The janitor who amassed a fortune: How character underpins investment success
All investors want – or, at least, say that they want – to become successful. And virtually all people claim that they desire financial independence and wish to help others. How to achieve these worthy goals? In this article, which reviews the life and legacy of Ronald Read, a janitor, maintenance man and service station attendant from Vermont, I reiterate a critical point: successful investment and financial independence are not matters of luck. In other words, they don’t stem from formidable IQ, elite secondary (or university) education, and high-status or big-paying jobs. And although good habits are necessary, they’re insufficient.
Developing investment acumen, achieving financial independence and making bequests to one’s community – these are ultimately consequences of a particular set of values and aspect of character which virtually anybody, regardless of one’s station in life, can develop. Unfortunately, today’s zeitgeist (“spirit of the times”) discourages and even punishes the cultivation of such traits. People like Ronald Read deserve recognition because they leave vital legacies; even more importantly, they merit emulation because they swim against a strong and odious cultural tide.
A man worth remembering
“Ronald Read may have spent years pumping gas,” gushed Anna Prior in “Route to an $8 Million Portfolio Started with Frugal Living” (The Wall Street Journal, 15 March 2015), “but he was even more adept at pumping up his portfolio.” He died on 2 June 2014 at 92 years of age. A lifelong resident of Brattleboro, Vermont (apart from several years as a soldier in North Africa, Italy and the Pacific during the Second World War), he started life with few possessions but sound values. By the time of his death, those values had accumulated an estate – mostly comprising the common stocks of major corporations – whose market value was estimated at $US8 million. In current $US, that’s almost $US9.8 million; and at the prevailing rate of exchange, that’s approximately $A13.5 million.
The assessment of him in Brattleboro High School’s 1940 Yearbook was prescient: “It is tranquil people who accomplish much.” As an adult, Mr Read neither flaunted his wealth nor bragged about its magnitude. “We all knew he was into the stock market, but not to this extent,” said Claire Johns, who worked with him and served as his estate’s executor. “Some of us knew he had some investments,” one of Read’s stepsons added, “but obviously he had a whole lot more that we didn’t know about.”
Read was also thrifty. “People were stunned that he had that much,” an acquaintance told The Brattleboro Recorder. “I bought some old fence wiring from him once because I thought he could use the money.” Throughout his life, he practised frugality in the same way that he “practised” breathing: both came so naturally that he didn’t consciously think about them. “Those who knew him,” Prior writes, “talk of how he at times used safety pins to hold his coat together and sometimes parked his 2007 Toyota Yaris far from where he was going to avoid having to feed the parking meter.” A senior client associate at Wells Fargo Advisors in Brattleboro who helped to settle his estate agreed: “If he could save a penny, he would.”
Born into an impoverished farming family, Ronald Read was the first of his clan to complete high school. He inherited nothing, didn’t attend university and never held a high-status job or earned an above-average wage. For decades he worked at a service station that his brother partly owned (they eventually purchased it) as an attendant and mechanic. During that time he married and financed his stepsons’ educations. When he retired he sold the service station. Within a year he became bored and restless, “retired from retirement” and took a job and for the next 17 years worked as a janitor and maintenance man at the local J.C. Penney department store.
Read's modest schooling and humble career were no impediment – given his sound values – to the accumulation of significant wealth: at his death, his net worth exceeded that of more than 98% of American households. Rather than squander it during his lifetime, after his death he bequeathed most of it to a local hospital and library, and the rest to his stepchildren, caregivers and friends. If it’s managed reasonably well, this legacy will benefit residents of Brattleboro for decades to come; and if his heirs husband capital as astutely as Read did, it could do so indefinitely.
Ronald Read’s character
How did he amass this fortune? He rejected what I call the Distemper of Our Times (for full details, see my book The Bourgeois Manifesto: The Robinson Crusoe Ethic versus the Distemper of Our Times, available via Amazon.com.au). Although he didn’t regard himself as bourgeois (it’s possible he didn’t know the term, and he almost certainly didn’t use it), as a significant part-owner of a range of businesses he definitely was a member of the bourgeoisie. Specifically, he was a rentier – that is, someone whose major source of income is not his labour but his capital.
Throughout his adult life, Read lived well within his means, saved assiduously, studied diligently, thought independently, invested prudently, waited patiently – and over time reaped commensurate material and moral benefits. Not just financially and economically, but also ethically, he withstood the madness that pervades today’s conventional wisdom. His feat was remarkable not just because these days so few people replicate it, but because few emulate it. Many, in other words, could become financially independent and bequeath an appreciable estate to worthy causes – if only they repudiated the Distemper of Our Times.
