Success is a lousy teacher. It seduces smart people into thinking they can’t lose
Ronald James Read was an American philanthropist, investor, janitor, and gas station attendant. Ronald Read was born in rural Vermont. He was the first person in his family to graduate high school, made all the more impressive by the fact that he hitchhiked to campus each day.
For those who knew Ronald Read, there wasn’t much else worth mentioning. His life was about as low-key as they come. Read fixed cars at a gas station for 25 years and swept floors at JCPenney for 17 years. He bought a two-bedroom house for $12,000 at age 38 and lived there for the rest of his life. He was widowed at age 50 and never remarried.
A friend recalled that his main hobby was chopping firewood. Read died in 2014, aged 92. Which is when the humble rural janitor made international headlines. 2,813,503 Americans died in 2014. Fewer than 4,000 of them had a net worth of over $8 million when they passed away. Ronald Read was one of them. In his will, the former janitor left $2 million to his stepkids and more than $6 million to his local hospital and library.
Those who knew Read were baffled. Where did he get all that money? It turned out there was no secret. There was no lottery win and no inheritance. Read saved what little he could and invested it in blue-chip stocks. Then he waited, for decades on end, as tiny savings compounded into more than $8 million. That’ ‘s it. From janitor to philanthropist.
The Psychology of Money
A few months before Ronald Read died, another man named Richard was in the news. Richard Fuscone was everything Ronald Read was not. A Harvard-educated Merrill Lynch executive with an MBA, Fuscone had such a successful career in finance that he retired in his 40s to become a philanthropist.
Former Merrill CEO David Komansky praised Fuscone’s “business savvy, leadership skills, sound judgment and personal integrity .” Crain’s business magazine once included him in a “40 under 40” list of successful businesspeople. But then—like the gold-coin-skipping tech executive—everything fell apart.
In the mid-2000s, Fuscone borrowed heavily to expand an 18,000-square-foot home in Greenwich, Connecticut, that had 11 bathrooms, two elevators, two pools, seven garages, and cost more than $90,000 a month to maintain.
Then the 2008 financial crisis hit. The crisis hurt virtually everyone’ s finances. It apparently turned Fuscone’ s into dust. High debt and illiquid assets left him bankrupt. “I currently have no income,” he allegedly told a bankruptcy judge in 2008.
First, his Palm Beach house was foreclosed. In 2014, it was the Greenwich mansion’s turn. Five months before Ronald Read left his fortune to charity, Richard Fuscone’s home—where guests recalled the “thrill of dining and dancing atop a see-through covering on the home’s indoor swimming pool”—was sold in a foreclosure auction for 75% less than an insurance company figured it was worth
Ronald Read was patient; Richard Fuscone was showy and greedy. That’s all it took to eclipse the massive education and experience gap between the two. The lesson here is not to be more like Ronald and less like Richard.
The fascinating thing about these stories is how unique they are to finance. In what other industry does someone with no college degree, no training, no background, no formal experience, and no connections massively outperform someone with the best education, the best training, and the best connections?
Bill Gates suggests an answer: “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.”
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The Psychology of Money by Morgan Housel
