Sunday, July 12, 2009

The Fundamentals Still Apply, as Time Goes By...

Martin Arnest, a friend of my friend Leland, wrote a nice email to me and in it he described the ways and thinking of his grandfather, Henry Arnest. I asked him if he would expand a little bit on his grandfather and provide some pictures. Below is a compilation of his email, additional information, and my edits:
"The Fundamentals Still Apply, as Time Goes By..."

…The main thing for me is a change in attitude and philosophy around money and the economy. Many of my friends and fellow Gen-Xer's still haven't gotten it.

My Grandfather was in his seventies and I was a teenager when he started to tell me on a regular basis, “You know Grandpa wont be around forever.” Damn if he didn’t live to be 94 years old, and I got the benefit of more than twenty years of his parting wisdom.

He was an experienced 21 year-old: he’d had the fingers of his right hand half-blown off at 14 in a mining accident, sold films to Northern California movie houses for 20th Century Fox as a teenager, and after spending several years working for his late Grandfather's partner in construction struck out on his own pouring concrete with his brother in Oakland California.

My grandfather never went to college and took a job with the Carnation Company in 1931. He started out selling Evaporated Milk and Polenta to the mostly Italian grocers of North Beach in San Francisco. During the 1930s he took the ferry from Oakland to San Francisco every morning and watched the SF Bay Bridge, then the Golden Gate being built. He worked his way up from being an Evaporated Milk Salesman to what we would call in today's terms the COO of the company. His great strength, among others was the ability to really know what the Harvard educated execs didn't get: what really goes on – on a day to day basis in the kitchens of America.

Nestle bought Carnation over two decades ago. He would have rolled in his grave if he knew that Nestle put out a product (Pre-made cookie dough) without understanding how their customers would use this case they ate it raw! You probably heard about the recall a few weeks back.

He also taught me about the fundamentals of a good investment: strong leadership, solid dividends, and moderate PE ratios, etc. He saw the scam that Enron was pulling long before it went bust... and made a profit from it. He started railing against derivatives to anyone who would listen as much as fifteen years ago.

“Lets take off the bandage and look at the wound,” he’d say… and problems would be days if not minutes from being solved.

Despite his typical bias toward action, he was fond of saying, “Sometimes the hardest thing to do is nothing.”

I’m taking both of these lessons to heart right now.

Great anecdotal story about your grandfather, Martin. Thanks for sharing!

Martin also shared this picture of his grandfather's social security card... it is from 1935, one of the original issued:

I’m thinking an entire generation is relearning the lessons of the past. Despite our now instant communications and record of history, collectively we don’t seem to act on those past lessons. Perhaps that will change some day.