The Best Investors You’ve Never Heard Of
No one took Ronald Read too seriously when he started investing, until he made a seven-figure fortune in the stock market.
Around town, people knew Read as a nice guy who often sported a baseball cap and flannel jacket. The former janitor never resembled a Wall Street trader.
But, while Read didn’t look the part, he had a secret talent for picking stocks. When the Vermont native passed away at 91, he left behind a stack of stock certificates six inches thick. Lawyers valued the estate at almost $8.0 million.
How did he do it? Read kept it simple: he bought shares of blue-chip companies that paid out regular dividends. When the distributions arrived in the mail, Read would use the money to buy more stock. His longtime holdings included dividend stalwarts like Johnson & Johnson (NYSE:JNJ), CVS Health Corp (NYSE:CVS), and J M Smucker Co (NYSE:SJM).
Read’s story, though, is no outlier. Thousands of people have built fortunes of their own through this approach:
- In 1933, Grace Groner bought three shares of Abbott Laboratories (NYSE:ABT) for about $60.00 each. She reinvested any dividends and held on for decades. When Groner passed away in 2010, she owned more than 100,000 shares, valued at over $7.0 million.
- Anne Scheiber lost all of her money in speculative stocks during the Great Depression. In 1942, at the age of 50, she saved up another $5,000 and started again. This time, though, she stuck to blue-chip dividend payers. When Scheiber passed away in 1995, lawyers valued her estate at $22.0 million.
- In 1987, science-fiction writer Hayford Peirce began buying shares of Altria Group Inc (NYSE:MO). Over the years, he reinvested all of his dividends. Today, his yield on cost has surpassed 50% and the shares throw off tens of thousands of dollars each year in dividend income.
You never hear the “pros” talk about these guys. How could that be?
It’s probably because most people don’t think such a simple approach can work. But how can you dismiss results like these?
We feel like investing should be complicated. In most life endeavors, hard work equals better results. That’s why we always push for some new gee-wiz trading strategy, from options trading to Fibonacci retracements.
I know it sounds crazy; doing nothing shouldn’t lead to huge gains, but it often does. And when you read the success stories, you learn that this is how ordinary people get rich in the stock market. Doing nothing—buying and holding—is how Read made nearly $8.0 million.
Bottom line: Buy wonderful businesses, reinvest the dividends, and wait 30 years. It isn’t rocket surgery.
In my 15-year investing career, I’ve traded millions of dollars in stocks. But, after reading the stories of Ronald Read and other top investors, I should’ve figured out one thing sooner: it’s the few investments you own forever that build real wealth.