Downton Abbey – Lessons for Investors
January 2, 2014 
Downton Abbey – Lessons for Investors
Were you one of the 8.2 million people watching the final episode of Downton Abbey, Series 3, last winter? If so, you were probably captivated by the drama. Perhaps you even learned a few life lessons from the Crawley family!
The Major Players
- Robert Crawley Earl of Grantham, patriarch of the family
- Cora Crawley Lady Grantham, his American heiress wife
- Violet Crawley Lord Grantham’s mother, the dowager countess
- Matthew Crawley Third cousin, next (male) heir in line. Husband of Mary Crawley, eldest daughter.
The Plot
It’s the 1920’s. World War I is over. The British economy is changing. Downton Abbey, a huge country house on about 1,000 acres (Highclere Castle in real life) is economically unviable.
Lessons Learned
- Danger of Concentrated Positions – Lord Grantham travels to London to meet with his broker. His large investment in a Canadian Railway hasn’t worked out. The founder has died; the company may go bankrupt. The family fortune is gone.
Value of Advice – Lord Grantham chose to ignore advice against putting so much money behind one idea. He’s now backed into a position where he can’t recover the capital he’s lost in time to save the estate.
Avoid “Get Rich” Schemes – Lord Grantham suggests to Matthew (and others) they chase high returns. “There’s a fellow in America, Charles Ponzi, who has been getting great returns…”
Be Aware – When Cora learns about the setback they have suffered with the Canadian railway investment, she asks, “What about my fortune?” At this point, she discovers her fortune, too, is gone. Both partners should be involved and aware of the family’s financial situation.
Don’t Use Debt For Ongoing Operations – The estate costs more to run than it generates in revenue. Borrowing can be a short-term solution. Eventually, though, the debt must be paid.
Accept Help; Seize Opportunities – Matthew Crawley receives a substantial inheritance from outside the family. At his wife’s urging, he offers it to Lord Grantham to save the estate. It takes a couple of episodes for Lord Grantham to accept, making Matthew a co-owner of the estate.
The World Is Changing – The business model that served the estate in the past is not the business model that will carry it successfully into the future. Matthew wants to reconfigure the operation, move to large scale farming and raising sheep. Lord Grantham resists because of the impact on those who depend on the estate for their livelihood, but eventually agrees, and the tenant farmers are treated fairly and sympathetically.
Take Control of Your Own Retirement – Downton Abbey had a significant staff for day to day operations. A sale of the estate might render them all without future job security. They needed to plan for their own future.
Illness Can Change Everything – Elsie Hughes, the housekeeper, has a cancer scare. Care was provided at no cost to her by the local hospital. That certainly isn’t the state of medical care in America today. Are you prepared for the risk of catastrophic illness?
Conclusion
The Grantham family has managed to turn the corner economically. The estate has been saved. Or has it? With a new baby on the way, let’s hope Matthew, a solicitor by trade, has been wise enough to update his will to provide for his family. Series 4 will begin on January 5, 2014. You may want to tune in…just don’t forget the scones (and butter)!
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