David Ogilvy was a great writer and teacher. His books are written so warmly that I regard him as a mentor, even though he died before I started my career. I know other marketing professionals who feel the same way, but one of the greatest lessons that I learned from David Ogilvy is something that investors should take to heart. Put your mouth where your money is.
Ogilvy had a rule when he ran his advertising agency: Use your client’s products. As he wrote in Ogilvy on Advertising:
“It is bad manners to use products which compete with your clients’ products. When I got the Sears Roebuck account, I started buying all my clothes at Sears…I would not dream of using any travelers checks except American Express, or drinking any coffee but Maxwell House, or washing with any soap except Dove.”
He wouldn’t be caught dead using a competitor’s products and he’d fire a client rather than badmouth them:
“I have resigned accounts five times as often as I have been fired, and always for the same reason: the client’s behavior was eroding the morale of the people working on his account.”
Here are the investing lessons that I took from these passages:
Buy shares of companies that you’re proud to own;
Do everything in your power to help the company succeed; and
Get rid of the company if it betrays your personal values.
Before you rake me over the coals for this approach, of course there is more to investing than these points. The best company in the world can be a terrible investment if you buy it at the wrong price. And like Warren Buffett suggests, the best holding period for stocks is forever. I don’t believe in buying and selling stocks willy-nilly because a company did something I like or something that upset me. Relationships don’t work like that and owning shares of a company is a relationship. You can develop it and it doesn’t matter how big or small of an investor you are.
Watch Warren Buffett for a while and you’ll hear him pitch Geico or plug Cherry Coke. But that didn’t stop him from publicly criticizing the compensation of Coca-Cola executives. After all, he owns millions of shares of The Coca-Cola Company.
But guess what: People pay attention when you own dozens of shares, too. I send letters to the CEOs of the companies that I invest in. Several CEOs have written back to me. It’s a pretty awesome feeling when the leader of a multi-billion dollar company says “we’re taking your suggestions seriously.” It’s equally gratifying when an executive takes the time to explain why my ideas don’t align with the company’s strategic objectives. I’m a proud shareholder either way and I wear that pride on my sleeve.
I’m just as proud of the companies that manage the mutual funds that I invest in. Take Vanguard, for example. I invest in Vanguard funds and happily recommend the company to others because of its low costs and commitment to serving investors. If every happy Vanguard client spread the good word, maybe the company could save on marketing expenses and lower its fees even more!
Put your mouth where your money is. David Ogilvy wasn’t embarrassed by his profession or his clients, even though many people regard “advertising” as a dirty word.
“I did not feel ‘evil’ when I wrote advertisements for Puerto Rico. They helped attract industry and tourists to a country which had been living on the edge of starvation for 400 years. I do not think that I am ‘trivializing’ when I write advertisements for the World Wildlife Fund…Advertising is only evil when it advertises evil things” - David Ogilvy
Ogilvy viewed his profession as a way to make a living and as a pulpit to do some good in this world. Investors should think of their role in a similar way.