(Warning: Downton Abbey spoilers through season five, episode five abound.)
I have a new favorite character on the popular PBS series Downton Abbey. Mrs. Patmore, the hardworking, easily overwrought cook, has won my admiration this season with her decision to invest her modest inheritance in a rental cottage -- with a rationale that would do Warren Buffett proud.
Of course, most Downton Abbey fans are likely more interested in the show's plot twists, early 20th-century fashions, and historical references than in the characters' investment strategies. But there are investing truths revealed in the way the characters, both wealthy and working class, manage their assets and plan (or don't) for the future. Here are just a few of the lessons that have played out over the course of the series.
Diversify your portfolio and don't follow the trends
In season three, Lord Grantham put the entire Downton estate in financial peril by investing his wife's money in a trendy Canadian railway stock. The investment evaporated when the rail project manager was lost on the Titanic. Grantham also had to be talked out of giving money to an American investment wizard by the name of Charles Ponzi. If not for the inheritance of his son-in-law Matthew, the family and the estate would have been ruined.
Don't overlook unglamorous investment options or existing assets
Always-poised eldest daughter Lady Mary proved she was willing to get her hands dirty (literally) with potentially profitable pig farming in season four. Her agrarian experiment, which involved a dramatic and incredibly muddy effort to rehydrate her pigs after they knocked over their water trough, was part of a plan to upgrade the estate's farming infrastructure, something that had been neglected for many years. Had the farm kept up with the times, it would have provided more income to offset Lord Grantham's investment missteps.
Focus on quality for the long term
In the current season, Lady Mary, her brother-in-law, Tom Branson, and Lord Grantham have been debating the best way to convert some of Downton's land to housing tracts. In this situation, Grantham's sense of tradition steers the group in the right direction. While Branson advocated for what amounts to the precursor to Levittown -- small, identical, inexpensive homes set close together -- Grantham wanted the real estate income, but not at the expense of the land's character. For now, the trio has opted for a local builder they expect to do higher-quality work, a move that means the new development will appeal to buyers based on more than just a cheap price.
Know what you're investing in
As enjoyable as it was to see Lady Mary in an evening gown watering her parched pigs, and as much of a relief as it was to watch Lord Grantham make a good call after his disastrous past choices, no one on the show has made a smarter investing decision than Mrs. Patmore did recently.
When the cook got a small inheritance, her first instinct was to turn to an "expert" for advice. Her chosen advisor, head butler Charles Carson, turned out to know less than Mrs. Patmore about investing, although he gamely tried to sound as if he knew what he was talking about. After Mrs. Patmore realized Carson didn't even know whether the construction company he recommended was publicly traded, she put what's likely the largest windfall she'll ever receive into something she understands -- a cottage she can rent out until she's ready to retire.
Carson was not impressed. "This is very small beer," he told her. "It's my kind of beer," she assured him, "and I know how to drink it."
That line echoed (or perhaps foreshadowed) one of the bedrock principles of investor Warren Buffett, who only invests in businesses he understands. While Lady Mary and Lord Grantham have had to learn the details of their investments through messy trial and costly error, Mrs. Patmore is starting off with an investment that makes sense to her -- a solid lesson for anyone with money to invest.