The Tale of an Unsophisticated Millionaire

It was 1909, in a small Illinois farming community, a little girl by the name of Grace Groner was born. Orphaned at the age of 12, and like many people who grew up and lived through the great depression, Grace Groner was quite frugal with her money.

It’s understood she bought her clothes from garage sales, and rather than buying a car, she walked everywhere. Her one bedroom house in Lake Forest was minimalist to say the least. Grace Groner worked at a healthcare company as a secretary for 43 years. Although she was quite frugal during her working days, she traveled widely upon her retirement, volunteered for decades, and occasionally made anonymous donations to those in need.

Grace Groner died in 2010 with an estate worth $7,000,000 which was left to a foundation she established prior to her death. It’s estimated the estate would generate $300,000 pa in income each year. She instructed that the income would be used to benefit the students of Lake Forest College by funding internships, international study, projects, and grants.

During the time of Grace Groner’s death, Richard Fuscone, a former top Wall Street executive declared bankruptcy – fighting to save foreclosure on his 18,471 square foot, eleven bathroom mansion.

“I have been devastated by the financial crisis which came to a head in March 2008, I currently have no income.”

He writes in his bankruptcy filing.

Richard had an MBA from the University of Chicago, and attended Harvard Business School. Fuscone was viewed by company insiders as a “winner”. Upon his retirement, then-CEO (of Merrill Lynch) David Komansky praised him for his “business savvy, leadership skills, sound judgment and personal integrity.”

Money and finance is one of those industries where the humble 100 year old secretary will outperform a Wall Street titan. In no other industry can this happen. The 100 year old humble secretary couldn’t beat Tiger Woods at a game of golf. And would not be better at open hear surgery than a specialist heart surgeon.

The correlation between financial education and financial success is not guaranteed, as we have seen with Groner and Fuscone.

So what was Grace Groner’s secret sauce? She bough $180 worth of shares in the 1930’s. She never sold the shares, reinvested the dividends, and let the magic of compound interest do the work.

Simplicity unfortunately is not sexy, and investors are attracted to complexity. We seem to think that complex problems require complex solutions, when in fact the converse is true.

Investors’ time horizons are getting shorter, patience is being tested, and we seem to have a desire to over-complicate things unnecessarily. It’s as if the more information we have, the better educated we are, the smarter we think we become, the dumber the decisions we make.

The finance industry is living in a world of hype, false complexity, and over-confidence.

I’ll leave you with this great passage from a Walt Disney biography:

Long-term successful investing is simple, but not easy.