I read David Nasaw's biography of Joseph Kennedy -- JFK's father and one of the most fascinating businessmen of the 20th century.
Here are six things I learned.
1. He was probably more interesting than his more famous son:
Had Joseph P. Kennedy not been the patriarch of America's first family, his story would be worth telling. That he was only adds to its drama and historical significance. His primary goal, as a younger man, was to make so much money that his children would not have to make any and could devote their lives to public service. He accomplished that much before he was forty.
2. He made a fortune in movies. But not with big ones -- the big money came in mass-selling low-budget films:
He was interested not in making artful or even good pictures at FBO, but in making a profit by producing cut-rate "program pictures," low-budget westerns, stunt thrillers, and action melodramas and distributing them to independently owned and operated small-town theaters that could not afford to pay premium prices for expensive pictures.
3. He made millions investing in stocks, and he was a shark about it:
In June 1933, Kennedy joined a syndicate to purchase sixty-five thousand shares in the Libbey-Owens-Ford Company, with options for tens of thousands more.
With the repeal of Prohibition now set in motion, investors were lining up to purchase "repeal" stocks. One of the most popular was Owens-Illinois, which made glass bottles.
Libbey-Owens-Ford was an entirely separate company, which manufactured plate glass for automobiles, not bottles, but its name was close enough to the bottle glass company to fool unwary investors. The syndicate, of which Kennedy was the largest individual investor, placed its Libbey-Owens-Ford stock orders in the hands of two pool managers, who divided them into several parcels and began trading them wildly on the New York Stock Exchange. As one of the pool managers later admitted under questioning by Ferdinand Pecora before the Senate Committee on Banking and Currency, the enterprise was constructed on the correct assumption that if the pool managers pumped up volume by buying and selling shares to one another, investors would take notice and start buying shares of Libbey-Owens-Ford on the mistaken belief that they were buying shares of Owens-Illinois, the bottle manufacturer.
4. This wasn't long-term thinking. He was basically a hedge fund manager:
He made his money as a trader, not an investor; he bought on bad news, sold on good news.
During his years in the picture business, he stepped up his trading activity, taking full advantage of the insider knowledge he was privy to. He generated rumors, planted stories, spread gossip to drive prices up or down, depending on whether he was selling or buying. Rarely, if ever, did he hold on to a stock or bond for very long.
He preferred getting out with generous profits to waiting for windfalls. On November 30, 1926, after ten months in the film business, his "capital account" held $373,394 and his real estate holdings were limited to his modest house in Brookline. Less than three years later, on October 31, 1929, after the stock market crash, his capital account held $1,740,494 (more than $22 million today) and he had bought two new houses for the family. His net worth was five times what it had been three years earlier. And that didn't take into account his real estate holdings.
5. He was constantly worried about holding on to his wealth:
"I would be willing to part with half of what I had if I could be sure of keeping, under law and order, the other half." What Kennedy was beginning to fear was not simply the diminution of his fortune, but the destruction of the capitalist system that had made that fortune possible.
6. He saw the future of television moving from entertainment to information:
"Perhaps the time will come when television will carry the best of entertainment into the home. I don't know. The entire amusement industry is in a state of flux and experimentation. Novelties of today become obsolete tomorrow. But one thing I do know, and everybody who has any business in the amusement business should know -- that sophistication is on the increase, and that prizes in the form of profits only go the way of producers who bet their brains and money in the long run on popular intelligence."
Go buy the book here. It's great.
- What I learned from Antifragile
- What I learned from Thinking Fast and Slow
- What I learned from Risk Savvy
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