The Ultimate Buy and Hold Investor: Anne Scheiber

Written by Tracey

May 3, 2007 07:30 AM

Anne Scheiber, who died in 1995 at the age of 101, became an investing legend after her death.

She took $5,000 in the 1940s, invested it in the stock market, and when she died was worth $22 million. Not shabby.

How did she do it? Patience. Discipline. And investing in the best companies in America. From Time Magazine:

By the time she retired from a $3,150-a-year auditor’s job at the Internal Revenue Service in 1943, she was already investing her $5,000 savings account in a stock portfolio. During her career reviewing other people’s assets, she had noticed that most who left substantial estates had accumulated their money through common stocks. So Scheiber, who had earned a law degree and passed the Washington bar exam before joining the irs, studied the stock markets with the same precision that she had applied to reviewing tax returns.

Fond of movies, she first invested in Hollywood studios, including Universal and Paramount, and kept a tally of their attendance rates. She also bought stock in about 100 blue chips and large franchise corporations, such as Coca-Cola and PepsiCo, and drug companies like Bristol-Myers Squibb and Schering-Plough. Her investments grew quickly, says William Fay, her stockbroker for 25 years. “After World War II, stocks really took off. While $5,000 sounds like a nominal amount, it could have increased fivefold in five years,” says Fay, who retired from Merrill Lynch two years ago. At Scheiber’s death, her portfolio had increased more than 4,000 times. Especially profitable were 1,000 shares in Schering-Plough that she had originally bought in 1950 for $10,000; by 1994 they had grown to 60,000 shares worth $4 million.

You think you can’t do it. Why not? She did.

If you hold the stock market long enough, you’ll make money. As it turns out over the last 100 years- you would have made a lot of it.

Her strategy? From Time:

Her strategy was simple: don’t worry about daily market fluctuations; reinvest dividends; hang tough.

Too many investors spend too much time obsessing over 50 cent increments in their stock price. They look at their portfolios on-line daily (sometimes hourly or several times an hour.) They fret over one 20% drop (or have a “sell” order if the stock does ever drop that much.) They don’t look to invest for the long haul- which is ten years or more.

The question to be asked, however, is: if what Anne Scheiber did seems so easy (who doesn’t know the top 50 stocks in the country right now? What if you put $100 into each tomorrow?)- where are the other Anne Scheibers?

It turns out that discpline and patience are rare attributes. Not many investors have it (or they’d all be as rich as she was.)

You can learn those skills.

Interestingly, on various websites that repeat her remarkable story, they don’t get it right. They say things like she was a billionaire when she died (um…no.) Another one said she invested a little here and there. Um…no. And others act like she didn’t know what she was doing (according to Time Magazine she actually attended shareholder meetings and asked questions.)

Just because she was a “little old lady” when she died at age 101, doesn’t mean she was clueless.

She made more money than many on Wall Street.

She proved it doesn’t take fancy insider information. It doesn’t take buying the next “great” thing (she bought established companies.) It does take buying companies that make money and holding them.

Afraid it’s too late for you because you’re, gasp, old? She was no youngster herself- beginning when she was well into middle age.

What’s your excuse?

http://traceysmarketupdate.com/2007/05/03/the-ultimate-buy-and-hold-investor-anne-scheiber/

While most people become poorer the older they get, Anne Scheiber became wealthier.

1. Anne Scheiber died in 1995 at the age of 101. For years she had lived by herself in a tiny run-down apartment in Manhattan. The paint on her walls was peeling and everything was covered with dust. Scheiber lived on Social Security and a small monthly pension which she began receiving when she retired from the IRS in 1943. At age 51, when she retired, she was making only $3,150 per year. Those who knew her say she was the model of thrift. She didn’t spend money on herself. When her furniture wore out, she kept on using it. She wouldn’t even subscribe to a newspaper, rather she went to the library once per week to read The Wall Street Journal. Norman Lamm, the president of Yeshiva University was literally blown away when he learned that this poor old woman left her entire estate to his university – $22 million! How did she do it? One day at a time. She had managed to save $5000 by the time she retired in 1943. She invested that in stocks. "By 1950, she had made enough profit to buy 1000 shares of Schering-Plough Corporation stock, then valued at $10,000. And she held onto that stock, letting its value build. Today those original shares have split enough times to produce 128,000 shares, worth $7.5 million" 

2. Anne Scheiber understood the value of investing for the long haul. Whether her stocks went up or down, she never sold it off. When she earned dividends, she kept investing and reinvesting them. While most people become poorer the older they get, she became wealthier. 


