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It’s Never Too Late to Start Investing

Last week, I was on vacation in Amsterdam. The weather was bad--cold and rainy--but it was still a great trip. One of the highlights was our visit to the Van Gogh Museum, which owns the world’s largest collection of works by Vincent van Gogh, as well as many pieces by...

Last week, I was on vacation in Amsterdam. The weather was bad—cold and rainy—but it was still a great trip. One of the highlights was our visit to the Van Gogh Museum, which owns the world’s largest collection of works by Vincent van Gogh, as well as many pieces by his contemporaries and artists he inspired.

The art, of course, was incredible. But one of the most striking things about the museum, was the tiny date range it covered. Many museums group works by date, but the ranges are usually pretty broad—Flemish paintings from the 16th century, for example. At the Van Gogh museum, the work is grouped into periods of only a couple years each: 1886-1888, 1888-1889 and 1889-1890, for example. The longest period is only five years (“early works” from 1882-1886).

The reason is obvious from reading the information about Van Gogh’s life on the walls. Van Gogh didn’t begin to pursue art as a career until his late twenties (after stints as an art dealer and preacher), and his career ended a short decade later, when he ended his own life.

Yet, in a few short years, Van Gogh managed to create an incredible body of work, consisting of over 2,100 works of art, and he’s remembered today as one of the greatest artists of all time. His greatest masterpieces were painted less than a decade after he began painting.

His story reminded me of an article in Scientific American I read recently. (You can read the whole thing by Maria Konnikova, here.) The article mentioned others like Van Gogh, who came to their careers or avocations late but still achieved greatness. The painter Grandma Moses (whose painting, Sugaring Off, sold for $1.2 million in 2006) didn’t begin to paint until she was 75. Harlan David Sanders started Kentucky Fried Chicken at the age of 65. Oscar Swahn, a Swedish shooter, competed in his first Olympics at the age of 60 and went on to become the oldest Olympic medalist in history at the age of 72.

The article also mentioned runner Kathy Martin, who launched her athletic career more recently—in her late 40s—and is now breaking records at 60. (She was also profiled in The New York Times earlier this month).

The point of Konnikova’s article was that intelligence—as well as many other traits, like artistic talent and athletic ability—are not fixed, but can change, increase and improve throughout our lives. Most interestingly, perhaps, is a study she described that found that for people who believe intelligence is changeable, it is. In other words:

“If you believe yourself to be capable of improvement, believe that your mind can learn, can become better, can overcome setbacks, you are setting yourself—and your brain—up for exactly that path.”

Furthermore, that mindset is no more predetermined than intelligence. You can go through the first half of your life thinking you’re not very bright, or good at math, but if, at 40 or 50 or even 60, you read a book or article that convinces you that you may be able to become smarter, or to improve your math abilities, you still can.

I thought the research was particularly interesting given that my main subject—investing—is something many people first try their hand at later in life. Often, retirement (or close to it) is when people first feel they have enough capital to invest, and enough time to do it themselves. Younger people are often paying off mortgages or student loans, raising children and then paying for them to go to college. And many working people don’t have enough time to manage their own investments.

But even if you buy your first stock at 60, 65 or later, there’s still plenty of time to become an expert. Or if there’s something else you’ve always wanted to try—like painting, running or founding a business—it’s not too late for that either!

As far as stocks go, today I have a pick for you from the latest Investment Digest. It’s not related to today’s article, but it is thematic because the industry it’s in—regional banking—is having a moment in the sun. In addition to this stock, the latest Digest included not one but two recommendations of a fund that focuses on smaller banks. With that, here’s this week’s Investment of the Week, recommended by Richard J. Moroney, CFA, in the April 2 issue of his newsletter, Upside.

“Headquartered in [McLean] Virginia, Cardinal Financial Corp. (CFNL) serves the Washington metropolitan area through 27 offices. The company also operates a residential mortgage-lending business with 10 locations and offers trust, brokerage and asset-management services.

“Cardinal earns an Overall Quadrix(R) score of 97, versus an average of 59 for the 288 regional banks in our research universe. The stock scores above 80 in three key Quadrix categories—Momentum (89), Value (84) and Quality (85). Cardinal posted impressive results in 2011, with per-share earnings up 52% to $0.94. Total assets soared 26%; deposits rose 15%; and loans held for investment increased 16%. On December 31, nonperforming assets as a percentage of total assets were a reasonable 0.69%. For 2012, Wall Street expects per-share earnings of $0.95, up 1%. That figure seems low given the company’s operating momentum. Cardinal Financial Corp. is being initiated as a Buy.”

Wishing you success in investing and beyond,

Chloe Lutts

Editor, Investment of the Week

Chloe Lutts Jensen is the third generation of the Lutts family to join the family business. Prior to joining Cabot, Chloe worked as a financial reporter covering fixed income markets at Debtwire, a division of the Financial Times, and at Institutional Investor. At Cabot, she is a contributor to Cabot Wealth Daily.