Roadway to Prosperity

Over the past dozen years or so I’ve issued a financial newsletter – monthly for the first decade, titled “On the Money Trail,” and weekly these last few years under the title “Straight Talk from Al Jacobs.” My intent is to pass on to my readers the info I’ve picked up over the decades on the subject of wealth...how to get it, keep it, and profit from it.

As nearly as I can tell from responses, most of my tips seemed well received. However, several garnered more than their share of queries. The purpose of this article is to elaborate on a few matters which I probably didn’t make as understandable as I might have.

The first concerns the matter of honesty, which I contend is a valuable asset. The subject warrants a good bit more commentary. There are no limits to the doors that open and the opportunities afforded a man or woman whose words and actions can be trusted. Whether you’re of truly high moral character, or possess the personal values of an eighteenth century London pickpocket, is not the issue.

From a purely pragmatic frame of reference, conduct your affairs in a way your reliability can never be criticized. Note my stress is not on honesty per se, but on reputation for honesty, so if you cannot bring yourself to adhere to these standards, at least be discreet in your dishonesty. For those of you who fit into this category, take your cue from the late comedian George Burns who declared: “Sincerity is my strong point; I fake it masterfully.”

It’s vital you not lose sight of the fact a sterling reputation is an irreplaceable community to be guarded carefully. And just as it’s advantageous to be believed, strive to deal with others who likewise are believable. In short, recognize there’s cash value in honesty.

Another matter I glossed over imperfectly concerns intelligence and its role in attainment of wealth. It’s a complex matter deserving an extensive evaluation. You might ask why some persons rise to the pinnacle, while others, who seem equally keen, wallow in mediocrity.

Still vivid in my memory is a line from the 1969 movie, Goodbye, Columbus, featuring that venerable actor Jack Klugman, who portrayed a crude and overbearing, but wealthy, plumbing contractor. In one scene, taking place at a family party, his cousin, a disgruntled college teacher, in referring to Klugman’s character, blurts out, “I don’t understand it. I’ve got more brains in my little finger than he’s got in his whole body. Why is he at the top and I’m at the bottom?”

Perhaps it’s natural to equate intelligence with financial success, and one of the more overused put-downs is the perennial question: “If you’re so smart, how come you’re not rich?” The fact is, however, affluence is not confined to the brilliant, nor are the brightest people necessarily the most prosperous. As a case in point, many members of the international high-IQ organization, Mensa, are of modest means.

This is not meant as an endorsement of stupidity, for most certainly dimwittedness does nothing to promote wealth accumulation. Nevertheless, high intelligence is not the answer. In his 1974 book The Common Millionaire, Robert Heller points out that, down through the ages, a lot of untalented people managed to make a million dollars.

It’s possible high intelligence actually acts as a bar to financial prosperity. Unlike success in scientific endeavors, requiring profound skills to solve often-complex problems, the routine applications commonly demanded in wealth accumulation often require little but a repetition of procedures, with no continual input of brainpower needed. Quite likely a mind capable of absorbing and processing new and stimulating data finds moneymaking demands a monotonous exercise offering little satisfaction – except for the obvious benefits of having wealth. If this is so, the link between intelligence and financial success is not the direct correlation we might have expected. Beyond some level, increased intellect may be a deterrent in the wealth-generating process.

I’ve long suspected financial success is enhanced as the intelligence quotient reaches an optimum of about 115, thereafter declining as IQ increases. If this is the case, we of questionable intellect may take heart; there surely is a fortune waiting for us.

There’s a third factor occupying a prominent role in prosperity: It’s education – and particularly higher education. It seems generally acknowledged a college degree is a necessity for even modest success in life. What makes this especially confusing is the extent of marketing conducted by the many higher learning institutions to the point of unbelievability. What to study requires a certain degree of clairvoyance.

Who predicted in 1970, for example, many of the prestigious and sought-after masters in business administration degrees would, within a short ten years, have slight acceptance and negligible value? As universities throughout the nation hurriedly set up MBA courses to cash in on the fad, a skeptical review revealed many of the programs to be devoid of substance.

What initially escaped the academic world became painfully obvious to the business community; many holders acquired an advanced degree of no consequence. If there’s a moral, it’s the academic establishment cannot be relied upon to develop and implement meaningful courses of study. You, as the prospective student must conduct your own investigation and make this determination for yourself.

When it comes to determining where to study, the options become even more baffling. If you believe the brochures of the major universities, you’ll conclude a graduate of other than a renowned institution is forever doomed to mediocrity. The official line is only name universities offer quality education. In this regard it’s worth comparing the two-year colleges with the four-year schools as to value and educational opportunity.

From the standpoint of tuition, the standard community college is normally far less expensive. As to whether the lower cost is reflective of lower quality there’s disagreement. According to all 26 members of California’s UC Board of Regents, the state’s network of community colleges is little better than its high schools and does not begin to compare in academic quality with the University system.

Though it’s hard to refute such an authoritative group, a personal testimonial is in order. In the past it was my good fortune to attend not one, but three, community colleges, taking courses in basic inorganic and organic chemistry. During my next several years, spent at the University of California Irvine, I completed the requirements for both a bachelor’s and a master’s degree in the subject. From this experience I can say, without reservation and contrary to the claims of the UC officials, the quality of instruction at the community colleges is superior in virtually every respect to that at the university. If there’s a reason, it’s because the two-year schools exist to provide education, whereas the universities derive their sustenance in a different manner. Quite simply, the quality of schooling seems generally to decline as the prestige of the institution increases.

With the matters of honesty, intelligence and education now more fully aired, we can hone in better on how these relate to prosperity. As you’ll note, the advice and counsel you receive from the world’s experts is often at odds with reality. There’s a valid reason for this. In most instances official utterances are not designed to provide gratuitous guidance for the uninformed. They are, instead, usually well-rehearsed sales pitches for those organizations who desire to market a service or product of some sort. And make no mistake. Prosperity – or the illusion of prosperity – is a product in great demand. There are fortunes to be made in its promotion.

So the question remains: Exactly what qualities are most helpful in acquiring and retaining wealth? From my observations it appears the necessary ingredients include habits of thrift and moderation, the diligent pursuance of a plan of action and just plain good luck. The second of these requires some aptitude, thereby eliminating the truly inept from the game. But on the whole, the meld of these character traits seems to determine the outcome.

And it’s my belief diligence is by far the most vital ingredient of all. I don’t suppose I need explain diligence other than to say you simply keep plugging away at a project until you get it to work the way it should. Winners do this; losers don’t.

Al Jacobs, a professional investor for nearly a half-century, issues weekly financial articles in which he shares his financial knowledge and experience. You may view it on http://www.roadwaytoprosperity.com.

al@beachcomber.news