To Invest is not enough We must make Wise Investments.

Anne Scheiber could have invested her nest egg unwisely and died penniless. She became wealthy because she wisely invested her resources.






http://www.barberville.net/sermon246.htm

The Story of Anne Scheiber: Discipline Trumps Math Ability

April 12, 2007

The Story of Anne Scheiber: Discipline Trumps Math Ability

Consider the remarkable case of Anne Scheiber. She represents not only the superb returns that can be enjoyed from a dedicated and systematic buy and hold strategy, but also the pluck to jump back in the game after losing everything...

She didn't do it with high-flying internet stocks. What's even better, Anne's time-tested investing style is important because it embodies one of three criteria for achieving great results.


It's a simple strategy and can be used by anyone — even small investors.

She relied on patience and sticking with her investment strategy - and above all the discipline to keep adding to her investments on a regular basis and over a long period of time.

On her modest salary as an auditor for the Internal Revenue Service (just over $3000 a year), she managed to invest $5000 over the next ten years. When she died in January 1995 at the age of 101, that modest investment had grown to $20 million. That's not a misprint. $20 million!

Her secret?


Miss Scheiber invested in stocks of companies that she knew and understood. Companies whose products she used. She loved the movies. So she invested in the production companies like Columbia pictures. She drank Coke and Pepsi and bought shares in both. She invested in the companies that made medications she took - Schering Plough and Bristol Myers Squibb. And so on.

Once can achieve the same thing by investing in a mutual fund, if you don't know what stocks to pick OR more importantly, if you're just starting your portfolio and you need diversification to blot out risk. (See: All Risk is Not Created Equal)


She invested regularly and with discipline -- making it the first priority BEFORE she had the latest Manolo's, Prada or Gucci -- through thick and thin for over forty years. Through the bear market of 1973-1974. Through the crash of 1987.


She invested in herself first so later she could have any designer she wanted!

Don't be misled or confused about the need for intricate trading strategies, greater math ability, or get rich quick 'secrets'. (There are none!)

It's about a conscious choice you're going to make today that says: "I can do this; I can own the responsibility for my financial future; and I can do it without pain. I can start right where I am today and still make an impact!"

Discipline -- a dedicated and systematic investment approach -- trumps sophisticated market knowledge. Combined with Diversification and a Longer-Term holding period, you have the only formula you need for success in investing.

Remember, the Tortoise and the Hare fable -- Slow and steady wins the race!


http://the411.typepad.com/weblog/2007/04/the_story_of_an.html

Buy-and-Hold: Golden Strategy That Takes an Iron Will

Buy-and-Hold: Golden Strategy That Takes an Iron Will

August 10, 1997|TOM PETRUNO

http://articles.latimes.com/1997/aug/10/business/fi-21077/2

Anne Scheiber's life was no happy tale. Embittered after the federal government failed to promote her from her IRS auditing job at the end of 1944, she retired and spent the next 51 years mostly alone, living on the Westside of Manhattan.

Her only hobby was investing. She apparently put every penny she had into stocks, rarely selling, her broker would later explain.

By the time she died in 1995, Scheiber had amassed a $22-million fortune in about 100 stocks--all of which she left to a stunned, but grateful, Yeshiva University.

If Scheiber's story is something of a cliche--"aged, frugal recluse buys and holds stocks, leaves millions to charity"--it's too bad we all can't be beneficiaries of such cliches.

But then, many investors have in fact benefited handsomely in the 1990s from the same basic investment philosophy: Just buy stocks and don't sell them. Period.

The proven long-term success of buy-and-hold is the basis for the retirement savings plan boom of the past decade, of course. Americans are encouraged to invest regularly in the market, avoid the temptation to sell when stocks suddenly sink, and trust that when retirement happens in 10, 20 or 30 years, a hefty nest egg will be there to fund it.

And why doubt that? Since Dec. 31, 1989, the Dow Jones industrial average has risen 192%, from 2,753.20 to 8,031.22 at Friday's close.

Even better: Measured from the start of the 1980s bull market on Aug. 13, 1982, the Dow has increased a spectacular tenfold.

What's more, if buy-and-hold still is good enough for Warren Buffett--perhaps the greatest living spokesmodel for that investment style--it still should be good enough for the rest of us, right?

