Father's Day Reflections: From the Junkyard to Wall Street

On this Father’s Day, I’d like to thank my dad for the lessons I learned from the Junk Yard. My dad’s family business was an auto salvage located in Beacon, NY.?

As context, some quick background on how an auto salvage business makes money: An auto salvage business buys cars that are beyond repair (the car is "totaled,” as they say in the insurance industry when a car is a total loss after an accident). Perhaps the engine is beyond its useful life or the body is too damaged from an accident. Fixing that one part would cost more than the entire value of the car. Because the car is beyond repair, it can be purchased for a low price. But other parts of the car are still valuable. So the business buys the car and then sells the working parts piece by piece to be used in cars that can be repaired. The remaining materials are sold as scrap metal to be recycled for other uses. With wise purchases of broken-down vehicles, the parts and scrap metal can be resold as parts at a profit.?

As a kid, I didn’t know these lessons, but I appreciate it now.

• The business laid the groundwork for my deep understanding of sum-of-the-parts analysis, which I used many times as a sell-side analyst covering consumer stocks. Quick definition of Sum-of-the-parts analysis: A method of valuation used to determine the worth of a company by determining what its divisions would be worth if it were broken up and sold off piece by piece.
• This business was ESG (Environment, Social, Governance) friendly before there was a term for it. The business facilitated the recycling and reuse of parts and materials as a core part of the business strategy. In addition, it offered low-income consumers opportunities to repair their vehicles with used parts if they couldn’t afford to have the vehicle repaired with new parts or trade in the vehicle for a new one. ESG has always been a critical part of my professional career, perhaps partly due to the groundwork laid back at the junk yard all those years ago.

The thing about that old junk yard was always apparent to me: I learned my work ethic from my dad.

• He worked at least six days a week and sometimes seven days a week. During the week, he’d leave early each morning before I would leave for school and he would get home after sundown.

• During the daylight hours, he worked in the junk yard, manually taking junked cars apart piece by piece with his business partners and a small team.
• Once dismantled, he and the business would catalog and store the parts in a large warehouse on the property.
• And, then (probably the most fun part of the process), he and the team would load the remains of the vehicle into the crushing machine, turning the car into a compressed rectangle of metal to be sold as scrap.

It was incredibly hard manual labor. When I was growing up, the junk yard was used as a message to me that I was going to college, unlike my parents, and that I had to work hard to get good grades to avoid the junk yard as my line of work as an adult. That was a message I heard as early as I can remember.

Perspective looking back

To be honest, I used to resent the junk yard because of how my dad had to work so hard while hearing it was not a job I should aspire to. But looking back, I couldn’t be more appreciative of what my father was able to provide for my brothers and me. I was able to go to college and make my own living in financial markets, data, and technology— something I truly enjoy doing and a community I enjoy being part of each day.

It’s very much the American dream that each generation has the ability to live a better life than their prior generation, and for that, I’m grateful. Hopefully one day, when my kids are grown, they will also be able to look back with this perspective and be appreciative of having a better life in their generation than prior generations.