Marty Bannon, father of economic nationalist Steve Bannon, worked for AT&T for 50 years. Over his career at AT&T, Marty had accumulated a significant position in AT&T stock. It was supposed to have been an insurance policy for his large family … but he sold it all in a fit of panic while watching the news one day near the market bottom.
Steve Bannon is widely credited with helping to get Trump elected president. He’s now President Trump’s Chief Strategist.
An incredible story recently published in the Wall Street Journal details how the experience of watching his father sell out his position in AT&T at the bottom of the 2008 – 2009 stock market crash helped to crystallize Steve Bannon’s political views … and ultimately helped land Trump in the White House.
I have known for a long time now that poor investment decisions made by individual investors have real and serious consequences for individuals and families. But I never dreamed that a classic emotional investing blunder could have been instrumental in getting a president elected.
It’s an unbelievable tale.
AT&T was practically sacred to the Bannon family … nearly as sacred as their beloved Catholic Church. Not only did Marty Bannon spend half a century working for AT&T. His own father, Steve Bannon’s grandfather, worked for AT&T for 48 years as well.
For Marty Bannon, his investment in AT&T was an insurance policy for his family. If financial disaster ever struck, at least AT&T, and Bannon’s AT&T stock, would likely still be there. AT&T had been there for the Bannon family for nearly a century already.
Then, near the bottom of the 2008 – 2009 stock market crash, Marty Bannon was watching the news. The whole financial system seemed to be unravelling. Marty panicked, thinking that his position in AT&T was on the verge of being worthless. He sold that day … his entire position.
It was a purely emotional decision … a panicked decision. He didn’t even bother to pick up the phone and call his Goldman-Sachs investment banker son Steve to ask for advice. He just panicked … and sold.
For Steve Bannon, now an outspoken economic nationalist, watching how hard that episode was on his father was a painful experience. Then Steve watched nearly all his investment banking friends get made whole by the easy money policies of the federal government while his father continued to suffer.
That experience crystallized Steve Bannon’s conviction that the chasm between the elites and the middle class had become un-crossable … and that something had to be done to defend middle and working-class Americans against the predatory elites.
That led to Bannon joining on with Breitbart News which ultimately put him in a position to help Trump get elected.
So … what, as investors, can we learn from this story? A lot.
- Investment decisions are serious … and consequential. Not all of them are as consequential as this one, obviously, but it’s a great reminder that we do need to take our investing seriously and that investing isn’t always just fun and games.
- It’s easy to find ourselves in an untenable emotional position when our investment sizes are too large. Marty Bannon’s position in AT&T was too big for him to manage without emotion getting the better of him. It’s critical to have the right position sizes.
- Watching too much TV is terrible for your investing. The media is in the business of capturing your attention … and the best way to do that is through your emotions. The media loves it when you get emotional. It means you’re paying attention. The more emotional the better. If you’re going to watch TV and let it influence your investing, just keep that in mind.
It pains me greatly when I hear stories like Marty Bannon’s … or what happened to the employees of Enron who had been encouraged to invest their life savings into Enron’s stock.
Unfortunately, stories like this happen in the stock market way more often than they should … and it’s usually the little guys that come out holding the short stick.
Stories like Marty Bannon’s get me out of bed in the morning to make TradeStops the investor’s best friend … a friend that gives confidence and conviction when the going gets tough.