Yet as stock prices have zoomed this year, adding to the huge gains of 1995 and 1996, many investors have understandably grown uneasy. The nagging worry is that stocks might have reached such historically high levels that buying and holding at these prices may never pay off.

On days like Friday--when the Dow sank 156.78 points, or 1.9%, as bond yields surged on concerns about the economy's growth rate--investors' darkest concerns about the market's future can surface.

*

Is there a danger in trusting buy-and-hold at this point?


Certainly not if you have 51 years, like Anne Scheiber did. Academic studies show that the longer your time horizon, the lower the possibility of losing money in stocks.

That's not terribly surprising: Over time, the economy's natural tendency is to grow, because humankind's tendency is to strive to achieve more. If you own stocks, you own a piece of the economy--so you participate in its growth.

But over shorter periods--and that includes periods as long as a decade--it is indeed possible to lose money in stocks. Consider: The Dow index was at 890 on Dec. 31, 1971. Ten years later, on Dec. 31, 1981, the Dow was at 875. Your return after a decade of buy-and-hold was a negative 1.7%.

True, the 1970s were a miserable time for financial assets overall, as inflation soared with rocketing oil prices, sending interest rates soaring as well. But we don't even have to look back that far to discover just how difficult it can be to stick with a buy-and-hold strategy.

From the late 1980s through 1991, major drug stocks such as Merck & Co. and Pfizer Inc. were among Wall Street's favorites. They were well-run businesses, and the long-term demand for their products seemed assured.

By December 1991, Merck was trading at $56 a share, or a lofty 31 times its earnings per share that year.

Then came the Clinton administration's push for national health care. Suddenly, the drug companies found their pricing policies under attack. The stellar long-term earnings growth that Wall Street anticipated seemed very much in doubt. And the stocks fell into a decline that lasted more than two years and which shaved 40% to 50% from their peak 1991 prices.

Merck, for example, bottomed at $28.13 in 1994, which meant a paper loss of 50% for someone who bought at the peak in 1991.

If that had been you, could you have held through that horrendous decline? You should have: Today, Merck is at $98.81 a share, or 76% above its 1991 year-end level. After restructuring its business, Merck's earnings began to surge again in 1995 and 1996.

And this year, the drug stocks have once again become market darlings. But therein lies the problem: Merck is again trading for a high price-to-earnings ratio--26 times estimated 1997 results.

*

That doesn't necessarily mean that Merck is primed to drop 50%, as it did in 1992-94. But it does mean that if you own that stock--any stock, for that matter--you must allow for the possibility of a deep decline from these current high levels, something much worse than the just-short-of-10% pullbacks the market has experienced twice in the last 14 months.

Anne Scheiber, angry recluse that she was said to be, somehow managed to show no emotion at all about the stock market's many ups and downs in her 51 years of investing. A cynic might say she had nothing on which to spend her money, anyway. But the point is, she managed to remain true to buy-and-hold, when many other investors were probably selling out at the market's lows.

Mark Hulbert, editor of the Hulbert Financial Digest newsletter in Alexandria, Va., and a student of market history, worries that too few investors will have Scheiber's iron stomach when the tide eventually turns for the market overall, as it did for the drug stocks in 1992.

"I am cynical about all of these people genuflecting at the altar of buy-and-hold," Hulbert says. "They're not buy-and-hold--that's just what is working now," so investors are happy to go with the flow, he says.

Most investors, Hulbert maintains, are too new to the market to imagine how psychologically painful a major and sustained loss in their portfolio would be.

What is key to judging how much of your assets should be in stocks is your tolerance for risk, your tolerance for loss and, of course, your time horizon. But as a simple rule of thumb, many Warren Buffett disciples like to use this line: If, for whatever reason, you can't take a temporary, 50% loss in your portfolio, then you don't belong in the stock market.

For the relative handful of pros who really invest like Buffett, what the market does on a short-term basis isn't important. Their faith in buying and holding stocks derives from their long-term faith in the underlying businesses.

George Mairs, the 69-year-old manager of the $324-million Mairs & Power growth stock fund in St. Paul, Minn., owns just 33 stocks in the fund. He is among the least active traders in the fund business--he almost never sells. And his results speak for themselves: Mairs & Power Growth has beaten the Standard & Poor's 500 index every year in this decade.

Does Mairs fear that buy-and-hold isn't a great idea at these market levels? Hardly. High-quality stocks aren't cheap, he says, but neither does he find them to be drastically overpriced. "It's the long-term earnings stream that we look at," he says. "If the earnings are going to be there, we don't worry too much.