Read possessed attributes that virtually everybody already possesses or can reasonably easily obtain: these include average intelligence, a basic education, a determination to work and learn, and a humble career. He also possessed habits of mind that few possess but anybody can cultivate, at least to some extent, if they exert themselves.
Alas, these days few people – misled by the “cognitive elite” (that’s the polite euphemism of the American social scientist Charles Murray; bluntly but truly, many of them are highly- and prestigiously-credentialed fools) who insist that the state can, should and will provide – bother to do so. The tragedy is that, by willingly ensnaring themselves in this elite’s clutches, non-elites merely harm themselves and their families.
During the past several decades, and at the elite’s encouragement (or insistence), more people have passed increasing numbers of years at “educational” institutions; further, growing numbers of people have received allegedly more advanced degrees. Yet many of these places are actually “indoctrination institutions.” Hence remarkably few of their graduates are willing and able to think rigorously or even coherently; still fewer seek to think independently of the crowd or their rulers – and, where appropriate, choose the road less travelled.
Moreover, and as a result of this indoctrination, these days many people – not least the elite – crave prestigious jobs and high incomes. They do so because they wish to consume conspicuously, i.e., to lead a self-indulgent “lifestyle,” and not as a means towards financial independence and service to others. Accordingly, very few people – including high-income earners – accumulate large portfolios of income-generating assets and leave bequests to their communities that are remotely as large as Read’s.
In sharp contrast, nowadays many people – and virtually all politicians and their mascots – loudly and self-righteously proclaim their “passion” to “change the world.” But they can do so only by coercing others: hence their alleged “compassion” is merely a false front for the urge to rule. Sincerely passionate people, as P.J. O'Rourke sagely put it, humbly and quietly volunteer to wash the dishes. Genuinely changing the world for the better entails countless instances, figuratively and literally speaking, of washing the dishes – and endowing hospitals and libraries.
The World Doesn’t Need “Cognitive Elites” – It Needs Ronald Reads
That’s what makes Mr Read truly remarkable. All his life, including the decades after he became wealthy, he worked without complaint or a sense of entitlement. He saved diligently, studied relentlessly, invested prudently – and time, in the form of decades of compounded growth – did the rest. For investors like Read, time is their best friend; in contrast, for most people, who have inherited the Distemper from their parents, “learnt” it at school, etc., time is their worst enemy.
Unfortunately, for many people it’s simply too late: their destructive habits have become too deeply ingrained to alter; and even if they changed their spots, they’d be too old to amass the assets that would render them financially independent. That, alas, is exactly where the cognitive elite wants them to remain: financially and psychologically dependent upon the state.
In the cognitive elites’ sense of “education,” which confuses this term with the phrases “years of attendance at an educational institution” and “credentials received by such institutions,” Mr Read was unexceptional; but in the proper sense of the term (which elites abhor and can’t abide) – the ability to reason, collect and dispassionately assess evidence, make prudent decisions, acknowledge and learn from mistakes – he was remarkable. “I feel like Mr Read was a self-made man,” said his local library’s director. “He did not have a formal education, but he was very smart …” According to The Reader’s Digest (2019), he was “a blue-collar guy with blue-chip smarts.” In the words of The Brattleboro Reformer, “Read was … a simple and hardworking Vermonter, who was so determined to finish high school he walked and hitchhiked into Brattleboro every day until he graduated in 1940.”
For the remainder of his life, almost three-quarters of a century, he remained eager to improve his mind: he read extensively, researched thoroughly and widely, took counsel but drew his own conclusions – and thus made his own investment decisions. He subscribed to The Wall Street Journal, regularly frequented his local library, and when necessary sought competent advice.
Mr Read’s ethos and achievement discomfits many people – particularly the cognitive elite. They take refuge in collectivist babble and the culture of complaint and entitlement, and they place their faith in futile and destructive pursuits like government and politics.
Yet they cannot dismiss his achievement with lame excuses like “sure, he did very well, but he was lucky.” Nor can elites’ mascots bleat “he had advantages like a prominent family, Ivy League degree and high-paying job; I’ve been denied access to these things, so there’s no way I can possibly amass a portfolio of assets that’s remotely as big as his. Hence the government owes me an education, a job, childcare, medical services and a pension.”
