FREE NEWSLETTER
FRANK CAPPIELLO and Carter Randall were longtime panelists on the television show Wall Street Week with Louis Rukeyser. Panelists typically worked at investment firms, with their affiliations displayed on the screen. At some point, Cappiello and Randall retired. On the screen, each was simply identified as an “independent investor.” At least one regular guest, John Templeton, also achieved this listing after retiring from running the Templeton Funds.
That “independent investor” label intrigued me then and does to this day. Do you need a career on Wall Street or in the financial services industry to achieve this designation? Does society benefit from having independent investors? Can you be an independent investor with $100,000 or do you need a million?
I’m retired and primarily living off my investments. Does that make me an independent investor?
Popular portrayals of wealthy individuals who make money from money are often negative. Think of Charles Dickens’s Ebenezer Scrooge or Mr. Potter from It’s a Wonderful Life. William Shakespeare coined a term with his infamous moneylender Shylock, who seeks a “pound of flesh” from a defaulted borrower. Marxists would say that in the eternal tension between capital and labor, investors are extracting their wealth from the sweat of workers.
The old saw says that money does not grow on trees—it has to be earned here on earth. Savers who put their money into bank accounts and investors who buy stocks are funding the future. Even in Bedford Falls, Jimmy Stewart, playing George Bailey, explains that money deposited in a bank account is invested in a neighbor’s house. The mortgage pays the interest earned by the depositor. Without saving and investing, there would be no capital to expand the economy.
Wall Street Week producers used the moniker “independent investor” to make clear the panelist had no employment affiliation. But I like to think it also spoke to financial independence. Those so labeled had achieved freedom from nine-to-five work through their diligence in saving and investing. Investing was no longer their vocation, but had become their avocation.
Rukeyser would use the term “investor” to mean a long-term stakeholder, not a speculator or manipulator. The show’s premise was to lift the curtain on Wall Street to let the little guy in. But it also served to encourage sensible investing.
Similarly, many HumbleDollar commenters encourage sensible spending—and caution against conspicuous consumption and living beyond our means. The Chinese concept of yin and yang suggests the world is made up of balanced forces. We need both spenders and savers in the economy.
The spenders keep the economy chugging along. The savers help fund their consumption. Those of us who are HumbleDollar-oriented savers should be thankful for the spenders.
When we see media accounts of the student loan crisis or read about bankruptcies from credit card debt, there is sympathy for the borrower and antipathy toward the lender. Certain senators can be counted on to ask for hearings. Yet, if we borrow, shouldn’t there be an expectation of repayment? If you dig deep enough, the money lent ultimately came from individual investors.
Mild-mannered as they were, I don’t want to think of Frank Cappiello or Carter Randall as either Scrooge or Potter. John Templeton, in particular, was noted for his generous philanthropy. Those of us who have achieved financial independence should find ways to give back, whether with their time or money, or both.
At the same time, those who are making money from money should be recognized as funding the economy. Demonizing their efforts doesn’t help anyone.
Regarding your mention of media accounts of the student loan crisis. It is a real crisis, approx $1.5 Trillion worth. The US nominal GDP is around $23 Trillion as of 2021. Average student loan debt by graduating class has increased dramatically over the last few decades. I wonder how many of the readers of Humble Dollar had very little debt after finishing their schooling. After finishing undergraduate and grad school my debt was practically nil. Over the last few decades we have as a nation decided that students should have more responsibility for paying for their higher education. In the future a higher and higher % of people who read this type of column will have a higher and higher student debt loan history. It is hard to save that 10% of income by those individuals who are impacted by high student loan debt.
I agree that it is very real. But if a student borrows money, they should pay it back. The problem is that students get advice that any college degree is better than no college degree. The truth is that students need to consider the return on their investment. If they are going to borrow $200K to major in a subject that has no employment prospects, that’s on them. Worse yet, if they borrow big dollars to start college, but never finish because they were not adequately prepared for college, they get the double whammy of no degree and debt to repay. Unfortunately, students are not trained in financial literacy in high school and they do not receive adequate counselling on their choices. I once had a former college administrator describe college financial aid advisors as the biggest predatory loan purveyors out there. There have been some reforms in recent years, but colleges need to fill spots in the freshman class every year.
By your logic, all Americans who borrow and cannot pay their debts should be required to pay their debts back and should not be able to file for bankruptcy. Oh I forgot, all Americans can file for bankruptcy, but not student loan borrowers.