He was a remarkable money management guru. Mutual fund giant James E. Stowers recently died at the age of 90.
His life and work were in the traditions of Sir John Templeton, John Bogle and Warren Buffett. Starting with very little, he used common sense, discipline and basic money management techniques to build a successful mutual fund business and achieve financial independence. He also employed his knowledge not only to build his fortune, but the fortunes of many others.
Stowers died in the American heartland, in his beloved Kansas City. That’s a place he never had any intention of leaving, even when successful, for the often aggravating precincts of the nation’s financial capital, New York City. That was a good choice. The Rancid Apple is a noisy, pricey, virtually one-party city. It is normally populated with venal pols right out of the pages of Boss Tweed and George Washington Plunkitt. I know because I’ve lived in Sodom on the Hudson most of my life. However, for a decade or so, in my youth, I also lived in the heartland.
Stowers’ heartland prejudice was shared by Buffett, who remains in his native Nebraska in a relatively modest home. The sage and kindly Templeton also operated away from the hustle and bustle of Tweedville from the Bahamas (One thinks of the philosopher Pascal’s counsel that clear thinking comes from operating in a quiet environment; from sitting and thinking quietly). Bogle founded the Vanguard funds in a Philadelphia suburb (I recently had the pleasure of meeting the brilliant Bogle. See recent blog entry: A Well Earned Tribute to a Mutual Fund Pioneer).
All of these money management giants did more than succeed in business: They also have devoted themselves to helping charities. And they shared another trait: They came out of nowhere, with few advantages other than their moneysense and their discipline, and became highly successful money managers.
James E. Stowers founded the Twentieth Century Funds in 1958 with just $100,000 and 24 shareholders. He shared some characteristics with the other greats of money management: He accumulated an incredible fortune using basic money management principles, many of which anyone can use. But luckily he recorded his knowledge, which is here for anyone. Indeed, in a little book written in the early 1990s—–Yes, You Can Achieve Financial Independence, James E. Stowers with Jack Jonathan—-he explained how he started with very little and became successful. He detailed how others could also prosper.
No, Stowers in his book didn’t purport to make anyone the next Bogle or Buffett. Nevertheless, the commonsense principles he outlines are timeless. They can help almost anyone who aspires to someday chuck the rat race and avoid someday dying at work or on a wretchedly slow moving D-train, packed with rush hour riders. Stowers, in simple language, explained how the average person could accumulate enough money to be comfortable and not have to ever go anywhere near those wretched subways or jammed interstate highways or have to report to bosses who always talk in the subjunctive tense.
What did Stowers advise?
Much of the advice is the same you will read in our blog—-I say we because I am not forgetting my partner Liam Judge, who is my virtual publisher and editor of some of my online efforts—-is the result of the Bogle, Buffett and Stowers. They, in turn, were standing on the shoulders of their money management gurus. But Stowers’ advice is good today, tomorrow and forever.
Save your money and consistently put money in good mutual funds every month in good markets and bad (especially the latter when depressed stocks are available at bargain prices and your monthly purchases get you extra shares).
Avoid buying things on credit. Control your consumerism. Big avoidable expenses reduce the amount of money you can put into investments.
Buy things you want responsibly. Make a plan. Stick to the plan. Be patient. Have an investment plan. Saving isn’t enough, certainly not at a time when savings accounts are paying close to zero percent and stocks, over the long term, tend to return about nine percent a year.
Be realistic and avoid the get rich overnight schemes. Have a long term investment plan. Be in it for 10, 20 or 30 years. It takes time for an investment plan to work.
Pass on these values to your children and grandchildren. Get them started as soon as possible (I often think of the certified financial planner Anthony Ogorek in Williamsville, New York. He had his teenage daughters who did babysitting set IRAs. If they stick to the plan, their IRA compounding could be incredible).
Stowers’ money philosophy was one of hope and empowerment. He rejected those who say that it is impossible for most people to achieve financial independence.
“I strongly disagree,” he wrote. “True most people will not accumulate enough money, but I absolutely disagree with the thought that most people cannot attain it.”
Then Stowers added another message of hope and of thrift. It is one that many Americans and many in the advanced Western welfare state countries that consume now and forget about savings cultures have never heard: “I believe everyone, and I repeat everyone, can become financially independent, including you.”
Invest 10 percent of your gross monthly income in equity funds and be patient, he counseled. Try to accumulate all that you can. You’ll likely need it because the odds are good that you are going to live longer than you think and that means you’ll probably need a lot to live comfortably and take care of your family.
And there is another very important reason to accumulate as much as you can—–so you can give back. Stowers spent the last years of his life giving away his vast fortune—-his favorite charity was a medical research center in his beloved hometown. His money management knowledge benefited many people in various ways and will do so for generations to come.
“I would like,” Stowers wrote, “to be remembered for what I did for others rather than what I did for myself.”
He will be.