Friday, May 26, 2006

The Rising Dividend Story -- Call # 3 -- Billy T. -- Part II

Billy said he was so worn out that he didn’t think he could stay awake another 5 minutes. He said he would listen to the story as long as he could, but he was making no guarantees that he wouldn’t fall asleep. The story I began to share with him was neither fully formed in my mind, nor entirely clear to me. But as Billy’s mood grew darker, something inside of me started to speak in a way I had never thought of before, so I started slowly. “Billy you know there is a drought in this part of the country. Corn and bean yields are way down, and some farmers have plowed under whole fields. Have you seen that field at the corner of Highway 57 and Kansas Road?” (Billy lived North of Evansville, and I knew he drove past the field nearly everyday.) “It’s burned up,” He answered. “Yeah, I know the farmer, and he said he’s going to plow it under. There is nothing to harvest. The sun has just roasted the beans. What do you think the odds are of anything ever growing in that field again?,” I asked. “Better yet, are you willing to bet me that that field is somehow broken and will never produce crops again?” Billy wouldn’t take the bet because he knew, as I did, that the field would indeed grow crops next year. I asked him on what basis he believed this. He said it’s only natural. I said, “Billy, just think of everything that has to go right for that field to produce crops—just the right amount of rain all year, not too much or too little; the absence of a blight and destructive insects; the right seed, the right fertilizer, and the skill of the farmer.” I asked Billy if he thought the value of the field had gone down because of the poor crop this year. He said he did not think so. I asked him why not. He said because in nine out of ten years the field would produce a crop, and some big crops would make up for the shortfall this year. Billy was warming to the discussion, but I knew he would soon grow quiet. I said, “Billy, what if I told you that the force that produces the crops--and the rain and sunshine that they need to grow -- is the same force that produces corporate profits?” Billy did not say anything, and I went on. “What if I told you that the same force that provides for a harvest 9 out of 10 years is not Mother Nature. . . but God? And what if I said that God is not only in control of nature, but He is also responsible for profits of all kinds?” I said, “Billy, I realize I might be in alien territory here, but if it’s OK, I’d like to go on.” Billy said, “Go ahead.” I said, “Billy, I have no idea where you stand on matters of faith, but let me give you a short course in biblical economics. When God kicked Adam and Eve out of the Garden of Eden, He said, ‘You will eat your bread by the sweat of your brow.’ In those words were a curse and a blessing. The curse was that they were being thrown out of the Garden of Eden and had to work to eat, but the blessing was that this work would work. They would eat. God did not say that Adam and Eve might eat, he said they would eat. In doing so, he blessed work. In short, work works. Many people believe that, but I suspect that few people have thought about what I am going to tell you next.” There was a brief pause. Then I continued, “Billy, what if I told you God is involved in the stock market.” Billy was silent, so I asked him, “Are you still with me?” “Yes,” was his only reply. I was almost wishing Billy had fallen asleep on me at this point, because as I went deeper into where my heart was taking me, I honestly did not know where it would lead. I was worried that I might say something wrong and make matters worse for Billy. I continued, “The Bible says that the world and everything in it is God’s doing. He created it, He sustains it, and He loves it. The part of His creation, however, that He loves the most, is us – human beings. In the book of Isaiah, God says something that is just amazing: ‘. . . because you are precious in my sight, and because I love you. . .’ ” I went on, “Most people get hung up in the ‘thee’s’, the ‘thou’s’ and the ‘thou shalt nots’, but I believe that the Bible is at its core a love story. God is not a cop, but a lover. He does not wish to destroy us; that would be easy for Him to do since we are such fragile beings. No, instead, He desires to bless us; to commune with us. Because God cannot be seen, he provides another kind of evidence of His presence. He provides order: gravity, seasons, night and day – the nature of things. Billy, there are lots of theories floating around that attempt to explain why things are the way they are, and I have listened to them all, but a few years ago I realized that for me, the one that spoke to every molecule of my body was God’s story revealed in the Bible. The bottom line on this story is that God has dominion over