Issue Index
Full-Time Dads;
The Magazine for Caregiver Fathers
Issue 19, originally appeared in print - January 1996
Having recently retired from the work force to assume the role of full-time care-giver for an infant daughter, I have quickly found that my grandiose visions of bountiful free time are mere fantasies. For the moment at least, the best selling novel and that gripping screenplay will have to wait. Each day brings new experiences and challenges and, while recently reviewing an annual report and simultaneously trying to cajole a tiny mouth to accept just one more spoonful of oatmeal, I was struck by the many similarities between successful investing and effective parenting.
First and foremost is the overriding principle of patience. Profitable portfolios and well-adjusted, capable children are not created overnight. Without exception, financial publications stress the importance of a long-term perspective as a key to success. The same is undoubtable true for parenting. Though there will inevitably be times of adversity, maintaining a positive outlook and never losing sight of the ultimate goal sending forth a self-reliant and compassionate adult will go a long way toward achieving that goal.
Indeed, the history of the market has shown that adversity often presents a buying opportunity. Similarly, times of disappointment and frustration with a child also set the stage for meaningful personal growth. (Although three decades have passed since I threw a golf ball through a basement window after having been warned repeatedly not to bounce the ball off the house, I can still vividly recall the trip to the hardware store where I paid for a piece of glass with money from my piggy bank.) The sage investor realizes that real growth is a gradual process and that there are no short cuts. As much as parents relish the thought of days without diapers, most realize that the long and occasionally contentious experience of potty training does take time. This realization is a key to making the process a rewarding experience for both parent and child.
An attribute that goes hand in hand with patience is discipline. In the market, established wisdom dictates that investors not be swayed by occasional setbacks but rather stay the course in times of uncertainty. The same sort of control of one's self is also essential in parenting. Restraint may be difficult as you gaze upon the contents of a bowl of oatmeal snatched from your grasp and hurled halfway across the room, but the realization that such occurrences are inevitable and educational may provide a modicum of solace. (After all, a flying bowl of oatmeal demonstrates the concepts of gravity, inertia, and centrifugal and centripetal force, not to mention the effectiveness of water as a cleansing agent.)
Having a keen eye is also important. The ability to notice untapped potential and discern intrinsic value can spell significant profit for the investor. Even something as nondescript as a footnote in an annual report can provide important insights. As any parent of an infant can attest, noticing the little things is deeply rewarding too. The passing of a toy from hand to hand, a tight lipped smile that denotes the imminent arrival of the first tooth, and seeing that precious little person turn in response to her name are milestones that serve as the tip of the iceberg in a child's development.
In the rapidly changing world of today the ability to innovate often differentiates successful companies from those that fall by the wayside. Innovation is also of paramount importance in childcare. Without it, routine responsibilities like diaper changes and feedings become tasks rather than opportunities to help a child laugh and learn. making up silly songs, showing exaggerated pleasure or excitement, and playing with toys in unique ways are effective techniques for making each day special for you and your child.
Diversification is important too. To many investors that means mutual funds. At the very least, those who (like me) aggressively manage a portfolio of stocks need to avoid concentrating too heavily on one industry. For parents, a sense of diversity in the experiences of their children is also important because it often reveals inclinations and talents that should nurtured. While the incessant banging of that pie pan may drive you to distraction, it may also reveal a sense of rhythm that indicates musical ability. As a child, my youngest brother was forever taking things apart to see how they worked; as an adult he puts them together as an automotive design engineer. While his penchant for disassembling everything from the bicycles to locks on the doors was at time inconvenient, the willingness of my parents to along with analytical behavior was almost certainly a major factor in helping him reach his full potential.
An appreciation of cause and effect is also relevant to both investors and parents. Discussions of radical reform in the nation's healthcare system will have a direct impact on healthcare stocks, both weak and strong. Nevertheless, successful investors have learned to evaluate stocks as individual entities that, while having some things in common, also have significant differences. Although perhaps mundane for adults, the very experiencing of cause and effect holds great fascination for children. While it is possible Junior throws his food from the tray of his high chair just to aggravate you, it is much more likely he is intrigued with the way things fall the way they look, the way they sound when they hit the floor, and the way they land. Understanding cause and effect is critical for a parent since realizing that things happen for reasons is the first step towards anticipating possible problems. Uncovered electrical outlets, easily tipped tables, dangling lamp cords and the myriad of other items to be dealt with when childproofing the home are our acknowledgement of the importance of expecting the unexpected. Even more disturbing activities such as experimenting with alcohol, drugs or sex also have causes, albeit ones which are much more difficult for parents to see or accept.
Perhaps the most essential aspect of successful investing and parenting is flexibility. Rigidity of philosophy has no place in either arena. While you may sneer at the need for access to 181 TV channels or the fantastic growth of cellular telephones, the truth of the matter is that the public has spoken. The admonition ³Don't fight the tape² carries as much weight today as it did when there really was a ticker tape of prices that was read scrupulously in investment houses around the nation.
The same applies to raising children. While no one would blame a parent for having high hopes and grand aspirations for a child, an unwillingness to accept your real child because the child of your fantasy is more lovable is cause for great concern. Despite the best plans and preparation it is highly unlikely your child will turn out just the way you had planned. (Besides, your parents probably feel the same way about you.) Rather than clinging to an unreachable ideal, successful parents and successful investors are able to remain focused on the long-term value of the investment. By doing so it's much easier to respond appropriately in times of distress.
Perhaps that valuation is the fundamental issue whether we as a society are willing to provide the vigilance, support and love necessary to ensure that our children pay dividends -- dividends which make the total return well worth the effort.
Copyright 1994 Dan Morra
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