Review & Outlook

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Reflecting on the Culture of Investing

11 October, 2016 by Mark O'Brien in Commentary


The occasion was a luncheon in the mid-1980’s at the Union League Club of Philadelphia, followed with a talk by Sir John Templeton, the great investor and benefactor.  After a short talk, Sir John took questions, the first of which was his best investment idea for making money.

I was a member of the audience and can say that I was sorely disappointed in the answer, for I was then a young man in a hurry, newly out on my own as a money manager, and hungry for investment ideas that would make money—preferably a lot of money—for my clients, and thereby help me attract new clients and build a larger investment-advisory business.

“My best investment idea for making money?” replied Sir John.  He paused.  He surveyed the room.  He took more time.  The luncheon guests shifted in their chairs, pens at the ready, the air crackling with anticipation.  Sir John looked into the faces of those present, studied them, and after a long time said, “My best investment idea for you, for each of you, is to tithe.”

To say the air went out of the room would be an understatement.  I can confidently say that most of those present were not familiar with the word, much less with the ancient practice of each year giving a tenth of one’s income to charity.

Sir John went on to answer other questions in a more conventional manner, responding with comments on then-current and likely future interest rates, the prospect of inflation, trends in employment, and other measures regularly considered in the trade of investing.  Many years later, however, and nearing the end of a long investing career, I return to Sir John’s answer.  He was clearly on to something that we as individuals and as a society forget at our peril: that investing is, first, an act of culture.  Habits and practices, shared understandings of ethics and morality, must be in place before people will be persuaded to give up something today in return for the prospect of even more tomorrow.  Ownership of private property and the rule of law are often cited as preconditions, but no less important are personal qualities (or are they virtues?) of trust, patience, hard work, enterprise, thoroughness, consistency, the need for planning, and resistance to believing in fables–like getting rich quick.

The conclusion is that managing a portfolio of stocks and bonds is often the easy part.  More difficult, and always more important, is the process of learning how to recognize and then adopt the habits of mind–the culture if you will–in which successful investing can take place.