Common Sense Investing – Dan Wyson, CFP®
The Green Sweater
Many who have come into my office have asked about a small green sweater that is framed and sitting on my bookshelf. It seems a strange item for a financial planning firm, but the story behind it plays a significant role in my philosophy towards investing.
In 1921 my grandpa Jones opened a small knitting mill in Los Angeles. From the beginning he decided to run his little company based on two very simple principles. First- Be fair and honest with customers and employees. Second - Only produce the highest quality of clothing, made from 100% pure wool.
The early years were not easy. Among other things was stiff competition from several other mills in the area that had chosen to use “fillers” in their wool. By mixing foreign material in the wool, the competition could keep costs lower while somehow managing to claim their product was 100% wool. At the time there were no regulations prohibiting this practice. This concerned Grandpa but he pressed forward with a firm determination to follow his business plan. When people bought a “Jonesknit” sweater, he wanted them to know they could trust the product to be of the highest quality.
The years went by and Jonesknit, despite receiving numerous awards for the quality of its sweaters, continued to struggle in a competitive world where price often had the final say. Suddenly in 1929 the Great Depression hit and businesses all over the country began closing their doors. The garment industry was particularly hard-hit.
Amazingly the sales of Grandpa’s sweaters soared. Public schools, large organizations and even the U.S. Postal service began to buy almost exclusively from Jonesknit. Not only were there no layoffs, but new people were hired and Grandpa was able to continue giving his employees regular raises. He learned that when times get tough, people can’t afford to waste their money on junk. They look for quality. Grandpas focus on integrity and quality resulted in his family and employees being cared for in comfort while so many were suffering during the depression.
The small green cardigan Jonesknit sweater in my office was given to me by my grandpa 45 years ago. Though originally I was very disappointed to have not received a toy for my birthday that year, I have since come to appreciate the valuable message knitted into that sweater. During the darkest moments of the most recent recession I would often glance over at that sweater and remember the lessons I had learned from Grandpa Jones. Despite all the problems on Wall Street, I knew there were still companies out there that operated honestly and produced quality products. I knew that in the end those companies would rise to the top. All I had to do was find them for my clients.
Take a look around today at those companies that have survived. Consider those that are no longer here. Whether it be banks, department stores or computer companies, the Green Sweater principle seems to have held true during yet another disaster. As we invest in our future let’s remember it.
Dan Wyson, CFP® is author of the book “21 Financial Myths” and owner of Wyson Financial. 1173 S. 250 W #505 St. George, UT 84770 - 435-986-9525 – Securities and Advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment advisor