Synopsis: One of the most quotable men
of the twentieth century gives advice
that still stands the test of time.
“Winnie! Winnie come down from there this instance. Its madness.” She was calling out through the old stone house and heard the echoes in response.
Then came a faraway voice. “Just a few minutes. They are coming, I know it.”
She frowned into the black space around her. “So what if they do? What will you do about it up there on the roof?”
Heavy footsteps echoed off the brick edifice, belying the weight of a robust man who hadn’t declined much due to the war rationing. Then his bulk appeared in the doorway, a shadow among the shadows. He wore an air raid helmet.
“They’ll come Clemmie. I know it. Tonight is the night.” Winston Spencer Churchill grinned in the candlelight like a moonfaced child. It was September 7th, 1940 and the Prime Minister was in his element, dealing with the ongoing tragedy of war with bold words, defiant gestures and the occasional tearful moment with those who grieved.
“And what if it is Winnie?” asked his wife Clementine. “What good will it do?”
“Why it will be the beginning of the end, my dear. It will be the beginning of the downfall of those wretched...” He held up his whiskey glass in a mock toast and froze. Far off he thought he could hear a low droning sound. Ambling to the roof once more, he confirmed it. There were airplanes, large and numerous, coming closer until the rumble rattled the old windows.
Churchill was right, they were coming. That night, the firestorm that became known as the London Blitz began, and German bombers continued the onslaught until May of the following year. But Churchill was wrong about the war’s course. The end, the beginning of the end and indeed the end of the beginning wouldn’t come for at least another year. And for that time and a lot longer, he and the people he led would have to endure much in order to enjoy the fruits of victory. Here then are lessons for investors in Winston’s own words. We think he’d approve given that he said: “It is a good thing for an uneducated (person) to read books of quotations.” Or at least a list of ten of them.
1. “It is a mistake to try to look too far ahead. The chain of destiny can only be grasped one link at a time.” It is the time of year when 2020 prognostications will begin rolling in, most like German aircraft during the Blitz, destined to bomb. Ignore them if possible. Seek shelter and tune them out until normal life resumes.
2. “Politics is the ability to foretell what is going to happen tomorrow, next week, next month and next year. And to have the ability afterwards to explain why it didn’t happen.” Churchill spent years in the political wilderness decrying the British policy of appeasement and countering conjectures about ‘peace for our time.’ Don’t rely on forecasts in trying to time your entry or exit into a brewing conflict, be it in continental Europe or the stock market.
3. “The power of man has grown in every sphere, except over himself.” Mankind still brings a prehistoric thinking mechanism, rife with bias and shortcuts, into an environment often moving at light speed. And Churchill, who loathed television, knew nothing about the internet or social media. If he had, the notorious imbiber would have a lot to drink about.
4. Investing “is more dangerous than war, for in war you are only killed once.” True, Churchill was actually talking about politics here, but the lesson is the same. Take the long view and don’t let the inevitable impediments be the end of your story. If you have prepared properly, no single setback in your finances is a matter of life or death. Churchill rode this kind of buoyancy into residence at 10 Downing Street twice after he had been written off as politically dead.
5 & 6. “It has been said that Democracy is the worst form of government except all those other forms that have been tried from time to time.” As another election year looms, remember that our deeply flawed system is merely a reflection of our deeply human flaws and that hating the government, or just the other party, is never to be confused with an investment strategy. Have some patience and perhaps some humility. Churchill, half American himself, knew that “Americans always do the right thing but only after exhausting all other options.”
7. “Without a measureless and perpetual uncertainty, the drama of human life would be destroyed.” Volatility and drama are not only normal, they make life interesting. Indeed, with a healthy attitude, could you learn to love the daily back and forth of the stock and bond markets? Probably not, but some of us do. Which is why our advice can be worth quite a bit over time.
8. “No one can guarantee success in war, but only deserve it.” Nor can we guarantee success in your financial affairs. But by thinking instead of reacting and by planning instead of improvising, we can deserve it. But we have to do the work to be worthy of success. No more appeasing the forces of inertia that keep us from taking action and having plans in place.
9. “The farther backward you can look, the farther forward you are likely to see.” Churchill was not only a politician, he was a masterful historian, authoring over forty-three titles and seventy-two volumes. A historical grounding can help with your decision making. It can also help you be less emotional about the world around you, including your investments. So, take control of your future by learning a little history. Oh wait, if you’ve gotten this far, you already have.
10. “Let our advance worrying become advance thinking and planning.” Amen Winnie, Amen.
With all of this collected wisdom you would think Winston Spencer Churchill an excellent investor. He wasn’t. Indeed, he spent much of his adult life troubled by money because of his spending habits. No matter, he was usually able to make up the difference through “blood, toil, tears and sweat.” Of course, if you don’t want to toil and sweat into your seventies and eighties as he did, let this be the last lesson: a good investor only spends what they can afford. No fun, I know, but “in finance...everything that is sound is disagreeable.”
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Don't wait for history to happen...