3c hapter - Index of

36 Locavesting
is a hot marketplace trend, with customers increasingly reaching
for staples such as tomatoes and corn that grew in local soil.”
Familiarity
Investment guru Peter Lynch has long advised “Invest in what you
know.” Berkshire Hathaway’s Warren Buffett adheres to a similar
principle of sticking to his “circle of competence.” That might
mean investing in the company that makes your favorite minivan
(in Lynch’s case) or cherry soda (in Buffett’s). Each investor’s
area of expertise will differ. But there is one thing we are all familiar
with: our own backyards. By that I don’t mean the tomatoes
growing in the garden, but the local and regional companies we
walk or drive by every day, read about in the news on a regular
basis, and that are a familiar part of our environment. The fl ow
of information about local establishments, both in the local news
media and on an informal basis, tends to be much greater for
a nearby company than for a distantly based one. And that, as any
fi nancial expert will tell you, is a big plus.
“Knowledge is currency,” says Ben Marks, president and chief
investment advisor at Marks Wealth Management in Minnetonka,
Minnesota, which runs a fund that is heavily weighted in Midwestern
companies, such as Minneapolis- based General Mills and
Medtronic. “If you can know more about what you’re investing in,
it increases the probability of success.” That’s especially true for
smaller companies, which can often offer the greatest returns but
for whom information is generally less available than large companies.
“Local investors have an advantage,” says Josh Silverman,
a wealth management advisor with Northwestern Mutual Financial
Network in Charleston, South Carolina, who advocates a 100-mile
investing strategy. “You can fi nd out a lot of timely information.”
In his book Enough (John Wiley & Sons, 2009), John Bogle,
the legendary Vanguard founder, tells of a community banker
who, every Sunday after church, likes to drive past a local company
he’s lent to, just because he can. That’s something that J. N. Dolley’s
unfortunate Kansan could not easily do when he invested in a speculative
New Mexico land deal. But even with modern communication
and transportation systems, investors today are often similarly in the