How to Survive Market Volatility

Many who have come into my office have asked about a small green sweater that is framed and hanging on my wall. It seems a strange item for a financial planning firm, but the story behind it plays a significant role in my philosophy towards investing.
In 1921 my grandpa Jones opened a small knitting mill in Los Angeles.  From the beginning he decided to run his little company based on two very simple principles. First- Be fair and honest with customers and employees. Second - Only produce the highest quality clothing, made from 100% pure wool.
The early years were not easy. Among other things was stiff competition from several other mills in the area that had chosen to use “fillers” in their wool. By mixing foreign material in the wool, the competition could keep costs lower, yet under regulations at the time they could still claim to be pure wool. This concerned Grandpa but he pressed forward with a firm determination to follow his business plan. When people bought a “Jonesknit” sweater, he wanted them to know they could trust the product to be of the highest quality.
The years went by and Jonesknit, despite receiving numerous awards for the quality of its sweaters, continued to struggle in a competitive world where price often had the final say. Suddenly, in 1929 the Great Depression struck and the garment industry was particularly hard-hit.
Amazingly, while competitors were shutting down, the sales of Grandpa’s sweaters grew. Public schools, large organizations and even the U.S. Postal service began to buy almost exclusively from Jonesknit. Not only were there no layoffs, but new people were hired and Grandpa was able to continue giving his employees regular raises. He learned that when times get tough, people can’t afford to waste their money on junk. They look for quality. Grandpas focus on quality resulted in his family and employees being cared for in comfort while so many were suffering during the depression.
The small green cardigan Jonesknit sweater in my office was given to me by my grandpa when I was eight years old. I admit to being pretty disappointed at the time, having really wanted another toy airplane that Christmas. But I have since come to appreciate the valuable message knitted into that sweater. During those times when the investing world is struggling and I am searching for appropriate investments for my clients, I glance over at that sweater and remember the lessons learned from grandpa Jones. “Focus on quality,” I remind myself, as those companies who do so are most likely to survive and thrive. I call it my Green Sweater principle and it has served me well for many years.
As the investing markets enter this current season of heightened concern and increased volatility, you can be sure I will be paying particular attention to the lessons of that old green Jonesknit sweater hanging on my wall.