A moving story about two investors from the brilliant book ‘The Pyschology of Money’ by Morgan Housel.
From modest beginnings next door, Ronald Read was the first in his family to graduate, even though he had to hitchhike 4 miles each way to get to school. Drafted in WWII, upon his return he joined his brother’s gas pump company and worked as a gas attendant for 25 years. Thereupon, he joined as a janitor to JC Penney to ‘retire from retirement’ and worked for another 17 years.
When he died at the age of 92, he had a net worth of $8 million. He left $2 million to his stepkids and $6 million to his local hospital and library.
Where did he get all the money?
Read took savings from his salary and invested it consistently. People who knew him said his life was as low-key as it could get.
Around that time, the story of Richard Fuscone also made the news. Fuscone, educated from Harvard and a former VC from Merrill-Lynch declared personal bankruptcy.
After being praised by Merrill Lynch for his “business savvy, leadership skills, sound judgment and personal integrity” Fuscone borrowed heavily and bought two homes. And then the 2008 financial crisis hit.
The same year Read left money to charity, Fuscone filed for bankruptcy.
As Morgan Housel describes in his book ‘The Psychology of Money’, the fascinating thing about these stories is how they relate to Finance.
In no other industry does someone with no college degree, no training, no background would outperform someone with the best education, the best training, and the best network.
This is because Finance is a soft skill, where how you behave is more important than what you know. Ordinary folks with no financial education can be wealthy whereas a genius who loses control of their emotions can be a financial disaster. Morgan Housel calls it the soft skills – the psychology of money that matters.