UNFORGETTABLE CHARACTERS I'VE MET. THE WARRIOR.

Her Father Was The Town Doctor. She was a pretty lady just over 30 but her family was disappointed in Helen. The prevailing opinion in 1922 was that any female over 30 that had not yet attracted a mate was missing some important qualities. While that was embarrassing, she had an even more humiliating problem. She was going to have to tell her family that she was with child.

Their Reaction Was Predictable. They were horrified. Within 30 days she was on a train to Kansas where she had some wealthy relatives. She was going to have the baby and come home after a respectable period. The family would have several months to concoct a story as to the origin of the child. This didn't work so well. Poor Helen died from some sort of flu germ shortly after giving birth. They named the baby John and the Kansas family was more than willing to keep the child and raise him as their own; however, the Pennsylvania country doc would have none of that. Within two months, he was on a train to claim his grandson so he could bring him home to raise as his own.

A Pretty Auspicious Beginning For The Warrior. The doc was unable to continue bringing up the baby, hereinafter called "The Warrior". He must have contacted the same nasty flu germ that killed Helen because he died within a month of coming home with the warrior. Ultimately the warrior wound up with the oldest brother in the family who went through adoption proceedings. His uncle didn't raise him like the rest of his "siblings". He was assigned most of the hard work tasks around the farm, one of which was to bring home wild game to subsidize the family meals.

He Was Well Liked In School. Like most of his family, he finished high school which was not entirely common during those times. He still felt like an outsider at home so he joined the army shortly after high school. Because of his excellent marksmanship, he was selected to become a gunner the air corps. After undergoing several months of training in the maintenance and firing of machine guns, he was assigned as a bottom turret gunner on a B-24 in the 492nd bomb group.

The 492nd Was Not Blessed With Fantastic Luck. They had a tremendous casualty rate. The warrior and his crew were one of a very few to complete their quota of 30 missions, two of which were during the invasion period in the vicinity of Normandy. Because of his contribution to his crew's success, he was awarded the Air Medal and The Distinguished Flying Cross. The rest of the 492nd was disbanded after three months due to their huge casualty rate.

I Was Seven Years Old When I Met Him. My father was still in combat in the army when my aunt brought him to our house and announced her intention to marry him. I liked him right away. I thought the jacket he wore with one bomb attached to the back for each mission he flew was more than neat and he spent considerable time teaching me some of the skills he had acquired. He was part of our family for 60 years but almost never mentioned any of his combat experiences until I coaxed some out of him after he turned 80. The big surprise was that this mild mannered gentleman had undergone so many tasks that required courage more than I could imagine. It wasn't until after his death that I found out he had won the two medals given out for distinguished performance.

Alzheimer's Claimed Him Before He Died. Old age related illnesses have no respect for lifetime courage and accomplishment. Dementia began to overtake the warrior in his late 70's and gradually worsened until he could barely talk and he had no idea who I was when he died at the age of 85. I watched out for him during these years and I must confess it was a relief to see this proud man relieved of the burdens of that horrific disease. The plaque you see above was made by my wife and we hung it in his room at the Alzheimer unit. The purpose was two fold: 1. To remind his failing memory of the good he had done during his life. 2. To let those caring for him in his unit know he wasn't just another old man who had to have his diapers changed. Perhaps they might have given him just a bit of the respect he had earned.

We Are Losing His Generation At a Very Rapid Rate. They will all be gone within a few years. War is changing and, although this was a difficult, high casualty war, those of that generation had the comfort of knowing we were all behind them. Perhaps we can do more for the current generation of warriors.

UNDERSTANDING TOTAL RETURN ON INVESTMENT.

Water Level At the Dock After A Single Night's Rain.

I've Written About This Before. It's a relatively simple concept, yet I am surprised at how few people have a firm grasp on how we are rewarded for risking our capital in an investment. I even find financial professionals who do not have a firm understanding. There are two major sources for our return. 1. Benefits (usually in the form of cash) during the holding period. 2. Benefits from selling at a profit at the end of the holding period. If I told this to an audience at a seminar, I would expect to hear a chorus of "Duh" after those statements. While you may hear a few other suggested benefits such as tax advantages, etc. the first two overshadow the remainder. Here is another Duh statement.

More Is Better Than Less and Sooner is Better Than Later. Again relatively simple; however, there are some strong implications here. It's a relatively simple matter to understand that the sooner you begin to receive cash flow, the lower your risk. Less obvious is the fact that this interim cash flow may be a return on investment or it may be a return of your initial investment. Also, you won't really know which it is until the end of the holding period. To use a real life example from my own portfolio, consider an investment I made in a company called Prospect Energy Capital. My original investment was in May of 2007 when I bought 2000 shares at an average price of 13.50 per share. During this holding period, I have received distributions of $9685. Not a bad return on an investment of $27,000. That is until you look at the current value in todays market. At a current price of $9.45 the value is $18.900 or $8,100 less than I paid. From that point of view, if I sold today, my $9685 in distributions would be considered as a return on investment of $1585 and a return of capital of $8,100. If you have trouble following this example, let me assure you it's relatively simple. Your failure to grasp this concept was more likely do to boredom or not giving a damn. For some reason I enjoy this sort of thing.

Let's Go A Step Further. Suppose I sold today what would be my return on investment. Let's simplify this and say I received my distributions monthly (which I do at present.) My return would be an average of 193 per month for 50 months. This equates to an annual return of 1.61%. Obviously, there is little argument that if I sold today this would be a poor investment. Let's say we didn't receive those distributions and we sold today at $28,585 (current value of $18,900 plus $9685). Our return on investment would be 1.37%. While this is not a huge difference, it does illustrate my point. More is better than less and sooner is better than later.

An Even More Important Point. It isn't just the magnitude of your return that matters it's which is the most important to you. In a high risk environment such as this one. Current income is important as a risk reduction tool. I have clients tell me that they have an adequate income from salary to fulfill their income needs. This can be true for many of the younger folks with relatively stable employment but one point to remember is that current income is important for things other than income to fund your lifestyle. It can be valuable for reinvestment. During the "Tech Wreck" when dividends were considered less useful, many ended up with a drastically reduced portfolio value with no capital to re-invest in stocks at bargain prices.

So Who Would Benefit From Later Rather Than Sooner Income? As I mentioned before, one group that would often choose growth would be higher tax bracket investors with no need for income to fund their current lifestyle. Since there is no current tax on accumulated growth, these are much more tax efficient than stocks with current income. Also, stocks that reinvest their earnings rather than pay distributions should be able to earn more on this capital than the investor who must reinvest these funds. Unfortunately this isn't always the case as some companies can't be depended on to invest this capital in the best interest of shareholders as opposed to management.

The Implications of All This. Some of us have no interest in finance for different reasons such as the lack of capital to invest or the ability to make more money doing something else while they pay to have their investments managed. My position is, whether you manage your own money or have someone else do it, the more knowledgeable you are the better qualified you are to communicate your needs to your investment manager or spot a manager who is acting more in his best interest than yours. I would appreciate your feedback on this post.