With eye on the future, investment firm marks the past
Renowned investor Warren Buffett once said, “Time is the friend of the wonderful company, the enemy of the mediocre.”
Don Gould would agree.
Mr. Gould founded Gould Asset Management, a fixture in the Village for two decades, in 1999. His underlying philosophy is much like Mr. Buffet’s: investing is not a sprint, it’s a marathon.
“First, we are inherently on the conservative side of the middle when it comes to risk,” Mr. Gould said. “And we continually remind our clients that money takes decades to accumulate, and if not managed properly, can be dissipated much more quickly.”
That philosophy has helped GAM reach an admirable milestone for any business: its 20th anniversary. The firm paused this week to celebrate with a client mixer at its Village offices.
Mr. Gould grew up nearby, in San Marino, the fourth of five kids. He’s a Pomona College grad, as are two of his brothers. “That’s what got me introduced to Claremont,” Mr. Gould said. “I just loved it here, and I stayed here.”
He went on to earn his master’s degree from Harvard University after Pomona. “Cold weather cured me of the east,” Mr. Gould said. He came back to Claremont in 1981 and has been here ever since.
He had been in the investment business for 18 years, most recently with global behemoth Franklin Templeton, by the time he founded GAM.
At Franklin Templeton he had been a cog in a giant financial services machine that managed nearly $1 trillion in funds.
“It’s like the 747 versus the Cessna,” said Mr. Gould. “The 747 is a magnificent, gigantic machine with a huge number of passengers who are all sitting way in the back, and you’re up high in that little cockpit. You’re flying at 37,000 feet, and you move a little lever and tilt the wings a couple degrees.
“Here, we’re in the Cessna. We’re a few hundred feet off the ground and we can see the houses, the yards and the children, and the passengers are sitting right here in the cockpit with us.
“I greatly prefer the Cessna: You’re closer to the ground, you’re closer to your clients, and you’re closer to the community. It’s just a better way to live.”
Gould Asset Management was a one-man operation for its first three years. Then, in 2002, Mr. Gould made his first hire, portfolio manager Tom Carr. Mr. Carr is now a partner with GAM.
“We started with zero, exactly zero,” Mr. Gould said. “If you fast forward, we went from zero clients and zero assets in 1999 to 10 employees, three consultants and $600 million in assets and management and 300 clients.”
Amid the 20th anniversary fanfare, on September 28, Mr. Gould will be honored by Claremont Museum of Art, one of several nonprofits his firm has long supported.
The firm’s investment in local institutions has also included sharing the knowledge Mr. Gould has accumulated over his now nearly 40 years of building clients’ assets.
He taught portfolio management for five years stint at Claremont Graduate University’s Drucker School, and for six years at Claremont McKenna College. He later hired his Drucker student Scott Smith and CMC student Johnny DeBiase, both of whom are now partners at GAM, along with Mr. Carr and himself.
Mr. Gould has been a trustee on the board of Pitzer College since 2006, where he was instrumental in supporting Pitzer’s decision to divest fossil fuel stocks from its endowment and later to incorporate environmental, social, and governance factors in its stock selection process. He also chaired the search committee that led to the appointment of Melvin Oliver as Pitzer’s sixth president in 2016.
Much has changed in investing over the 20 years GAM has been in business. The rise of online trading, which saw its nadir at the height of the soon to burst financial bubble of 2008, was one new development.
Another is the increased acceptance and popularity of index funds. These are a type of mutual fund with a portfolio tied to the components of a financial market index, such as the Standard and Poor’s 500. Proponents say they provide broad market exposure, low operating expenses and low portfolio turnover.
“We were one of the early adoptees of index funds at a time when they weren’t very popular, and some even called them un-American,” Mr. Gould said. “And I think that proved to be a good decision, because most of the industry has come around to see the wisdom of index funds.”
The firm weathered the 2008 recession—a cataclysm that felled industry giant Lehman Brothers, among others—by virtue of its by then well-established conservative track record.
“That’s not to say it was not stressful,” Mr. Gould said. “It was very stressful. If you look at the newspaper headlines from 2008, it’s hard to imagine that that really happened. Every day we were having a major financial institution go down.”
The firm, though, was ultimately strengthened as a result of the recession, with new clients drawn to its track record of steady growth as opposed to the wild west style speculation that led up to the 2008 collapse.
“When markets are going up, I think people are generally pretty happy, or at least complacent with their current investment advisor or way of managing their money,” Mr. Gould said. “When they go down it exposes weaknesses in strategies or advice.”
The firm’s client growth has been steepest during and after periods of market volatility, he said. “If you’ve developed a good reputation, when people ask for referrals you’re going to get your share.”
About half of GAM’s business is local. The other half is spread out across the country. Mr. Gould said he hopes that the firm’s longstanding strong suits—it’s independence, which he says is crucial to offering non-biased investment advice; and being local, with many of its employees Claremont residents—will still hold true over the next 20 years.
“We make this business very personal,” Mr. Gould said. “Every one of our clients has a close relationship with at least two and maybe three of our team here, on a first-name basis. We know the names of their children, the challenges of their job, and you could go on down the line. So, yes, it’s a very personal relationship.”