This is one of the most inspiring and uplifting stories I’ve ever read in the financial press (from Barrons, September 12). Stephanie Mucha has defied what all the policy experts in Washington and Wall St. claim: That one cannot participate in the success of capitalism at every income level through capital accumulation. This woman did not get rich through a salary wage, she got rich by accumulating and investing capital successfully. I can’t tell you how many policy experts I’ve heard state this is not possible. No, not everybody will be as successful, but the basic golden rule of working, saving, and investing prudently in capitalist enterprise is as sound as it ever was.
What we need to do is to stop punishing people who pursue such prudent strategies through our misguided tax code that rewards borrowing and spending money one has never earned. The biggest crime is to continue to convince people that such participation is not even worth trying. That’s what ZIRP, TBTF, and double and triple taxation of capital is doing to us all. Let’s encourage and defend the rights of the small public shareholder.
The second accolade for Mrs. Mucha is her desire to spread that capital around before she dies. She has done this through public charities, but there is no reason not to pursue good by providing angel capital to potential entrepreneurs who hope to create something of lasting value. The venture capital industry is not the only channel. The sustainability of capitalism derives from the constant recycling of capital. I’d have to say Buffett and Gates could learn a thing or two from Stephanie Mucha.
The Muchas invested without the help of Wall Street. Some 30 years ago a broker advised them to sell their Intel shares (ticker INTC); after that, they ignored his advice. But gifted investors, always on the lookout for ideas, often make their own luck. Mucha was working in the VA hospital when Wilson Greatbatch, a local inventor, implanted a pacemaker in a dying dog. In about 10 minutes, the dog’s tail started to wag; a little later, it sat up and walked around.
“I came home and said to my husband, ‘I saw a dead dog come to life.’ ” What she had seen was a demonstration of the first implantable cardiac pacemaker. The device was licensed in 1961 to Medtronic (MDT). In around 1964, the Muchas spent $255.50 to purchase 50 shares at $5.11. By the time she donated a portion of the shares in 2007, the position had grown to $459,000. She still owns about 300 shares, at $66.
Hard work and frugality also contributed to the Muchas’ success. They created three apartments in their house, one to live in and two to rent out. The Muchas, who weren’t able to have children, owned only one car. After her husband’s death, Mucha sold her diamond ring and wedding band for $2,700, investing the proceeds. She also rented out a room in her apartment for $15 a night to women visiting their sick husbands at the VA hospital. She invested the estimated $25,000 she earned over 20 years from that rental in the market.
A fan of Jeremy Siegel’s book Stocks for the Long Run, she held on to her stocks in both up and down cycles. She also realized that women tend to outlive men, so they need to know how to invest. “Women need to learn how to use their money so it outlasts them.” She waited until she was 70 to start collecting Social Security, and now collects about $40,000 a year from Social Security and her VA pension, plus $675 a month from a renter.
Mucha doesn’t have a computer. She has an Ameritrade account that gives her free trades over the phone, reinvests her dividends, and sends her five research reports a month. She reads The Wall Street Journal every day, along with Barron’s, Forbes, the Economist, and the New York Times, and watches CNBC and Bloomberg. As for picking stocks, she recalls her husband saying, “You can’t build without nuts and bolts.” With that in mind, in recent years she has bought Precision Castparts (PCP), Snap-on (SNA), and Illinois Tool Works (ITW).
Age has caught up with her a bit, but it hasn’t dimmed her wits. Mucha’s portfolio made 11% last year, but when she learned her accountant’s portfolio made 36%, she gave his financial advisor a call. “I wanted to see if I was doing the right things,” she says. Larry Stolzenburg of Sandhill Investment Management in Buffalo now manages her portfolio. “Stephanie’s portfolio was one of the best I’ve seen,” he says. “It was well balanced and thought out. I almost offered her a job.”
Mucha, who never spent a dime of her investment capital, has put $1 million in trust each for the Kosciuszko Foundation, which helped her husband when he immigrated to the U.S.; the University at Buffalo’s School of Arts and Sciences, because it has a Polish studies program; and the School of Engineering, as her husband had wanted to be an engineer. This month, she plans to make a donation to the School of Medicine and Biomedical Sciences. She has also earmarked money for the schools of nursing and dentistry.
“She’s a fantastic, smart person,” says Alex Storozynski, president emeritus and a trustee of the Kosciuszko Foundation. In addition to the $1 million donation, Storozynski says she has given him dietary tips, like eating chia seeds and almond butter. Advice to live by, no doubt.