"What we want to do is own businesses," Mairs says. "If we like a business for the long term, we don't worry about what the stock value is on a week-to-week basis."

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)


How Patient Can You Be?

"Buy and hold" sounds great on paper, but it can require enormous patience. Major drug stocks, for example, soared 94% between March, 1990 and December, 1991, as measured by the Standard & Poor's index of five major drug companies. But when the threat of federalized health care surfaced in 1992, drug stocks began a sustained decline that lasted more than two years--and slashed the S&P drug index by 42%. With the stocks again rocketing this year, 1992-1994 stands as a sobering reminder of how bad things can get. S&P drug stock index, quarterly closes and latest



Source: Bloomberg News

Anne Scheiber's story: An amateur investor with a large fortune

The Anne Scheiber story ... an attachment to DGIS as noted by Taggart Stock pickers who can beat the market over a long period are like .400 hitters. When one turns up, it's big news. Thus did Money magazine think it had a sensation in the story of Anne Scheiber, an amateur investor who died a year ago with a large fortune. The cover of it's January issue shouted "10 Secrets From The Investor Who Turned $5000 into $22 Million." Unfortunately, Money got it's numbers wrong. Scheiber was a successful investor. She was not, as claimed, the peer of Warren Buffett or the superior of John neff. According to the magazine, Scheiber retired from a low-level job at the IRS in 1943 and made stocks her full-time hobby. Earlier she had lost some of her hard-earned savings in the market, but this time she learned from her mistakes. Her astute eye for growth stocks enabled her to transform $5,000 of savings into a $20 million pot by the time she died last year at 101. She left the money to Yeshiva University, and, said Money, the pot has grown to $22 Million. Wow! Warren Buffett, move over. John Neff, hang your head in shame. Money said Scheiber's portfolio grew at a compound annual rate of 22%, only slightly trailing Warren Buffett's record.There's only one thing wrong with this tale. It isn't true. Go through the arithmetic. Turning $5,000 into $22 million over 52 years is not a growth of 22% ayear but one of 17.5%. "A regrettable mistake," says Money managing editor and article author Frank Lalli. That's just the beginning. The starting date and the starting value presented by Money are wrong. Key fact in the Money magazine account: "In 1944...she started fresh with a $5,000 account at Merrill Lynch Pierce Fenner & Beane." The $5,000 might have been the opening balance of her Merrill account, but it almost certainly wasn't the extent of her investment portfolio at the time. "I think there was a little confusion," says Benjamin Clark, who knew Scheiber for 25 years and is the executor of her estate. "She retired to New York in 1943 or 1944, but she was in the market long before that." Scheiber's 1936 tax return shows she was already receiving dividends of $900 (plus about $3,000 in capital gains), Clark says. That dividend number never shrank, as would have been the case had there been significant pre-1944 losses. Instead, the dividends kept growing, says Clark. The market's average dividend yield in 1936 was 4.3%. That suggests that Scheiber already had something like $21,000 in stocks in 1936-four times what Money said she had when her investing saga began. Scheiber had a spartan lifestyle. In those Depression days even a modest salary would stretch fairly far, and Clark says she saved 80% of her salary. That means she was contributing cash to the investment pot between 1936 and 1943. Even ignoring the input of fresh cash, the difference between starting in 1944 with $5,000 and starting in 1936 with $21,000 is tremendous. Not counting additional cash, Scheiber probably earned about 12.5%. That's better than the 11% annual performance of the Standard & Poor's 500 index, but not as good as the 14.7% return on small stocks., according to data compiled by Ibbotson Associates. If you allow for probable additional cash input, she about matched the S&P 500. Nice, but no magazine cover miracle. Scheiber did come up with at least one home run-an early investment in Schering Corp. (now Schering-Plough). She was also wise enough to avoid the drain of capital gain taxes and brokerage commissions by almost never trading. She was like Warren Buffett in this regard. Was she in his league as an investor? Far from it. Her wealth sprang from an unusual mix of austerity, longevity and compound interest. From it's Scheiber myth, Money magazine draws some grand conclusions about how the little investor can beat the averages: Buy growth stocks, invest in leading brands, go to shareholders' meetings. The facts support a much more limited lesson: Live on next to no money, survive in good health to past 100 and let your savings compound for 60 years. With that going for her, Scheiber would have gotten as rich had she invested in a diversified basket of stocks, today's index funds, and never attended a single shareholders meeting or read a financial statement. Here's what Money magazine had to say in the "letters" section of their magazine of March 1996. Note how the 22% compounded becomes 17.5% without admitting "any errors or omissions". "January's cover story, "How She Turned $5,000 into $22 Million (and How You Might Too...)," intrigued and inspired Money readers. While expressing compassion and concern for Anne Scheiber's lonely, loveless life, those of you who sent us mail admired her fierce commitment to the simple rules that shaped her investment success from 1944 until her death last year at 101. Among them: Invest in leading brands, favor companies with growing earnings, invest in small increments (a rule that not only added diversity to her portfolio but caused her to pick up extra shares when prices were low) and avoid going overboard when prices were high. Two others: Reinvest your dividends, and hold on to stocks you believe in (no matter what the market does). That time-tested investing style brought her an average annual return of 17.5%, well ahead of the S&P 500's 12.4% for that same period and the 13.9% posted by Vanguard superstar John Neff from 1964 to 1995."

