A Lesson From Uncle Earl

      Many years ago, my Dad's brother, Earl, came to town from his home in Florida to visit his mother. Earl liked to invest in stocks so I made it a point to meet with him to get some insights into where he was putting his money. To my surprise, Earl told me that he was investing in companies located right here in Evansville, In. With a whole world available to him, he liked this small town in the midwest for his investable dollars. In those days Evansville was a manufacturing mecca. We had heavy industry like Alcoa, Arkla, Whirlpool, General Electric, Meade Johnson, Bristol Myers, and a very robust plastics industry. A byproduct of the plastics industry is many small machine shops that made and repaired molds for plastic injection machines. The end result was a skilled workforce able to keep the wheels of industry turning and a strong work ethic that was inherent in their DNA. Earl stated that some of the best investments are right here under my nose and I didn't even see that. Over the years, local conditions have changed. Many of the industries left and moved production to countries where labor is much cheaper. Some companies have sold or spun-off divisions to streamline their operations. Like the rest of our country, there has been a shift from a manufacturing economy to a service economy. As our local economy changed, I invested more in large companies with global operations but I never forgot what Uncle Earl taught me. Currently, my large-cap stocks are trading at lofty multiples as measured by the P/E ratio. There is also a movement to relocate our supply chain back to America. The problems of relying on foreign sources, especially China, for critical components are obvious now. Also small cap stocks are currently in favor again after many years and so is value investing. Add it all up and it makes sense to take Earl's advice now and look locally for opportunities to make money. Regional Banks are making money on mortgages, higher interest rates, and a surging economy, the plastic industry has a local powerhouse in Berry Plastics, we still have a presence in the pharma industry, and metals are again in demand due to the reopening. Most of these local stocks have performed well so far this year but still trade at very reasonable valuations and they are right under my nose.