Fathers and sons inevitably have ups and downs throughout life, but especially when sons become young men. My father certainly gave me a hefty workout in those days; my radical and idealistic ideas clashed heavily with his ever present voice of reason.
“When you’re 21, you can do what you like, but right now while you’re under my roof……….” That’s how it went, and boy was I fuming!
Now that I have my own kids (my son is eagerly telling me he’s about to turn the big seven), I am becoming acutely aware of this perspective, and the challenges that lie ahead. I can see the wheel turning right back at me.
My father and I spend long hours together. We go to the test cricket, the footy, lunch, and discuss all kinds of things – various aspects of family life, sisters, brothers, daughters, grandchildren, the financial markets, and all now with an open and contented honesty that we both thrive on. I’ve finally grown up – sort of, I still feel 25 in his presence, but my admiration and respect for him is what it should have been back in those difficult teens. Our relationship is in a good place.
Occasionally he calls me with his thoughts on the financial markets. I should preface this by saying he usually takes a very conservative approach to his investments, but he has taken some very left-field positions in is time. At least that’s how they felt at the time. He bought gold futures in 1986, before it nearly doubled in price. He sold News Corp shares while the bull raged in 2000, before it fell from $26.00 to $4.00. And he sold Rio Tinto during the BHP bid in 2008, when the price was $120 – soon after that, it was at $25.00.
My dad was a contrarian, who knew? A damn good one too. Both wise and profitable. It got me thinking. What does he do well? What’s his edge? He doesn’t read or study the market very much. And he’s not a risk taker either. But he does have an uncanny ability to take a detached market view. He does what he thinks is right, and always avoids the nutty chatter of the crowd.
I had lunch with him the other day, and asked him for his thoughts on interest rates. As a retiree he’s sick of the super-low rates on bank deposits, as I’m sure many of you are too. I asked because there are very few top quality stocks that are both undervalued and high yielding in this current market. But this doesn’t bother dad. He still likes the banks, and is still targeting them for more growth. Certainly, Australia’s ‘big four’ banks are well protected, and continue to generate fantastic capital appreciation and dividend growth – I should add that dad’s one of the lucky few to own parcels of CBA at $5.00.
He has a point. In the absence of other conservative high-yielding alternatives, do we really need to look further afield? Dad’s objectives are now geared more towards his children and grandchildren, who will be the beneficiaries of this investment wisdom. His straightforward ‘common sense’ approach has looked after him well in life, and it’s a philosophy we could all learn and prosper from when dealing with the stock market, whether as traders or investors. Sound reasoning and clear objectives are what ultimately build a successful investment philosophy.