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Growth an Ageless Style
Small Companies Still in O’Hara’s Sights
I’ve devoted the last few columns to writing about the benefits of long-term investing. Every month I pen this column, the stock market is turning down a bit more, so much so that it’s beginning to sound like a broken record. I’ve quoted some experts familiar to the BetterInvesting community in recent columns in discussing how to respond to this type of market, so this month allow me focus on someone who gave me a great deal of insight through the years — Tom O’Hara, our association’s co-founder.
It seems like only a few months ago that I was asked to comment at one of our conventions about Tom as he celebrated his 90th birthday. In July he’ll celebrate another one, and the years seem to fly by much quicker than I want to acknowledge. I’ve always considered Tom to be the big brother I never had. He has shared his knowledge with me as if I had been part of his family, and I’ll always think of him that way.
It goes much further than that, however. Tom is an unabashed growth stock investor. Even at his current age, he looks for stocks of companies that will continue growing faster than the economy. Keep in mind that finding growth companies has become more difficult than it has in years. The economy is in the tank, and it’s rare that a quarterly report shows earnings above the corresponding period from the previous year. That doesn’t stop Tom from continuing to look for those rare growth stocks that have been beaten down in price and may have a lot of potential over the next five years.
At our last meeting of the Mutual Investment Club of Detroit, Tom arrived using a walker, aided by his son Bob. Even though he isn’t as spry as he once was (who among us is?), he’s still one of the most optimistic people I know.
As investors grow older, they tend to become more conservative with stock selection. That isn’t Tom’s style. He’s always looking at least five years in the future and at times even longer. Tom studies the club’s portfolio and quickly sizes up how much we have in large, medium and small companies. If we haven’t been adding to our positions in some of the smaller companies in recent months, he’s been known to chide the other members about having a bit more balance according to size.
Of course, the companies have to have earnings. “There’s no price-earnings ratio if there are no earnings,” he tells us. Tom also points out that there’s risk in buying small-company stocks and that not all of them will perform as well as we’d like. But if the risk is spread out over a few stocks, there’s a chance at least one of them will be worth substantially more in years to come.
Tom likes to tell the story of a man who used to go to his cottage in northern Michigan on summer weekends. Every time the man drove through Midland, he noticed a company that was building new and larger plants. That led him to buy stock of Dow Chemical, which was in its infancy at the time and has since grown to become one of the largest chemical companies in the world.
In short, Tom makes us think. He became interested in investing when he was just a student at Southwestern High School in Detroit. His experience led him to believe that the earlier you become an investor, the better chance you have of being successful over your lifetime. So he encourages younger people to set aside even small amounts of money to buy common stocks.
Tom has now been a member of the Mutual Investment Club of Detroit since 1940. Both of his sons and his son-in-law are also members, and he’s proud to have them as partners in the club.
And when his grandson joined the club a few months ago, Tom couldn’t suppress his smile.
Kenneth S. Janke, Sr., was the long-time president of BetterInvesting and a member of the magazine’s Editorial Advisory and Securities Review Committee for many years.