The Philosopher Series I am assembling will examine philosophers from the past and consider what I believe their belief-systems might lead them to invest in, supposing they were around today to do so. To qualify for this series a philosopher must no longer be alive since if they are currently living, we could simply ask them what they have invested in and the intrigue would be lost.
A word of warning to the reader: Philosophers and their theories lend themselves to heated debate as to what they did or did not actually mean by their principles. In this series you will be treated simply to my interpretation of how certain theories might take form in the realm of investment.
Friedrich Nietzsche is a nineteenth century German philosopher whose influence spans the gauntlet as he was quite prolific as a writer. Highly critical of his contemporaries and those who came before, Nietzsche never shied away from ruffling anyone's feathers.
He believed in an elusive concept he termed the "Will to Power" which contends that all life is in a constant struggle to attain power. Beyond that, he believed that antiquated notions of truth and knowledge are superseded by desire for power as a governing principle. He believed the guiding ideal of humanity and the world itself is a push toward greater levels of being which manifest themselves in degrees of supremacy. Nietzsche's philosophy is also commonly associated with the notion of the "Overman" which, depending upon interpretation, is the greatest personification of a truly powerful being.
Consequently, it stands to reason that Nietzsche would be in the market of acquiring large businesses that operate globally and gain strength as time goes on.
The first company I would expect Nietzsche to add to his portfolio would be Berkshire Hathaway (NYSE:BRK.B) which recently celebrated its Golden Anniversary of 50 years under current management. BRK.B is the conglomerate behemoth headed by Warren Buffett and Charlie Munger.
BRK.B bears all the marks of an all-consuming power. The company has built a collection of businesses that bear continual fruit in the form of a never-ending cash machine. As the money funnels up the organization to Buffett, it is then redeployed to acquire even larger businesses to put under the umbrella. With each acquisition, the monster of a company grows even stronger and is able to repeat the process quicker.
Pursuant to Nietzsche's notion that "whatever doesn't kill you makes you stronger", he would admire BRK.B's ability to grow market share and capitalize in times of strife. During the financial crisis BRK.B was able to strike terms to deals with some of the largest corporations in the world including Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC) with favorable terms due to BRK.B's incredibly strong financial standing.
If there was ever a company that is truly built-to-last under any conditions, BRK.B fits the bill.
While Nietzsche really believed that talk is cheap and would most certainly have been a dividend growth investor, I believe BRK.B to be the one company he would make an exception for. Having noted the above, this would have been a staple in his portfolio.
The second industry I would expect Nietzsche to have a stake in would be the tobacco market. I would not imagine Nietzsche to have had any issues with profiting from human vice. Further still, Nietzsche might balk at those who even suggest that there is an issue of morality in the field of investing. His later writings suggest that people require a revaluation of their values meaning to move beyond the social trappings of accepted morality. The fact that so many people have an aversion to tobacco stocks may even increase Nietzsche's desire to own stock here; he could be quite the contrarian.
Not only do I suspect Nietzsche would have taken a stake in a company such as Philip Morris (NYSE:PM), but I reckon he would also have been an early adopter. PM would satisfy Nietzsche's requirement of owning a large, international operator, and he would have profited over the years greatly as a result. Upon recognizing the addictive nature of the product and the hold it has over its users, he would have almost certainly taken a sizeable stake here with the mindset being that if people are doing it anyway, as an investor it would be foolish to not get a piece of the pie.
Having little faith in the intentions of people, Nietzsche preferred action and results. In The Dawn he states, "What is the best remedy? Victory" (Point 571). There is little room for a confused value-system in a results-oriented philosophy; PM's healthy dividend yield sitting around 5% would certainly satisfy Nietzsche's desire for said results.
In the third spot I struggled between a few names and finally settling on Johnson and Johnson (NYSE:JNJ). Nietzsche could certainly recognize a good thing when he saw one and JNJ bears all the hallmarks of a company with staying power.
Over fifty years of annual dividend increases on a current yield approaching 3% would be the icing on the cake for a company with hugely favorable demographic trends. JNJ is currently positioned to continue increasing its presence for years to come as it produces the products people use every single day and buy more when they run out.
JNJ's management has had ample opportunity over the years to spin-off different aspects of their business lines and have not done so. A unified JNJ would be preferential for the dominating spirit of Nietzsche. He would be in favor of this approach so long as the organization is able to avoid the pitfalls that accompany gargantuan corporate size.
While his predilection toward the powerful would lead him to prefer large multinational corporations, Nietzsche's hypercritical nature would cause him to struggle against the bureaucracy that tends to breed rampantly in these organizations. Additionally, although BRK.B is a lean corporation from top to bottom, it fails on the show me the money component by not paying a dividend.
Further, it is likely that Nietzsche would be a very activist investor, challenging CEOs and selling stock if they did not proceed as he saw fit. It would be difficult for him to own and hold companies if he saw any cracks in upper management both on a personal or professional level. As is widely known, the more active investors are the worse their returns tend to be.
In my favorite of Nietzsche's texts, Twilight of The Idols, he challenges the cultural establishment of his day. Finding fault in the decadence of those in his era over one hundred years ago was easy enough for Nietzsche and would no doubt only be magnified in the sound-byte world of the twenty-first century. Given his ability to whip off one-liners that could shred those who disappoint him, Nietzsche's activism would no doubt lead him to actively and vehemently confront the management of his companies using the most appropriate medium of the day; in 2015 that means Twitter (NYSE:TWTR).
Nietzsche earns a final score of B as an investor.
The top three companies I believe he would take a stake in include BRK.B, PM, and JNJ.
As noted above, he would have had the ability to find and own the highest quality companies but would have struggled against his desire to sell if things did not carry on as he preferred. He very well might have bitten off his nose to spite his face as an investor which would have hurt his potential for long-term gains.
Passive indexing would also have been out of the question as Nietzsche's writings are anything but passive. In fact, Twilight of The Idols mentioned above also goes by another name of "How to Philosophize with a Hammer".
Full Disclosure: Long JNJ.
Disclosure: The author is long JNJ. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.