The Client Who Changed How I Invest

Warren Buffett said that when he writes his annual report, he thinks of his sister Susan and writes as if he’s talking to her. This is a wonderful trick – it’s difficult, probably impossible, to visualize hundreds or thousands of people, but easy to talk to one.

I write for Dr. M.

Dr. M became a client early on; he’s a radiologist who’d been reading my articles for a few years. The tipping point came when my favorite accounting professor at CU Denver invited me to speak to her graduate class about value investing. Dr. M’s son happened to be in the audience that day. When he went home and told his father about my talk, that endorsement was all Dr. M needed to pick up the phone and turn over his retirement account – the bulk of his life savings – to IMA. Remarkably, even though he lived right here in Colorado, we didn’t meet face-to-face until a few years later.

The gravity of what we do hit me during our initial conversation. I’m not curing cancer or saving babies from burning buildings. But our decisions impact how Dr. M will spend his retirement, the final chapter of his life. The pot of money he placed under our care is irreplaceable capital; he won’t have an opportunity to earn more. I couldn’t care less about what my industry obsesses over: the latest performance against the indices. When I make investment decisions, I think of Dr. M. I don’t want to screw it up for him. I’m focused on long-term survival.

Dr. M and I have what I consider a perfect relationship where (hopefully) I think of him far more than he thinks of me. He’s a very smart guy who chose to dedicate his life to healing people, not to being a stock junkie like me (our society needs more people like him, not me). He’s also intellectually curious and reads everything I write. Today both of his now-adult sons are also IMA clients.

As I’ve gotten older, something odd has happened: Money has become less of a motivator (the younger, especially the Soviet Union version, of me would be confused about this). Doing what I love and being a net positive force to the people I contact, like Dr. M, is what recharges my battery.

This brings me to you, my dear reader. I’ll be sharing an excerpt from a letter I wrote to Dr. M (and all IMA clients who own these stocks). But I want to make sure I’m a net positive force in your life. If you blindly buy companies I mention in these letters, our relationship may tilt toward being net negative to you.

I may change my mind tomorrow about these companies – facts may change, new information will come out, I may have missed something and end up simply being wrong. I may sell these stocks. Dr. M will find out because he’ll see the sale confirmation in his Schwab or Fidelity account. A few months later, he’ll get a letter from me explaining my latest thinking. None of these things will happen for you.

If you blindly buy stocks I’ve mentioned here, you’ll be getting on the train without knowing where to get off – and that may end up hurting you, as these stocks may decline and you will not know what to do. We have a portfolio of stocks; you don’t know how big these positions are in our portfolio. Thus, please (!) read these articles as case studies or as an initial nudge toward rolling up your sleeves and doing your own research.