The inconvenient – to the mainstream – truth is that Mr Read didn’t need above-average schooling or high salary to become financially independent; nor, by implication, do the millions who use the state as an emotional and financial crutch.
Your portfolio reflects your character, too
More than 20 years ago, paper-based stock certificates were already passé in the U.S., but Mr Read retained his. (Among other things, they made short-term trading prohibitively inconvenient and were thereby well-suited to a buy-and-hold approach to investment.) When he died, his executors found a stack of them in his safe-deposit box. Those shares represented the bulk of his estate, and a year after his death his executors and broker were still ascertaining their exact worth. What’s clear: at the time of his death, Read owned shares of at least 95 companies, and had held many of them for decades. They covered a broad variety of sectors, including banks, consumer products, railways, telecoms and utilities; he avoided most technology (and all “dot com”) stocks. His long-time holdings included stalwarts such as Dow Chemical, General Electric, J.P. Morgan Chase and Procter & Gamble; he also owned large stakes of J.M. Smucker, CVS Health and Johnson & Johnson.
In “Route to an $8 Million Portfolio Started with Frugal Living,” Prior added:
Mr Read didn’t always hit home runs. His portfolio included shares of Lehman Brothers Holdings, the financial firm that collapsed in 2008, for example. But he was willing to stick with his picks for many, many years and most of them did very well.
Mr Read didn’t invest indiscriminately; his portfolio was carefully focussed rather than aimlessly diversified. At his death, ten stocks, which were weighted towards financial services and consumer products, comprised approximately one-quarter of his total net worth (Figure 1). He typically bought shares of companies that he’d researched thoroughly and which reliably paid generous dividends. And when his dividend cheques arrived in the post, he ploughed the proceeds into more shares (not necessarily of the same companies).
Figure 1: Market Values of Ronald Read’s Ten Biggest Holdings (Thousands of $US in 2013)
Portfolios of the rich and unheralded
Six months after Read’s death, The Wall Street Journal (“How to Save Like the Rich and the Upper Middle Class (Hint: It’s Not with Your House),” 26 December 2014), reported:
The very rich often live in expensive houses, but that’s not where most of their wealth is. In fact, for the wealthiest 1% of Americans, only about 9% of their total net worth is tied up in their home. That’s compared to 63% for the broad middle class.
Edward Wolff, an economist at New York University, analysed the widely differing assets of the wealthiest 1%, the next 19% (which can be loosely regarded as the upper-middle class, though the top of this range was, by most standards, also very wealthy), and the middle 60% (broadly speaking, the middle class). A decade ago, the top 1% – whose net worth at the time, according to Wolff, exceeded $US7.8 million – held nearly half of their gross assets in the form of business equity (often unincorporated) and real estate. They held an additional 27% as financial securities such as stocks and bonds, managed funds and personal trusts. Typically, however, their personal residences comprised relatively little (9%) of their gross assets.
For the middle 60% of the distribution, on the other hand, the picture was – and still is – very different. Their principal place of residence constituted nearly two-thirds (63%) of its wealth. The financial profile of the upper-middle class, too, was different. This group – the “next 19%” whose gross assets exceeded $400,000 but were less than $7.8 million – concentrated less in business equity and directly-held financial securities than the rich and less in their principal place of residence than the middle class. Instead, they concentrated more – amounts ranged from hundreds of thousands to $1-2 million per household – in their superannuation (which, in effect, means indirectly-held securities).
Recall that Ronald Read’s estate totalled ca. $8 million, and was composed mostly of financial assets (common stocks). He also owned his home but owed no significant debt. In those respects, it resembled America’s wealthiest households.
Wolff’s analysis also distinguished the percentage shares of categories of total assets held by the top 1%, the next 9% and the remaining 90% of households. Figure 2 summarises his findings.
The wealthiest 10% of households owned virtually all of the business equity (94%) and financial assets (95%), and most of the non-home real estate (78%) and life insurance (75%). In sharp contrast, the bottom 90% held 59% of the principal places of residence (by value) and 74% of the total household debt (i.e., auto, credit card, mortgage and student debt).
Figure 2: Percentages of Selected Assets and Liabilities Owned by Wealthiest and the Rest (2013)
This distribution of assets and liabilities helps to explain why the Global Financial Crisis so much more difficult for the middle and bottom than the top of the distribution. It also helps explains why the “recovery” has been so disappointing for so many - and so rewarding for a few.
