Investing: How Simple Can it Be? Part 3
To implement George Nicholson’s concepts, he gave us the Stock Selection Guide (SSG) —a printed form that makes it possible to both view those simple things necessary to determine if a company is a good quality company, and to calculate whether the price is appropriate or not.
In its day, it was the perfect tool to guide a novice investor through the concepts listed earlier. And, even today, it can be a good tool to teach those concepts, provided we use it for that purpose and don’t just make teaching the SSG, itself, the objective.
Had there been computers available in the nineteen-fifties, perhaps the printed form would never have been designed. I’ll bet that Nicholson would have designed a computer program that could simply spew out the graphs, do the math, and provide the opportunities for estimates. Certainly he was enough of a visionary to have taken advantage of whatever technology might have been available to him at the time.
The sad thing is that, with everyone having computers and being able to get all kinds of information on fhe Web, we seem compelled to demand more. In a sense, we’re yielding to the same temptation as the fundamental analysts before us: to continue to “fine tune” the method by adding more complexities. Instead of reveling in the simplicity of what we were given, many of us want to dig deeper in the hopes that such activity will improve our track records.
One of the most widely-acclaimed entities in the investment education arena has done an exemplary job of persuading the public that the amateur can do it herself. In the daily newspaper, you will find its syndicated columns continuing to make that point very effectively. Yet, when it comes to offering a methodology to its readers with which they could do an effective job, they refuse to offer or endorse anything as simple as the NAIC methodology because it’s just too simple. They actually confided in me that, while they understood and agreed with the premise, it would put their columnists out of work!
I am sometimes amused to find, among the ranks of NAIC’s volunteer educators, a somewhat similar mindset occasionally surfaces. “You don’t need a professional to invest successfully ….” What’s implied, however is, “…but you need me!”
Certainly it’s understandable to feel that, if we make it seem too simple, the value of our knowledge and the worth of our teaching somehow become demeaned. We paid our dues and we insist that our students do the same! So, in our own way, we tend to perpetuate the notion that it may be simple; but it’s not that simple!
Yet, how much more effectively we could fulfill the educational mission if we accepted the fact that it is just that simple! Just maybe, the things a teacher needs to teach a new student can be taught in far less time than we now take. And just maybe, many more people might be capable of teaching the basics than we now think can do it—or who think so themselves.
Let’s try to continue the legacy of NAIC’s founders and devote our attention to making the simple things simpler.
To those who want to add the extras, pore over the balance sheets and the cash flow statements, and second guess managements as they go about their business of producing the results we study, I say more power to you! It can be an exciting and interesting hobby. Just don’t let anyone ever tell you that those things are more than just interesting and enlightening, much less required for success.