http://www.financialwebring.org/gummy-stuff/Scheiber.htm

Anne Scheiber's investment legacy provides a powerful example of what we can achieve if we are methodical and patient with our money.

FOOL'S SCHOOL DAILY Q&A
It's Never Too Late to Invest

Ask A Foolish Question

By Selena Maranjian (TMF Selena)
May 7, 2002


Q. I'm middle-aged and don't earn much money. Can I really invest? And would my investments really ever amount to much?

A. It's never too late (or early!) to begin investing. For a little inspiration, look to the amazing story of Anne Scheiber. Most people haven't heard of her, but she's one of the world's greatest investors. In 1932, Ms. Scheiber was a 38-year-old IRS auditor. Intrigued by the stock market, she forked over most of her life savings to her brother, a young stockbroker on Wall Street, who lost it.

Determined to try again, but this time relying on herself, she saved $5,000 and plunked it back into stocks in 1944 (at the age of 50). By the time she died in 1995 (at the age of 101), her money had grown to $20 million. How'd she do it?

Well, for starters, she was a long-term, involved investor. She didn't buy a stock today and sell it tomorrow. She attended shareholder meetings and followed her companies closely. She bought big, consumer-brand companies like PepsiCo, Schering-Plough, Chrysler (now DaimlerChrysler), and Coca-Cola, and she reinvested her dividends. She placed her faith -- and her money -- in these growing companies and watched their earnings grow higher over decades. And, when she died, Anne donated it all to Yeshiva University in New York.

Anne wasn't totally Foolish, though, as she didn't stop to smell the roses enough. Those who knew her say she was a recluse in her small, rent-controlled apartment. Never married and painfully frugal, she wore the same coat year after year and skipped meals to save money. Fools generally enjoy not just investing and compounding long-term profits, but also family, friends, and the pursuit of happiness.

Anne Scheiber's investment legacy provides a powerful example of what we can achieve if we are methodical and patient with our money.


http://www.fool.com/foolu/askfoolu/2002/askfoolu020507.htm

Anne Scheiber's story: Most important points to take away - Being patient and consistent.

The almost unbelievable story of Anne Scheiber who turned $5,000 into $22 Million with a simple buy and hold strategy has been told quite some times now, unfortunately sometimes with wrong numbers. Here is what she did in her long life of 101 years:

• Anne Scheiber invested in leading brands, which she called franchise names. These were leading companies that created products she admired like Coca-Cola, Bristol-Myers and Allied Chemical.
• She favored firms with growing earnings and tended to ignore a stock's price to earnings ratio. Important for her was the company's ability to increase profits. She reasoned that stocks are overpriced sometimes and underpriced others but if the company's income rises year after year the buy price doesn't matter.
• Investments were taken by her in small pieces. She essentially put fresh money she earned as an IRS auditor to work and bought small lots of shares. Her extreme ability or better said fanaticism to cut down her real life expenses allowed her to invest the better part of her salary.
• She never sold a stock in which she believed. Neither in the bear market of the '70s nor during the crash of '87 she was worried. Instead she thought the general market had gotten overpriced, and she was convinced her stocks would come back.
• In order to cut taxes she reinvested her dividends in tax exempt bonds. When she died, she had 60% in stocks, 30% in bonds and 10% in cash.
• Her compensation for her poor life - saving every possible cent and investing it in stocks - was to attend her companies' New York City shareholder meetings. She demanded answers from the CEO, just as she did when she was an auditor. She also loved the freebies at these meetings, filled her bag with the food served and lived on it for days.

