Roberts talks about bulls, bears, hogs and market rhymes
As founder and president of Ken Roberts Investment Management Inc., Ken Roberts manages $250 million for more than 1,000 clients, mostly individuals and small institutional investors. The firm’s staff of nine includes wife Sharon, a retired teacher. A graduate of Whitworth University with a master’s from Harvard University, Roberts bought his first stock in 1961, when he was a teenager living on the family farm in Genesee, Idaho.
Q. What was that first stock?
A. A California savings and loan. The worst thing happened that could have happened: It doubled in six months, and I should have sold it. There was a bad market in the spring of 1962 and it went down to what I paid for it, which goes to show that a bear can make money and a bull can make money but a hog never can. I was the hog.
Q. When did you start your own firm?
A. 1994. I’m on my fourth career in this industry. I started out doing research at Murphey Favre. And then when I worked at Foster & Marshall I was a research analyst and a broker, and then I started a mutual fund when I was there in 1981. We got bought out in 1982 by Shearson, and the fund that I started became a Shearson fund – it’s called the Shearson Fundamental Value Fund. It’s still around. I ran that for nine years. When Shearson got sold to Smith Barney, a co-worker and I decided we would be happier on our own.
Q. How would you characterize what has happened in the last two years compared with anything you’ve dealt with.
A. History doesn’t repeat itself, but it rhymes a lot. What we’ve been through in 2008 and 2009 is like the 1973-1974 bad market. It went down about the same percentage. The institutions of our country were shaken to the core. We had Watergate. We had the Vietnam War. We had double-digit inflation. We had double-digit unemployment. And then we had a big rally in 1975, which is very similar to the rally we had starting in March 2009. And after that we had five or six years of back and forth, and that’s what we’re in right now. We’re going to go through a number of years of back and forth.
A. Our country is still dealing with a lot of unfinished business and problems we’re still working through. The public is de-leveraging. They’re paying down their credit cards. People are saving money. But a lot of that leverage now is on government balance sheets. What are you going to do about that problem? Do you raise taxes? Do you cut spending? Neither one of those is going to be popular.
Q. How are you managing money right now?
A. We’re trying to find growth. We’re trying to find companies that don’t need loans. We want companies that have a product or service that somebody needs or wants, products that improve efficiency. And companies that sell things overseas. We’re developing an emerging middle class in many parts of the world, and those consumers are starting to like the same things we like.