The Janitor Did It

You would think that the sentence, Gas station attendant Ronald Read, who spent much of his life as a janitor, was not distracted by stock market volatility was a meaningless non-sequitur. Instead, it was a sensible recipe for amassing a considerable amount of wealth through investing in stocks.

The fascinating story of Ronald Read, who passed away last year at the age of 92, was not known fully until earlier this year. Read was a “secret millionaire” – someone whose appearance belied his accumulation of a large sum of financial assets.

Read spent his years in the southeastern Vermont town of Brattleboro (recent population: 12,000) as a gas station attendant and then janitor at the local J C Penney. The Great Depression unfolded during Read’s formative years and it left its mark. Throughout his life, the hard-working Vermonter had no problem wearing aged clothes adorned with the money-saving handiwork of a patch or safety pin. Somewhat atypical of today’s consumer, Read sought no extravagances; he was most comfortable leading a frugal life. Whenever possible, Read would park his small, used Toyota a little farther away if it meant avoiding the need to deposit coins in a parking meter.

Whether he knew it or not, Read made a habit of following the wisdom of Ben Graham and Warren Buffett who repeatedly said that the best investment advice is to live within one’s means. In his retired years, Read allowed himself the luxury of enjoying breakfast at a nearby coffee shop. One day, he found his bill paid by a generous fellow patron who thought Read could not afford it. Little did that patron know that the benefactor had for decades accumulated a stockpile of shares of some of America’s largest companies.

Read was an avid reader of The Wall Street Journal and Barron’s and he spent much of his time studying and thinking about the companies in which he invested or considered for investment. Beginning in the 1950s, in his late 30s, Read first purchased shares of large U.S. businesses that he thought had the wherewithal to grow over time. He would invest in various industries, buying financial organizations, industrials, conglomerates, and consumer goods companies, among others. Diverse as those businesses may have been, the one common thread was that they paid ever-growing dividends to its shareholders.

Read bought shares of companies that he expected to be long-term survivors. And he held them for as long as possible, displaying tremendous patience through turbulent markets. He withstood bear markets and far worse – all of which cause a great many market participants to panic and sell. His buying and holding went uninterrupted despite an unpleasant smorgasbord of recessions, banking crises, oil price crashes, the tech boom and bust, the bursting housing bubble, embargoes, wars, terrorist attacks and assassinations.

          Read bought shares of companies that he expected to be long-term survivors and he held them for as long as possible.

Declines in his portfolio brought on by bear markets never frightened Read into selling. The test of time proved that wise for most of the businesses he owned. He correctly viewed his companies as often being disconnected from the gyrations of their share prices. During bear markets, those businesses just kept chugging along.

Read viewed shares as an ownership stake in an ongoing business. Shares were not a three or four-letter ticker symbol which flashed green on the up days and red on the others. He may have even looked at the stock market with awe. For the stock market is the mechanism which allowed him, a janitor and an unknown in the business world, to hitch his wagon – however small – to the likes of America’s greatest and most profitable businesses. He was immune to the price fluctuations emanating from Wall Street’s stampede of bulls and bears and its legions of greedy who turn fearful in the blink of a high frequency trade.

At his death, it was discovered that Read’s portfolio was worth $8 million. Assuming a modest 2.5% dividend yield, this portfolio produced $200,000 of annual income – a nice bump over the $12 per hour he last made while working. Healthy dividends were the common characteristic of the stocks in his portfolio. Notably, his companies paid ever-increasing dividends. This growing stream of payments occurred quietly in the background relative to the frenzied attention given daily stock price fluctuations and their emotion-laden, “Buy! No, sell! No, jump!” reactions.

As you may have already concluded, Read did not achieve success in the stock market by checking stock prices hourly.

There’s an old adage on Wall Street culled from a perhaps apocryphal story involving Joseph Kennedy: “Sell when the shoe-shine boy gives you stock tips.” When the landscape was infused with such optimism, and therefore high prices, that even shoe-shine boys were in the market, shares made for better selling than buying. In the case of Ronald Read, the adage might be: “Seek growing dividends, ignore the market’s fluctuations and clean up like a janitor.”

Earlier this year, Warren Buffett advised the general public to, “Consistently buy American businesses. American business is going to do wonderfully.” The Oracle of Omaha continued, “Just keep buying American businesses… The best days of America lie ahead and the best days of American investors lie ahead.”

Read knew this long ago.

Ronald Read’s estate called for $6 million to be distributed to the local hospital and library and for the remainder to be handed down to his stepchildren and friends.

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