Think Smarter, Not Harder: How “Obvious Adams” Can Boost Your Investing

During their latest episode of the VALUE: After Hours Podcast, Taylor, Carlisle, and Travis discussed Think Smarter, Not Harder: How “Obvious Adams” Can Boost Your Investing. Here’s an excerpt from the episode:

Tobias: JT, it’s the top of the hour. You want to do your–?

Jake: I would love to. It’d be my honor.

Tobias: Veggie?

Jake: [laughs] So this is a perfect segue since we were just talking about obvious things to do. I think I believe this is the book that Toby was referencing about–

Tobias: I think we did that offline.

Jake: Yeah, we did. So the name of this book that we’re going to do a little book report on, is called Obvious Adams. And it was recommended to me from my friend, Dan Sheehan. So thanks, Dan. It’s a fun little read. You can do it in well under an hour. It’s super, super quick. Or, you can just listen to this segment if you want instead.

So this was first published as a short story in the Saturday Evening Post in 1916. So it’s quite old, more than a 100-years old by my math. The story is about this poor, young man, who wants to get into the advertising business after hearing this spellbinding talk from the president of a famous advertising agency. The only trouble is, this guy, Adams, this kid is completely unremarkable. He is just average in every way. And to be a successful ad man, you have to be rather clever. So to get into advertising, he makes an appointment with the president. And the president, he talks his way pass the secretary, gets in and talks to the president, and the president asks him some questions and determines like, “This kid isn’t nothing. We can’t do anything with this.”

And then Adams takes that nicely enough when the president tells him this, and he simply says, “I’ve decided that I want to get into the advertising business, and that I want to work for you, and I thought the obvious thing to do was to come and tell you. So you don’t seem to think that I could make good on this. So I will set out to find some ways to prove it to you, and I’ll call on you again when I have found them. Thank you. Good bye,” and he walks out and just leaves. And the president is dumbfounded, and he spends all evening thinking about this kid and their interaction, he realized, we could use somebody around the office that has sense enough to just do the obvious thing and then not make it more complicated than it has to be.

So the next morning he sends for this kid and he offers him a job. And Adams comes in, he starts doing this little menial job, and he has some suggestions about obvious improvements to do his job that increased his productivity. And eventually, he tells his boss that someone could be doing my job for half of the salary. So they end up promoting him and someone else takes that job. He actually gets into starting to write copy. And so his ad work was focused on– He just goes and talks to the companies that he’s doing the ad work for and to understand what are they doing, like what makes their product special. He gathers the facts, and then he spends a lot of time just thinking about them, and he determines the essential points and then puts them down clearly into ad copy, and that’s it. And it worked like a charm. He became one of the most sought-after ad men from just basically discovering the obvious thing to do. Hence the name, Obvious Adams.

So when asked why don’t more people do what’s obvious? He replies, “Thinking is the hardest work many people ever have to do, and they don’t like to do any more of it than they can help. They look for a royal road through some shortcut in the form of a clever scheme or stunt, which they call the obvious thing to do, but calling it doesn’t make it so. They don’t gather all the facts and then analyze it before deciding what is the obvious thing. And therefore, they overlook the first and most obvious of all business principles.” And then at the end of the book, the author gives you five tests of obviousness in this appendix, which I will share with you now.

Number one, and this came from Charles Kettering of GM, who is like a pretty famous CEO of GM way back in the day in their heyday. He had it placed on the wall of the GM research building, and this little plaque said, “The problem, when solved, will be simple.” Or, said in another way, “The solution, when found, will be obvious.” Number two. Does it check with human nature? If your idea or plan can’t be understood and accepted by your mother, wife, brother, friend, gardener, all these people, etc., it’s probably not obvious. Human nature makes or breaks any plan, and the public’s mind is simple, direct and unsophisticated.

Number three. Put it on paper. Write it out like you were explaining it to a child. Can you do this in two or three short paragraphs? If the explanation is long and complicated, it probably isn’t obvious. Number four. Does it explode in people’s minds. If people say, “Now, why didn’t I think of that?” Of course.

Tobias: [laughs] Too obvious.

Jake: Yeah. Then you’re probably on the right track. If it doesn’t explode in the mind and it requires lengthy explanations and hours of argument, it probably isn’t obvious. Number five. Is the time ripe? Sometimes the windows pass for an obviously good idea. One is reminded of the quote, “What the wise do in the beginning, fools do in the end.” And sometimes the idea is ahead of its time, which then calls for patience and alertness.

So I think if you take these five obviousness principles and apply them to your investing, you hopefully can recognize a Microsoft in 2012 at a 10 PE, and not try to overcomplicate things and think about, “Hey, I got to be more clever than that. Anybody could buy Microsoft.” [chuckles] I think when you look at Buffett’s record, and the way that he’s able to boil things down– when he explains it’s like, “Oh, well, duh, that’s so obvious and a smart thing to do.” Oh, the KPI for Coca Cola is unit cases sold per share. If I just keep an eye on that, if both of those things are going in the right direction, this is going to work out just fine. Being able to boil it down and become your own Obvious Adams, I think might be one of the untapped potentials in this entire business. We like to make it so complicated.

Tobias Carlisle Yeah. Jake sent it through to me, and I had to read it through. I worked out at seven words per line, 21 lines per page. Now I forget the number of pages, but it worked out to about 8,000 words. It’s a very quick read, like, literally half an hour.

Jake: 40 pages?

Tobias: 40 pages.

Jake: Look how thin this is. This is it. It’s a pamphlet, practically.

Tobias: Great book. He tells a great story about being tasked with going and figuring out why a hat store wasn’t selling. There were two hat stores, and one was selling a lot and one wasn’t. And when he tried to find the second hat store, he couldn’t find it because it was hidden down an alleyway. And you’re coming up to a busy intersection trying to figure out why you’d cross over, and he’s like, “There’s the answer. It’s too hard to find.” [crosstalk]

Jake: Yeah. And the sign, I guess was obscured, and no one would have been looking up, because they were worried about crossing the street there.

Tim: It makes sense, totally.

Tobias: Yeah, good little read. I think that’s right. I think that’s like the best investment decisions are often and stuff. It’s just obvious. And I think Buffett’s Apple is also another obvious one in 2016, where it was just overearning. Everybody had an Apple phone. Toes up. There’s a ladder of like, you have to keep on buying every few years where your phone doesn’t work no more.

Jake: Or, the battery will just start draining mysteriously. [laughs]

Tobias: Yeah, that’s right. Or, you get a whole ecosystem of Apple TV and Apple computers and Apple phones and Apple Watch you’re locked in. No one’s getting outside of that ecosystem anytime soon.

Tim: Oh. I’m an Android person.

Tobias: [crosstalk] [laughs]

Tim: So everyone hates when I’m on the text messages and stuff like, “Who’s the non-Apple [crosstalk]? This idiot.” [laughs]

Jake: Who’s the green guy?

Tim: Yeah.

Tobias: One you look–

Tim: Oh, sorry. Go ahead.

Tobias: No, you’re fine. I was going to say, once you lock into the pixel, it’s hard to get out of that too. I’ve got a pixel.

Tim: Oh, yeah. That’s what I have too. I have the foldable one. I love it.

Tobias: Oh, yeah?

You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:

Apple Podcasts