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Treasure in the Trash

Matt Trogdon

MY MOST SUCCESSFUL investment is one that I tried to throw in the trash.

I own 126 shares of Anthem, a large health insurance company. I believe I got my shares on April 30, 2002. That’s when Anthem bought Trigon, a small insurer based in Virginia that my family used for health insurance.

In 1996, Trigon began the process of converting from a policyholder-owned company into a stockholder-owned company. It went public in 1997. Anyone who had a health insurance policy became a shareholder, including yours truly, who was age 14 at the time. In 2002, those Trigon shares were converted into Anthem shares.

I imagine Anthem sent me letters about my shares at some point, but I never received them. I was a sophomore in college, and my main concerns were studying, partying and downloading music on KaZaa (if you know, you know).

This was also a period of family upheaval. My grandmother, who raised me, had succumbed to dementia and was placed in a nursing home. My childhood home was sold, and there was a short window when I lacked a reliable mailing address.

By 2008, I had taken an interest in investing and started working at The Motley Fool. One day, a cousin suggested I enter my personal information into a “lost money” website. Crazy enough, the lost money thing worked. A couple of weeks later, Anthem sent me a letter. Dunce that I was, I looked at the envelope, thought it was an advertisement and promptly threw it in the trash. They sent me a second letter. I threw that one in the trash as well.

Finally, they sent me a letter with the words “potential forfeiture” on the envelope. I opened that one out of fear that I owed money. Imagine my surprise when I found out I was entitled to claim 126 shares of Anthem stock that were worth roughly $6,000. Anthem has soared since then, and it’s now one of my portfolio’s largest holdings.

When I’ve told this tale in the past, I’ve used it as an example of how buy-and-hold investing really can work. And it certainly has. I held Anthem shares unwittingly from 2002 to 2008, and I’ve held them on purpose for another 14 years. Anthem closed at $28.73 on April 30, 2002—the first day I owned shares, or so I assume. It finished yesterday at $522.87 (symbol: ANTM). That’s a 1,720% return.

Still, let’s not overlook all the ways I lucked out here:

  • I’m lucky I got the shares at all. I certainly didn’t pick my own health insurance plan as a kid.
  • I’m lucky Anthem has done as well as it has. I could have received shares of a company that performed poorly.
  • I’m lucky I didn’t find out about the shares when I was in college. I absolutely would have blown the money.
  • I’m lucky that the “missing money” website I nonchalantly signed up for was legit and not part of some scam.
  • I’m lucky Anthem sent me a third letter about my unclaimed shares—with the eye-catching words “potential forfeiture” on the envelope.
  • I’m lucky that my Anthem shares have been held through a transfer agent and not in a brokerage account. That’s been enough of a barrier to keep me from selling.

Of course, I can also point to some errors. I never bothered to set up dividend reinvestment. The company started paying dividends in 2011, and those could have been reinvested. Had I done so, my investment would be worth even more.

It’s important to concede that luck will affect all of our investment results. We can certainly increase the odds of our success by stretching our investment timelines and by diversifying. But luck and timing will always play a role. For example, someone who invested in the S&P 500 for 20 years got a 104% return from December 1998 to December 2018—but a far larger 877% return from December 1980 to December 2000.

Further, it’s important not to confuse luck with skill. We all live and invest in times and circumstances that are unique to each of us. We can do all of the analysis we want. We can exercise as much prudence as we want. We can do all the “right things.” But there are always going to be circumstances beyond our control.

That’s not necessarily a bad thing. It just means that it’s important to have a financial plan that’s flexible enough to accommodate a bit of luck—good or bad.

Matt Trogdon is a financial planner with Craftwork Capital, LLC. He’s based in Washington, D.C., and has a special interest in helping Gen X and Gen Y families. He also serves as a workshop instructor for the Babson College Financial Literacy ProjectFollow Matt on Twitter @Matt_Trogdon and check out his earlier articles.

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