Mr. Smith: Superman in Disguise

Mr. Smith was an interesting character and I’ll never forget some of the sound advice he gave and the unorthodox insight he possessed. Mr. Smith wore the same suit every day, a dark blue suit with a light blue shirt and dark blue tie. My classmates and I noticed this, but of course, nobody had even the slightest courage to ask him about it. At first, we thought that perhaps he had multiple copies of the suit, shirt, and tie and just wore the same style out of the simplicity of decision making. We thought that perhaps he was like Superman and had a whole closet full of blue suits and accessories. To many of us, he was similar to Superman in the eyes of an undergraduate pursuing a Business Administration degree.


Mr. Smith taught classes necessary for the Finance concentration associated with the Business Administration degree and, if Finance was your concentration, you would take more than a few classes with him. He was a very smart man and a bit intimidating in his teaching style. He always showed up to class a bit disheveled, with piles of papers and books under his arm. But when it came time for financial problems and calculations he was all business. Looking back, he had obviously been teaching these classes so long that it was like driving home for him. He knew the route, would never get lost and could spot errors and potential miscalculations by students a half a mile down the road. When students made mistakes, he would react modestly as though the error were easily corrected, much the way you would recover from putting on your turn signal a street too soon before a turn.

Mr. Smith was most endearing to the students that could appreciate his gruff ways. His last year of teaching was my last year of undergraduate work and I felt as though that happened for a reason. A couple of years earlier, when I knew I had to decide on a concentration for my Business degree, I actually went to see him in his office. As a Business major, I had to pick an area to concentrate my last year of courses. My choices were Management, Marketing, Entrepreneurship, Management Information Systems or Finance. At the time I had a relatively decent understanding of these subjects and was having a hard time deciding between Marketing, Entrepreneurship, and Finance. Since I knew Mr. Smith was the professor over the Finance department I went to see him. I entered his small, cramped office overrun with stacks of papers and finance books. There was just room for his equally unkempt desk with more papers and books, along with various mixed nut tins and a chair for the infrequent visitor who dare enter his space.

Upon making myself as comfortable as I could in an office that was obviously an extension of his complex mind, I told him my dilemma and asked what he thought. He waited for a moment then asked me a question. “If you wanted to learn how to make flowers grow, what would you major in?” he asked.  I paused, wondering what kind of question is this. Upon reflection, I somehow came up with the answer of horticulture. He nodded and then asked, “If you wanted to learn how to make money grow, what would you major in?” And that was it. No stories about his life, no insight into his world, just a matter of fact. And that was all I needed. My concentration was Finance and I would go on to take several Finance classes from Mr. Smith over the next two semesters.

One of those classes was Financial Management. The class was a study of various principles, instruments and procedures businesses use to obtain and use funds to finance their operations.

In my Financial Management class with Mr. Smith, we learned a variety of financial concepts, theories, and tools many of which have stuck with me throughout the years.  Mr. Smith was not one to dole out advice about finance, but rather content to let you find out on your own. I found this out in another class I had with him titled Investment Analysis and Appraisal. This was the class that lit the fire for me in terms of investing. Part of the requirement of the class was to participate in an investment simulation activity. Each student signed up for an account and was given 500,000 virtual dollars of which he would be required to make a variety of financial trades covering stocks, bonds, futures, options, currency, and short sales.

I had befriended another Finance concentration student, and we both got pretty involved in the class and wanted to be the one to have the highest returns on our investments. The weekly standings were highlighted in class on Fridays and I think we both wanted not only bragging rights but more importantly the respect of Mr. Smith, who incidentally, had an account of his own. My friend and I knew that we had only a short period of time, one semester, to maximize the returns on our investments. One of the rules of the simulation was that you had to make a minimum number of trades of various financial instruments. Beyond that, you could trade as much as you liked, which my friend and I did. Many afternoons we could be found sitting in a small computer lab day trading as if we were back in the ’90s. What we didn’t realize at the time was that what we were doing was not necessarily investing but more gambling.

Mr. Smith made certain trades mandatory because it gave a real-life element to the investment instruments we were learning about in class. The incessant trading we were doing beyond what was required was done out of pure enjoyment and the possibility to make a lot of money. My unraveling came in the form of live cattle futures. Futures contracts are basically contracts between two parties where one party agrees to buy the contract of an asset at a future price and the other party agrees to sell the contract at a future price. I don’t remember if I was buying or selling live cattle futures, but whatever I did, I lost some serious money – an outcome that, given my knowledge of live cattle futures, I would most certainly repeat if attempted today. Even though this was a simulation and the money lost was not real, I was pretty bummed. I did manage to “trade” my way back into contention over the rest of the semester and finish a respectable fourth in my class, but I was beaten by my friend and, more importantly, by Mr. Smith.

Mr. Smith, however, was not making the trades we were required to make. What he did was simply buy a diversified index fund and wait. He ended up beating all but one student in the class coming in second. Even though he was not bound by the same requisites the class was in terms of having to make trades of complex financial instruments, the lesson I learned was that it is very hard to simply “beat” the market. Investing in sound companies represented in diversified funds is real investing.

Making trades in individual stocks on a hunch or trading in financial instruments of which you do not fully understand is no better than my trip to Vegas. You may get lucky and win, like the student who beat Mr. Smith in the short term, but the odds are more likely that you will not, like the dozen students who came up short.

I have no idea what Mr. Smith’s net worth is, or where he is today. Knowing what I know now, I imagine him like Warren Buffet: a plainclothes Superman, drinking McDonald’s coffee instead of Starbucks, and financially set for life because of the consistency and mundaneness of his everyday financial choices.

–The Haggard

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