At the time of Ronald Read’s death, the apex of the distribution of wealth in the U.S. didn’t merely hold a much greater quantity of assets than the middle: qualitatively, its wealth took a very different form. The wealthiest owned lightly-leveraged business and financial assets; the others, to the extent that they owned anything, owned the heavily-mortgaged family home. It’s true that during the past few years residential real estate in the U.S. has boomed; but it’s equally true that in the decade or so after the GFC it regained lost ground very sluggishly whilst stock markets zoomed.
The major “middle class” asset, in other words, has grown relatively slowly (and more in some parts of the U.S. than others). In sharp contrast, the assets of the wealthiest households didn’t just quickly rescale but have greatly exceeded their pre-GFC peaks.
The consequences are invidious. Unlike Ronald Read, most American retirees lack the assets to make significant bequests – or even to support themselves in retirement. As a result, in their later years they rely heavily (and many of them exclusively) upon the state. And in order to support tomorrow’s retirees, today’s workers must bear a heavier burden of taxation (or its antecedent, inflation). Yet more inflation and taxes will make their efforts to save for retirement, which is already woefully inadequate, even more difficult. As MarketWatch (“5 Disastrous Trends Impacting Future Retirees,” 12 March 2015) put it,
The only relief can come from a drastic shift in people’s willingness to substitute savings for consumption together with supporting savings policies from the government. That’s an extremely difficult thing to do for politicians who only look ahead as far as the next election and promote more government support to gain votes.
Increasing longevity is compounding the problem:
When Social Security began about 80 years ago, few people lived much past 65. According to the Social Security Administration, life expectancy for a 65-year-old man is over 84 and almost 87 for a woman. Further, 25% of these will live past 90 and 10% past 95 … Improved medical care and scientific discoveries will continue to push those ages even higher. Funding pensions for longer lives will be very difficult …
A vital – but fading – legacy
Since Ronald Read’s death, in the U.S. and elsewhere, these ominous clouds have become even darker.
As a result, more than ever his life and its achievements remind us that today’s economic and financial problems are only superficially matters of economics and finance: much more profoundly, they reflect shortcomings of ethics and morality. Becoming a successful and financially independent investor isn’t a matter of brains; it’s a consequence of character. It isn’t the result of luck; yet – as Warren Buffett has repeatedly acknowledged – being born at the right time and place certainly helps.
The Great Depression and Second World War scarred Read’s adolescence; but affordable (by today’s standards) residential real estate allowed him to buy his home early and reasonably easily as a young adult – and, freed from rental payments, to save assiduously and compound capital for decades. In contrast, these days the price of real estate rewards the middle-aged and old, and punishes the young; so did governments’ panicked reaction to COVID-19. Like Ronald Read’s, today’s younger generation’s misfortunes are occurring early in life. That should make him and his generation a role model for today’s young.
A crucial question, therefore, is: have their elders bequeathed to them the values that will enable them to cope and eventually to prosper? In some cases, they certainly have; but I’m very sceptical (let’s hope I’m wrong) that this is the rule. If so, then people like Ronald Read will remain largely unknown, their ethos mostly uncelebrated – and the Distemper of Our Times will remain undiagnosed and untreated, and become hereditary.
Wealth creators. Value investors.
At Leithner & Co, we believe in creating wealth through long-term consistent growth, built on trust and transparency. Our value investing approach allows us to learn from the past but keep an eye firmly on the future.
We are committed to helping you achieve the future you have in mind. For more of our insights, click the FOLLOW button below.
- “Frugal Benefactor Leaves Millions to Brattleboro Memorial Hospital and Brooks Memorial Library” (The Brattleboro Reformer, 5 February 2015)
- “Here’s How a Janitor Amassed an $8m Fortune” (CNBC, 9 February 2015)
- “These People Donated Millions After They Died—But No One Knew They Were Rich,” The Reader’s Digest (January 2019)
- “Ronald Read (philanthropist)” – entry at Wikipedia
- “The Remarkable Life and Lessons of the $8 Million Janitor” (The Washington Post, 25 April 2014)
- Edward N. Wolff, “Household Wealth in the United States, 1962-2013: What Happened over the Great Recession?” (National Bureau of Economic Research, Working Paper 20733, December 2014)
MORE ON Education
After concluding an academic career, Chris founded Leithner & Co. in 1999. He is also the author of The Bourgeois Manifesto: The Robinson Crusoe Ethic versus the Distemper of Our Times (2017); The Evil Princes of Martin Place: The Reserve Bank of...