One Investing Family’s Greatness Explored in “The Davis Dynasty”

Shelby Davis may not be a household name, compared, say, to one particularly famous value investor from Omaha, but the story of his life — and his son’s and grandsons’ lives — makes for a fascinating read. The elder Davis started investing in stocks at age 38, and by the time of his death at 85, he’d turned an initial $50,000 investment into a fortune worth $900 million. Following the same principles, his son and grandsons also became successful market-beating investors, creating a remarkable three generations of Wall Street wonders.

The Davis Dynasty, which was published over a decade ago but still has great insights for investors today, reads partly like a biography of an interesting family, partly like a history of the U.S. economy in the 20th century, and partly like a treatise on what it takes to make money in the market over the long haul. Shelby Davis did so, in large part, by investing in insurance companies, and one chapter in the book briefly traces the history of modern insurance companies back to 4000 B.C. I found this interesting (really!) — you’ll never look at insurance the same way again!

Perhaps not surprisingly, Shelby Davis’s philosophy on spending money, versus making it, was that he wanted to do as little of it as possible. The book’s filled with tales of his legendary penny-pinching, including one anecdote from his grandson about the lecture he got on compounding returns when asked for $1 to buy a hotdog. His granddad pointed out that $1 invested wisely over 50 years would turn into $1,024, so was he really so hungry he’d eat a $1,000 hotdog?

For investors, the book offers up lots of useful lessons that remain as true in today’s market as when Davis bought his first stocks back in 1947. For example, “A few big winners are what count in a lifetime of investing, and these winners need many years to appreciate.” Shelby Davis and his son and grandsons believed in buying and holding for the long-term, and together they grew their family’s wealth over three generations. When considered against the current trends of minute-by-minute trading and the overabundance of short-term thinking on Wall Street, what they accomplished is even more impressive and inspiring.

(Originally published here: