Julius Westheimer (Sun file photo / June 18, 2001) |
Julius Westheimer, special managing director of Ferris, Baker Watts Inc. in
Baltimore, is celebrating his 40th year in the brokerage business. SunSpot recently caught up with Maryland's most famous investment adviser.
How did you get your start in the brokerage business?
My father was a member of the New York Stock Exchange. Right here in Baltimore, they had a business on Redwood Street called Westheimer & Co. So when I was very young I learned a lot about the stock market at the dinner table. Then when I graduated from Dartmouth College in 1938 I was persuaded to go into a family department store business. After the war, I did go into the store and despised every minute of it. As soon as I could get out and turn it over to someone else to run I came to what was then Baker Watts & Co. That year was 1961. I rapped on the door and told them a little about myself. They hired me on the spot and IÂ’ve been here ever since.
How has the business changed over the past 40 years?
A lot of the local individual brokerage firms have disappeared or merged into larger ones. There used to be a lot of smaller firms like my dadÂ’s firm, Stein Brothers, John C. Legg & Co., which became Legg Mason. That is one of the differences. Another difference that we have largely forgotten about now is discount commissions. When I came into the business, commissions were standard, $39 for every 100 shares. Now there are discount commissions and multiple trades at lower rates, things like that. Also, the rise of 401(k)s and 403(b)s is new. In the old days, only a privileged, favored few affluent people were in the stock market. The present landscape has broadened so much that I wouldnÂ’t say everyoneÂ’s in the stock market, but I think 41 percent of the population of the United State owns stock and/or stock mutual funds either outright or in their retirement plans. ItÂ’s become a much more popular activity then it had been before.
What effect has that more widespread stock ownership had on the market?
I think it has a positive effect. What you have is a sort of built-in, perpetual buying activity. People who start
401(k)s and people who are staying with 401(k)s every year are basically putting the money in the stock market, even though the last year has been very damaging. This has been a relentless bear market, especially in the tech area. But, as the Bible says, this too shall pass. The thing to remember is that over the last 75 years, despite ups and downs, inflation, deflation, prosperity, depression, bull markets and bear markets, stocks have yielded, on average, ten and a half percent per year. If people keep their eye on the ball and are not diverted too much by today’s headlines or broadcasts or talking heads — half of whom don’t know what they’re talking about — they’d be well served. A lot of us get impatient in a bear market and sell when we shouldn’t, and we get impatient and greedy in a bull market and keep buying when we shouldn’t. If we would just stick to the fundamentals and be patient, I think Wall Street is an excellent place to be.
What about the current economic climate, does this market remind you of any other youÂ’ve seen?
This is the worse bear market I have seen since 1973-74 when the market dropped, I think, 55 or 60 percent on the Dow Jones average. Now the Dow has largely recovered. It is only 8 or 6 percent below its all-time high. The wreckage is in the high tech area, and that is going to take years to correct itself. ThatÂ’s not going to happen overnight, the damage is severe. You take Cisco, that stock was selling at 75 or 80. You can get all you want today for 20 or 21, I think. Which, of course, is when nobody wants it. We all scramble for it when itÂ’s high, which is wrong. Now, nobody wants it, which is wrong.
So you see opportunity there?
Yes, but it will take time. ItÂ’s a very good time to buy. The time to invest money is when you have it, because if you donÂ’t, if you wait for the so-called right time to buy, youÂ’ll never buy. Long-term, it will be in your favor.
How do you pick a stock? Fidelity fund manager Peter Lynch, IÂ’ve read, once bought Hanes because his wife liked their panty hose.
Yes, and DunkinÂ’ Donuts. But it wasnÂ’t the doughnuts that impressed him so much. It was the flavor of the coffee, and he put a lot of money in it, as he did in Hanes.
Do you have system like that?
Rule of thumb, I donÂ’t have any strict guidelines. I like companies that instead of paying out high dividends to the stockholders, take that money and put it back into research, development and expansion. That is particularly true of the drug and pharmaceutical companies. I go by the theory that the company can do better with our money than we can. People who want income should buy real estate investment trusts or public utilities or something like that.
What do you think has been the secret of your success? How have you become such an institution?
I have always since childhood enjoyed being on my feet and speaking in public. I won a state of Maryland oratorical contest when I was still in my teens. I did a little bit of radio in college. Frankly, I enjoy publicity. I love to see my name in print. It’s an ego trip. People say, why do you get up at 3 o’clock in the morning six days a week? And I reply, truthfully, I have no trouble with that at all, absolutely none, because the adrenaline starts pouring as soon as I get in my car and drive to WBAL TV. I love that activity. Furthermore, this world has been very good to me. The older I get the more I realize just how good it has been to me, financially and every other way. I’ve been a very lucky guy. I don’t want to brag about that but I just want to express gratitude for the blessings that I have had. So what I want to do, in addition to the ego trip aspect of broadcasting—my wife, by the way, says it’s very good for restaurant reservations—I want to give something back to this world. I want to be helpful to people who need help. That’s one of the reasons I keep doing it.
What is a day in your life like?
I get up at roughly 3:15 am. Get dressed, have a little oatmeal. Drive to WBAL where around 5 oÂ’clock I write and record a one-minute radio show, which they air at 8:07. Then I have two live appearances on WBAL-TV. Then I go home again and have a second breakfast with my wife, occasionally doze off for five or ten minutes, and come to work. The difference between what I do now and what I used to do in my active years is, I donÂ’t stay here all day anymore. Around 11 or 11:30 I go home or I go to the golf course or I have lunch with the boys, something like that. ThatÂ’s a typical day. And I go to bed early.
Are you based out of the Legg Mason building?
Yes, weÂ’re in the Legg Mason building, formerly the USF&G building. IÂ’m whatÂ’s called a special managing director of Ferris, Baker Watts. IÂ’m not sure what that means. IÂ’m not special, except my wife says I think I am, I manage nobody and I direct nothing. But it looks good on the card so I take it for what itÂ’s worth.
WhatÂ’s next for you? Are you contemplating slowing down at all?
No, I have never even considered retirement. ItÂ’s just a word thatÂ’s not in my vocabulary at all. If I retired, if I stayed home and read the Wall Street Journal all morning, I think IÂ’d be dead in a year. I have to have a workplace. IÂ’ve always been in the workplace. ItÂ’s a support system for me.
I've read that despite all your financial experience, you still have trouble balancing your checkbook.
I donÂ’t even balance it anymore. I look at the statement once a month and I look at the signatures on all the checks and if they look like mine or my wifeÂ’s then so be it. If it was out by a lot then IÂ’d know it. If itÂ’s out by $33.82, then so be it.
How did you get your start in the brokerage business?
My father was a member of the New York Stock Exchange. Right here in Baltimore, they had a business on Redwood Street called Westheimer & Co. So when I was very young I learned a lot about the stock market at the dinner table. Then when I graduated from Dartmouth College in 1938 I was persuaded to go into a family department store business. After the war, I did go into the store and despised every minute of it. As soon as I could get out and turn it over to someone else to run I came to what was then Baker Watts & Co. That year was 1961. I rapped on the door and told them a little about myself. They hired me on the spot and IÂ’ve been here ever since.
How has the business changed over the past 40 years?
A lot of the local individual brokerage firms have disappeared or merged into larger ones. There used to be a lot of smaller firms like my dadÂ’s firm, Stein Brothers, John C. Legg & Co., which became Legg Mason. That is one of the differences. Another difference that we have largely forgotten about now is discount commissions. When I came into the business, commissions were standard, $39 for every 100 shares. Now there are discount commissions and multiple trades at lower rates, things like that. Also, the rise of 401(k)s and 403(b)s is new. In the old days, only a privileged, favored few affluent people were in the stock market. The present landscape has broadened so much that I wouldnÂ’t say everyoneÂ’s in the stock market, but I think 41 percent of the population of the United State owns stock and/or stock mutual funds either outright or in their retirement plans. ItÂ’s become a much more popular activity then it had been before.
What effect has that more widespread stock ownership had on the market?
I think it has a positive effect. What you have is a sort of built-in, perpetual buying activity. People who start
401(k)s and people who are staying with 401(k)s every year are basically putting the money in the stock market, even though the last year has been very damaging. This has been a relentless bear market, especially in the tech area. But, as the Bible says, this too shall pass. The thing to remember is that over the last 75 years, despite ups and downs, inflation, deflation, prosperity, depression, bull markets and bear markets, stocks have yielded, on average, ten and a half percent per year. If people keep their eye on the ball and are not diverted too much by today’s headlines or broadcasts or talking heads — half of whom don’t know what they’re talking about — they’d be well served. A lot of us get impatient in a bear market and sell when we shouldn’t, and we get impatient and greedy in a bull market and keep buying when we shouldn’t. If we would just stick to the fundamentals and be patient, I think Wall Street is an excellent place to be.