--

When Anne Scheiber died at 101 on Jan. 9, 1995, her 10 top stockholdings were worth nearly $6.2 million.

No. of      Dec. 11   1995
Company (symbol)              shares owned     price   gain
SCHERING-PLOUGH (sgp)            64,000       $59.25    62%
PEPSICO (pep)                    27,000        57.50    65
ALLIED SIGNAL (ald)              20,934        49.25    44
LOEWS (ltr)                      14,061        78.00    75
BRISTOL-MYERS SQUIBB (bmy)       10,080        84.50    45
COCA-COLA (ko)                    9,048        79.25    60
ALLEGHENY POWER SYSTEM (ayp)      8,000        28.25    30
ROCKWELL INTERNATIONAL (rok)      4,640        51.75    46
UNOCAL (ucl)                      3,690        28.75    10
EXXON (xon)                       1,664        84.00    39

Sources: Merrill Lynch, Benjamin Clark

--

The orignal money article quoted an average growth of 22% for the long period of 52 years. With such numbers Scheiber would have rivaled even Warren Buffett's record. There's only one thing wrong with this tale. It isn't true. Turning $5,000 into $22 million over 52 years is only a growth of 17.5% a year. Furthermore Anne Scheiber loved stocks her whole life long and there is evidence that she started much earlier than 1944 investing, albeit only partially successful.

--

It shows quite clearly that there were many mistakes in the original article:

1. $5k to $22m in 50 years (1944-1995) is 18.3% p.a. not 22% p.a.
2. Anne received $900 in dividends in 1936. At the average market yield of 4.3%, this meant she had capital of about $21k not $5k, and she started at least as early as 1936 and not 1944.
3. Anne was saving 80% of her $3,150 salary between 1936 and 1944. So there was probably additional cash input to the portfolio during these 8 years.

Ignoring the additional cash input, going from $21k to $22m over 59 years (1936 to 1995) gives... 12.5% p.a. Better and longer than Hetty Green, but considering the S&P 500 did 11% p.a. over the same period, with its small stocks getting 14.7% p.a., one has to wonder if her record is truly outstanding after all.

I think the more important points to take away are being patient (Anne was down 50% during the 70's but didn't sell) and consistent (Anne only bought companies she understood, mostly leading brands, and reinvested all her dividends).

Side note: Like Hetty, Anne was frugal to the point of being miserly. She wore the same clothes year in, year out, walked everywhere, and filled up bags of food to take home at shareholder meetings

http://www.stocksystemtrader.com/systems/anne-scheiber.html

The Story of Anne Scheiber

November 24th, 2008 

In his book The 21 Irrefutable Laws of Leadership, John Maxwell says that becoming a leader is a lot like investing successfully in the stock market. If you hope to make a fortune in a day, you won’t be successful. What matters most is what you do day by day over the long haul. This, he terms as The Law of Process.

Maxwell recounts the story of Anne Scheiber, an elderly and thrifty lady who lived in New York and worked for the Inland Revenue Service. When Scheiber retired at age fifty-one, she was only making $3,150 a year. She was treated poorly by her employer and was never promoted. Yet when Anne Scheiber died in 1995 at the age of 101, it was discovered that she left an estate to Yeshiva University worth US$22 million!

How did a public service worker with minimal salary accumulate such a staggering wealth? Here’s Maxwell’s take on it:

“By the time she retired from the IRS in 1943, Anne Scheiber had managed to save $5,000. She invested that money in stocks. By 1950 she had made enough profit to buy 1,000 shares of Schering-Plough Corporation stock, then valued at $10,000. And she held on to that stock, letting its value build. Today those original shares have split enough times to produce 128,000 shares, worth $7.5 million.

The secret to Scheiber’s success was that she spent most of her life building her worth… When she earned dividends – which kept getting larger and larger – she reinvested them. She spent her whole lifetime building…. When it came to finances, Scheiber understood and applied the Law of Process.”

The above story of Anne Scheiber was actually used by leadership guru Maxwell to illustrate an important leadership principle. But it can be equally applied to investing. I’m not sure if Maxwell got the facts right, but we can certainly learn a couple of important principles here:

1. Time in the Market
It is now how you start that is important. It is what you do day to day, and how you finish that counts. Sure it’s nice to time the market correctly but if you’re looking to make some serious bucks, time in the market counts.

Patience and consistency is everything!

2. Focused InvestingMost of Scheiber’s wealth was in a handful of stocks, the largest one being Schering-Plough. Like Warren Buffett, Scheiber is a Focused Investor. A Focused Investor puts meaningful amounts of money in a few things. Scheiber liked companies which are leading brands in their market.

Anne Scheiber

Most of us will not have the experience of picking one company which will ride on a tsunami wave. If you had bought a piece of Microsoft or Berkshire Hathaway when they started business, you would have the same ecstasy… but how many companies are like that? What are your chances of picking such companies? Nevertheless it is not impossible… imagine if you had bought and held on to Public Bank since inception. Now isn’t it worth a little time and effort to research and identify the next Public Bank?

3. Compound Growth
Whether the stock went up or down, she never thought, I’m finished building; now it’s time to cash out. She was in for the long haul, the really long haul. We are told that Anne Scheiber reinvested all of her dividends. She didn’t say lets take out some money and buy the latest LV handbag.  In fact Anne Scheiber was frugal to the point of being miserable. She lived in a rent-controlled apartment, wore the same clothes year in year out, didn’t own a car and even went to shareholder meetings so she could take home bags of food.

Don’t get me wrong… I’m not saying you shouldn’t reward yourself once in a while. In fact I would say there is a thin line between extreme thrift and greed. If you are blessed with so much money, spend some of it, give it away or whatever. Not only will you bless others, you release yourself from the trappings of greed 

“Keep your lives free from the love of money”Hebrews 13:5 (NIV)

The important lesson here is to realize the power of regular investment and compound returns. When you invest in good things and you invest regularly, your wealth will eventually multiply.

Remember attending one of those Unit Trust presentation and the Agent puts up that Regular Investment & Compound Return chart? Then everyone’s jaw would drop because your RM100/month savings can turn into a six figure sum when you retire? Start early, invest and have the discipline to keep re-investing…

Anne Scheiber loved stocks for her whole life and it is likely that she started investing much earlier than 1943 (the time she retired). Although she met with limited success initially, she came out tops in the end.

4. Hard Work
Anne Scheiber worked on her investments. She studied the companies she invested in, attended shareholder meetings and asked many questions to satisfy her curiousity and passion. Hard work with laser-like focus usually pays off.

“Successful leaders are learners. And the learning process is ongoing, a result of self-discipline and perseverance. The goal each day must be to get a little better, to build on the previous day’s progress.”John C. Maxwell

Replace the word leaders with investors. Makes sense, wouldn’t you agree?

http://www.horizon.my/2008/11/the-story-of-anne-scheiber/

Anne Scheiber: The quietest can make a great noise.

Anne Scheiber's Gift
Published: December 05, 1995

With the season of holidays and gift-giving comes the story of Anne Scheiber, a 101-year-old recluse who spent her retirement quietly turning a $5,000 nest egg into a $22 million stock portfolio. She then left the entire fortune that she had accumulated over half a century to Yeshiva University, to establish scholarships for needy women students there.

"Here's a woman who for 101 years was childless and now becomes a mother to a whole community," said the president of the university.

During her life, Ms. Scheiber had no direct contact with the university, or indeed with just about anyone except her lawyer and stockbroker. Although she clearly had a genius for finance, she founded no business. She had no close family, and no friends. She had no projects, no charities, did no volunteer work. She retired a half-century ago from the Internal Revenue Service feeling that her hard work there had gone unrewarded because of her sex. It was apparently that memory that inspired her bequest.

Ms. Scheiber's gift recalls the story of Oseola McCarty, the 87-year-old Mississippi woman who earlier this year donated $150,000 earned in a lifetime of doing other people's laundry to endow scholarships for black students at the University of Southern Mississippi. Both women lived simply, and cared nothing about possessions. That may explain why they gave their money for opportunity, rather than plaques or buildings.

Besides money, both women left us a lesson. We can touch the future in many different ways. The childless can leave their imprint on the young for generations to come. The friendless can transform a community. The quietest can make a great noise.

http://www.nytimes.com/1995/12/05/opinion/anne-scheiber-s-gift.html

Upon retiring, Anne Scheiber dedicated her life to investing in the stock market.

