2021 Q1 Newsletter

Father Knows Best

Longtime Spartans may recognize some of the following from a newsletter I wrote five years ago this week. I have updated it to honor the legacy of my father, Kenneth Davey, who passed away recently. If you ever wondered where the Discipline in Disciplined Equity Management comes from, it comes from him. Thank you for all your kind thoughts and prayers as I mourn the loss of my hero.

Thirty years ago this month, I was selected with the 67th pick in the NFL draft, fulfilling every Wisconsin kid’s dream of becoming a Green Bay Packer. When I signed my rookie contract a few weeks later, I was suddenly transformed from a 23-year-old broke graduate student into an NFL player with a $90,000 signing bonus in hand ($73,458.47 after taxes; I still have the check stub 😊).

I immediately invested a portion of my newfound wealth in an engagement ring for my high school sweetheart, Kristen, who would become my lifelong partner and mother of our five beautiful daughters. To this day, that ring remains the single best investment I have ever made. From there, I faced the same decision all investors face: What to do with the rest of the money?

Most of my fellow NFL rookies spent their signing bonuses on expensive houses, fancy cars, flashy jewelry, and luxurious vacations. Some bragged about investing in “sure thing” business opportunities such as night clubs, restaurants, and real estate. However, neither lavish spending nor speculative investing appealed to the conservative Midwestern values I was raised with.

You see, by the time I was beginning my professional career, my father, Kenneth Davey, a former Marine, had been selling industrial abrasives for the diversified global behemoth Minnesota Mining and Manufacturing (NYSE: MMM) for twenty-five years. Dad loved 3M and trusted that its leadership would always innovate its product line, expand its customer base, and overcome whatever obstacles it faced. As such, he committed a portion of every paycheck to his 401(k) and Employee Stock Purchase Plan so he could own a piece of the rising stream of earnings and dividends that great companies tend to generate. Paycheck after paycheck, year after year, through good times and bad, my father’s disciplined investment strategy gradually transformed him from a traveling salesman into a wealthy retiree. His strategy was simple, and the results were inevitable.

My father’s methodical, patient, commonsense investing strategy resonated with the number-crunching engineer in me. So, against the advice of my teammates, agent, and commission-hungry broker, I invested the remainder of my signing bonus in a diversified, low-cost equity index fund and began my journey as a lifelong equity investor. As Nobel Prize-winning research uncovered the benefits of incorporating tax management, global diversification, and the four-factor model, my portfolio gradually evolved into the DEM Global Equity portfolio we use today. But my strategy remained unchanged.

Over the past thirty years, I have maintained my unwavering commitment to my father’s disciplined investment approach through wars, natural disasters, terrorist attacks, political turmoil, economic downturns, six bear markets, and now a global pandemic. For the past twenty-three years, I have made it my life’s mission to pass along his wisdom and guidance to a select number of affluent families affectionately known as my “Spartans.” And just like him, we have all accumulated our wealth both simply and inevitably. How true it is that Father Knows Best after all.

Thanks, Pop!

Don Davey
Senior Portfolio Manager
Disciplined Equity Management
Plan Appropriately, Invest Intelligently, Diversify Broadly, Ignore the Noise