all things. For the first time in my life, tonight, Billy, I am coming to the realization of how God is involved in the stock market. Billy, a corporation is nothing more than group of people working together for a common goal. I don’t know if God blesses businesses directly, but I believe He blesses the work of the people who make up the corporation and that blessing manifests itself as profits. When you and I invest in a company, we are sharing in that blessing, and likewise the company is blessed by our investment.” I continued, “The thing to remember is that God’s blessing is in the fruits of labor of the workers’ hands and minds, not necessarily on the price that the market says this fruit is worth. Prices on the New York Stock Exchange are man’s attempt to value God’s blessing. While the prices may reflects man’s best guess of what a company is worth, prices also contain man’s greed, fear, and biases of all kinds. In short, prices are the best man can do, but price is a poor substitute for how God values things, which is revealed in the fullness of time. Billy, you said that even though that field at Highway 57 and Kansas Road is burned up that it would produce crops again, and that the true value of the field had changed very little because the owner could expect crops nine out of ten years. What I’m trying to say is that the stock market, by extension, is like the field on Highway 57. It caught on fire today and some of this year’s harvest has burned up, and it may burn even more in the weeks ahead. But, the ability of the millions of groups of people that work together in what we call corporations to produce profits is unchanged. The true value of corporate America is unchanged unless God has changed his nature and is no longer blessing work.” I said, “Billy, if God has decided he will no longer bless work, there is no place to hide. Everything will fail. On the other hand, if God is still true to his word and is still blessing the work of people; better yet, if He is still a lover rather than a destroyer, the value of most companies will continue to grow, and in time so will prices.” As this story came out of my mouth, I thought surely I must be out of my mind to try to explain the mind of God. I prayed that God would guide me to the end of this story and forgive me if I veered too far in my explanation to Billy. Billy asked, “What if my understanding of God is not the same as yours?” I said, “Billy, what I just told you I have never told anyone before. I don’t know if I have ever thought these thoughts before. But tonight, we both need peace. Either I am making all this up, or God is talking to us both, and he is saying, ‘Do not be afraid. I do not seek your destruction; indeed, I seek to bless you’.” I continued, “Billy, I am going to ignore your instructions to sell everything. Sleep on it tonight, and if you still want me to sell, call me tomorrow before 9:00 am.” Billy did not call the next morning, and we never spoke about that night again during the next 20 years I continued to work for him. I had never thought the thoughts that I told Billy that night, and I am sure I would not have told him had I not been concerned about his state of mind. Billy was special to me, and I was honored to serve him. I have thought a hundred times about the story I told Billy that night, and as I explained to him, I believe God was speaking to the both of us in the story that I told Billy. I realize some of what I told him could be debated by theologians, but Billy wasn’t talking to a theologian that night, he was speaking to an investment guy who, when he came to his wits end, found that a bigger, infinitely better Wit was there with a story of hope. This was the third call of Black Monday that would change my mind about investing forever, but it was not the last call. At 12:00 AM my friend Dr. S. called. He said, “Sorry to call so late, but your note said you would be up ‘til midnight, and your phone has been busy all night. How are you doing?” “I’m shot,” I replied. He said, “Hey, you don’t need to waste much energy on me. While I was trying to reach you it dawned on me that three more days like this and we’ll be starting all over. (The market was down over 500 points and had closed at just over 1700.) He, said, “I don’t know why, but seeing what happened today and realizing that there cannot be many more days like this convinced me that this whole thing is not real. The market is going to turn around, and it’s going to turn around faster than most people think. I’m thinking about getting a second mortgage on my house so we can be a buyer in through here.” “Stop,” I said. “Can we just sleep on it?” “Goodnight,” he replied. “I just wanted to be sure you were hanging in there.” I told him, “I’m on fumes, but thanks for the call.” Next time: What the three calls meant to me and where they led me.