• December 18, 1995
 
• Vol. 44
 
• No. 25

Angel in Disguise

After Years of Resentful Frugality, Anne Scheiber Bequeaths $22 Million to Help Women Students

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ONLY A HANDFUL OF PEOPLE KNEW Anne Scheiber, and few can recall her smiling. Instead they remember a friendless, pathologically frugal woman who seemed as bitter as Baker's chocolate. Never married and long since estranged from all but two of her nine siblings, she rented the same New York City studio apartment for 50 years and lived surrounded by furniture she had bought in 1944. She wore the same hat and coat nearly every day, regardless of the season. So the news that became public two weeks ago is doubly startling: Not only had Scheiber, who died last January at 101, built a fortune of $22 million, but she willed all of it to needy students at Yeshiva's Stern College for Women in New York City—a school she had never visited. "She got a lot of satisfaction knowing she was leaving this money," says Benjamin Clark, Scheiber's tax lawyer. "She'd say, 'Someday, when I'm long dead, there will be some women who won't have to fend for themselves.' " 

For most of her life, Scheiber was forced to do just that. Born in Brooklyn, she was raised primarily by her mother, Rose, a real estate broker, after her father had died prematurely. Scheiber started night school and went to work as a bookkeeper at 15, later entering Washington's National University (a forerunner of George Washington University) Law School. But rather than practice law after graduating in 1924, she stayed with the more secure auditor's job she had landed four years earlier with the IRS. Despite a stellar performance during the next 19 years, she was never promoted; Scheiber blamed the slight on the fact that she was a woman and a Jew. "The IRS treated her quite shabbily," says Clark. "She was very bitter." 

Upon retiring in 1943, Scheiber decided to get even by getting rich. She returned to New York City and dedicated her life to playing the stock market. "She never tried to outguess the market," says William Fay, Scheiber's broker since the '70s. Her strategy: Invest in blue-chip companies and hold on. By the time she died, her initial $5,000 investment had increased 439,900 percent. 

Clark delivered the gift to a stunned Dr. Norman Lamm, Yeshiva's president, in January. "Ms. Scheiber was a very unhappy woman whose only joy came from accumulating wealth," says Lamm, who will oversee the Anne Scheiber Scholarship and Loan Fund Awards. "Now in one fell swoop, she has managed to gain immortality." 

http://www.people.com/people/archive/article/0,,20102404,00.html

Anne Scheiber is the poster woman for "It's never too late to start investing."

The Saga of Anne Scheiber

Once more, I swerve away from animation to tell a tale every animation employee faces: earning a living and saving for retirement.

I relate the following story because a) it's a good one, and b) I've had too many people call or come through TAG's office over the years and say (more or less) that they were 63 years old and flat broke, without job prospects, and without any pension except for the piddly amount they were getting from Social Security. So listen up:

Ever heard of a woman named Anne Scheiber? Probably not, but Anne is the poster woman for "It's never too late to start investing."
Anne was an IRS examiner back in the 'forties. And thirties. Along about 1944, Anne reached retirement age and decided it was time to hang it up. And so she took retirement…on a queenly $3,150 annual government pension.
For the next fifty-four years, Anne lived quietly and simply in her small, rent-controlled apartment in New York City. She clipped coupons, shopped for discounts at the local stores, ate home a lot.
As far as anyone could tell, Anne was just one more Big Apple pensioner, squeaking by on a small and miserable fixed income. But lo and behold, when Anne passed away in 1995 at 101, her will was opened and the larger world found out that the little woman in the tiny apartment had left a $22 million dollar estate to Yeshiva University. And that her stock investments were earning around $1 million per annum, most of which she didn't spend.
So what the hell was going on? Actually something relatively simple. Back when Anne retired, she took the $5000 in savings that she had scraped together and began investing it herself.
Anne, you see, had been burned by various stock brokers during the 1930s, and had resolved to never depend on them again. She did her own research, chose her own stocks, and by the time she passed away 53 years later, her stock choices had grown at the rate of around 12.5% per year. And the paltry five grand had mushroomed to $22,000,000 and counting. (Ah, the magic of compoudning.)
Anne's strategy was simple. She did her homework. She bought quality stocks. And held them. And held them. And held them. When she died, she had 60% of her assets in stocks, 30% in bonds, and 10% in cash. The classic asset-allocation fund.
The moral of this story is not: make big run-ups on your investments every year, nor is it to live like a church mouse while you have millions tucked away. The point of the story is, no matter how old you are, no matter how far down you think you might be, you always have the ability to put money into an investment and commence building a nest egg.
If Anne Scheiber was able to do it after retirement on a three-thousand dollar a year pension, you and I and everyone else in this on-and-off business can do it.

http://animationguildblog.blogspot.com/2007/01/saga-of-anne-scheiber.html