A mutual fund manager had $35 million that he needed to invest in a small manufacturing company in order to “fill out” the rest of his portfolio. A mutual fund is group of stocks and/or bonds that is managed by a manager. This allows a person to buy just one investment, yet have diversified exposure across several different companies/industries. In other words, it allows you to invest in many different companies no matter how much money you have. Mutual fund managers and analysts fill these portfolios with different types of company stocks that they research. Sometime the managers interview executives of the companies that they may invest in, sometimes managers study the other investors, and sometimes managers go to even greater lengths to ensure that they are investing their clients’ money into the right companies.
The mutual manager with the $35 million to invest had narrowed his search down to just two companies. On paper, these companies were exactly the same. They had the same amount of cash on the balance sheet, they had the same market share, and they had the same profit margins. So naturally, there was only one thing that the mutual fund manager could do: he decided to schedule visits to both companies’ headquarters. What he found changed the way he ran his mutual fund forever.
The first company he visited was the company that had a slight advantage. He didn’t know why, but this first company just seemed like it had a better chance at long term success and profitability. He drove up to the facility, approached the front desk, and identified himself, stating that he had an appointment with the CEO. The receptionist politely asked the mutual fund manager to have a seat in the small waiting area. The manager obliged and started to look around at the pictures on the wall. He noticed several pictures of celebrities. The celebrities were all posing with the same person. The mutual fund manager didn’t recognize the man, but he did recognize the sinking feeling in his gut. Thirty minutes went by, and the mutual fund manager was getting irritated that his meeting was being delayed. Just then the front door of the lobby flew open. There he was. The guy in the pictures. Every single picture. The guy who wasn’t the celebrity. He was wearing golf shorts, a golf shirt, and golf spikes. He loudly greeted the mutual fund manager. They walked together to the CEO’s office.
On the way up to the office, the CEO filled the mutual fund manager in on his golf game. The mutual fund manager didn’t care. Once inside the CEO’s office (which was filled with even more celebrity photos), the two men began talking about the business. They discussed the challenges and strengths of the small manufacturing business. “I wish I had 30 more of me” the CEO said. The two men then headed to lunch in the CEO’s new Jaguar. “It’s a limited edition,” he offered. The rest of the day was uneventful.
One week later the mutual fund manager headed out to the second company. He arrived at the facility, and walked inside to the front desk. Standing in front of the desk was a middle aged man wearing a uniform. “Don?” he asked with hand extended towards the mutual fund manager. The mutual fund manager shook the man’s hand just as the man introduced himself to the mutual fund manager. It was the CEO of the company. “How was your drive in?” he asked the mutual fund manager. Don told the CEO that it was pleasant. They headed down to the CEO’s office. On the way through the facility, the CEO stopped and shared greetings with several employees (who were all wearing the same uniform as the CEO), picked up a piece of trash off of the floor, and helped a worker lift a barrel onto a platform. They eventually got to the CEO’s office. It was a simple office in a random room with no windows. “I give my salespeople the offices with the windows” he offered. “They need the sunshine more than I do.” The rest of the day was uneventful.
The mutual fund manager went back to his office to debrief his team. He sat everyone down in the conference room and started in:
“I didn’t know what to expect when I went out on the road last week. Frankly, I wasn’t really looking forward to it. The thought of judging an investment by anything other than the numbers just seems like a bad idea. Boy, was I wrong. Last week I learned how to be a better person. I like to think that I take pride in my job and this company. But oddly enough, I don’t in comparison to a man I met last week. I’ve never met anyone that took more personal responsibility in the success of his company. It humbled me. And furthermore, I had the opportunity to contrast his efforts against one of the most deplorable people that I have ever met. This mutual fund company has always been about the investors. But I feel as though we have been short-changing the investors by not taking the time to understand the people in which we are investing on their behalf. This will never be the case again. I have scheduled meetings at all of the companies that we have major investments in. As of this very moment, this mutual fund is now only interested in companies that not only exhibit financial strength, but that are led by people with extraordinary senses of personal responsibility. And by the way, I’d like to personally apologize to all of you right now for not doing that in the past. Let’s go.”
This story was relayed to me years ago by a friend in the industry. I think of it often. I hope you will too. If you take personal responsibility for the things that you do, then you will never fail. And better yet, you will inspire those around you. If you aren’t part of the solution, then you are part of the problem. Those that understand the importance of personal responsibility will find themselves on the solutions side more often than not.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.