the goal is achieved and help you remain immune to the market noise. The markets have proved that in the long term, the risk of losing money is as good as zero and making real positive returns is the highest.
To put things in perspective, SENSEX has given a return of above 15% CAGR for the period since inception in 1978-79 till 04th December 2019. Which means, in absolute terms Rs. 1 lac invested on 1st April 1978 would have grown to Rs. 4.08 cr in this period.
To be a successful investor you don’t need to be a graduate in economics or finance. Smart investors don’t take actions in haste. They plan, they implement and then they let the time and compounding work for them in their favour.