What about the current economic climate, does this market remind you of any other youÂ’ve seen?
This is the worse bear market I have seen since 1973-74 when the market dropped, I think, 55 or 60 percent on the Dow Jones average. Now the Dow has largely recovered. It is only 8 or 6 percent below its all-time high. The wreckage is in the high tech area, and that is going to take years to correct itself. ThatÂ’s not going to happen overnight, the damage is severe. You take Cisco, that stock was selling at 75 or 80. You can get all you want today for 20 or 21, I think. Which, of course, is when nobody wants it. We all scramble for it when itÂ’s high, which is wrong. Now, nobody wants it, which is wrong.
So you see opportunity there?
Yes, but it will take time. ItÂ’s a very good time to buy. The time to invest money is when you have it, because if you donÂ’t, if you wait for the so-called right time to buy, youÂ’ll never buy. Long-term, it will be in your favor.
How do you pick a stock? Fidelity fund manager Peter Lynch, IÂ’ve read, once bought Hanes because his wife liked their panty hose.
Yes, and DunkinÂ’ Donuts. But it wasnÂ’t the doughnuts that impressed him so much. It was the flavor of the coffee, and he put a lot of money in it, as he did in Hanes.
Do you have system like that?
Rule of thumb, I donÂ’t have any strict guidelines. I like companies that instead of paying out high dividends to the stockholders, take that money and put it back into research, development and expansion. That is particularly true of the drug and pharmaceutical companies. I go by the theory that the company can do better with our money than we can. People who want income should buy real estate investment trusts or public utilities or something like that.
What do you think has been the secret of your success? How have you become such an institution?
I have always since childhood enjoyed being on my feet and speaking in public. I won a state of Maryland oratorical contest when I was still in my teens. I did a little bit of radio in college. Frankly, I enjoy publicity. I love to see my name in print. It’s an ego trip. People say, why do you get up at 3 o’clock in the morning six days a week? And I reply, truthfully, I have no trouble with that at all, absolutely none, because the adrenaline starts pouring as soon as I get in my car and drive to WBAL TV. I love that activity. Furthermore, this world has been very good to me. The older I get the more I realize just how good it has been to me, financially and every other way. I’ve been a very lucky guy. I don’t want to brag about that but I just want to express gratitude for the blessings that I have had. So what I want to do, in addition to the ego trip aspect of broadcasting—my wife, by the way, says it’s very good for restaurant reservations—I want to give something back to this world. I want to be helpful to people who need help. That’s one of the reasons I keep doing it.
What is a day in your life like?
I get up at roughly 3:15 am. Get dressed, have a little oatmeal. Drive to WBAL where around 5 oÂ’clock I write and record a one-minute radio show, which they air at 8:07. Then I have two live appearances on WBAL-TV. Then I go home again and have a second breakfast with my wife, occasionally doze off for five or ten minutes, and come to work. The difference between what I do now and what I used to do in my active years is, I donÂ’t stay here all day anymore. Around 11 or 11:30 I go home or I go to the golf course or I have lunch with the boys, something like that. ThatÂ’s a typical day. And I go to bed early.
Are you based out of the Legg Mason building?
Yes, weÂ’re in the Legg Mason building, formerly the USF&G building. IÂ’m whatÂ’s called a special managing director of Ferris, Baker Watts. IÂ’m not sure what that means. IÂ’m not special, except my wife says I think I am, I manage nobody and I direct nothing. But it looks good on the card so I take it for what itÂ’s worth.
WhatÂ’s next for you? Are you contemplating slowing down at all?
No, I have never even considered retirement. ItÂ’s just a word thatÂ’s not in my vocabulary at all. If I retired, if I stayed home and read the Wall Street Journal all morning, I think IÂ’d be dead in a year. I have to have a workplace. IÂ’ve always been in the workplace. ItÂ’s a support system for me.
I've read that despite all your financial experience, you still have trouble balancing your checkbook.
I donÂ’t even balance it anymore. I look at the statement once a month and I look at the signatures on all the checks and if they look like mine or my wifeÂ’s then so be it. If it was out by a lot then IÂ’d know it. If itÂ’s out by $33.82, then so be it.
