What I Learned From John Rekenthaler

As you know, John Rekenthaler recently announced he is retiring from Morningstar.

Hired as a fund analyst in 1988, John was one of Morningstar’s first employees. During his tenure, he served in various leadership posts in research and investment management, and the firm reflects his imprint in ways large and small, from the Morningstar Style Box to the Morningstar Category classification system to helping put our retirement business on the map.

Even for all of those achievements, John is probably best known for the Rekenthaler Report, his long-running column that’s become one of the most popular and widely cited in investing and personal finance.

Beyond that, John has been first and foremost a valued mentor to those of us who have had the good fortune to work with or for him. With that in mind, we asked a number of John’s longtime colleagues and confidants to share the key lessons they learned from him over the years. You’ll find their contributions below.

John isn’t going away, and he loves to hear from readers! If there’s something you’ve learned from John or just want to share a kind word, drop him a line. He’s at john.rekenthaler@morningstar.com.

On behalf of all of us at Morningstar, congratulations on your well-earned retirement, JR!

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John is funny and relatable yet delivers complex research pieces in a credible and deeply analytical manner. He lets the data speak, cuts to the heart of an argument, and seemingly simplifies the complex. In doing so, he isn’t fearful of being out of step and takes risks with an openness to being challenged.

John represents the quintessential Morningstar voice—in service of the investor, plainspoken yet bold, research heavy yet practical, and simply, real. I learned from him how to deploy our independent mindset in a way that makes it clear to this day that Morningstar exists in service of empowering investor success.

• Kunal Kapoor, Chief Executive Officer, Morningstar, Inc.

What I learned from JR is that in investment research, it’s more important to be an independent thinker and a courageous writer than it is to be steeped in deep financial knowledge. I brought John into our fund analysts team in the wake of several failed attempts to turn candidates with much more financial training into good analysts. His hire, along with those of Cathy Odelbo and Lori Lucas, put Morningstar on a winning path. We learned that we could teach finance on the job, but not bold thinking and great writing.

John did not grow up in an investing family and he had taken few if any finance classes, but he was an insightful observer, had a curious mind, and was a brilliant writer. While he later honed his financial skills with additional degrees and certificates, I believe his outsider perspective shields him from industry dogma and keeps him willing to challenge convention. He sees investing through a different lens, one based on common sense and now long experience—a powerful combination. He continues to adopt the perspective of the individual investor, not the industry establishment, even though he has long since earned his place among the elite thinkers in finance. Importantly, he has the courage to speak truth to power, an endangered quality in a world where increasingly power speaks to truth.

• Don Phillips, Managing Director, Morningstar, Inc.

To read John is to know him. Like his columns, John is curious, direct, and always helpful. He’s fun. He’s up for anything.

And his intellect is something to behold. I remember years ago when we were trying to come up with a tool to help investors sort out how to use a given investment in their portfolios given their goals and risk parameters. Over several meetings, we had been going around in circles about what we wanted the metric to achieve and whether it could be distilled to a single number. Before my very eyes, John came up with an elegant, interlocking system that encapsulated everything we were trying to accomplish. John shook it out of his sleeve, as Frank Lloyd Wright said of some of his most famous designs. JR’s mind works very quickly and efficiently like that. Watching it work in real-time that day nearly took my breath away.

In terms of the JR skills that I could actually seek to emulate, his willingness to unpack complex topics for his readers stands out. John is an analyst through and through, so you’d never find him repeating some investing truism without thoroughly exploring it and explaining it to his readers. I can safely say that I’ve never read one of John’s columns and found that it just reinforced something I already knew—I always learn something. What a gift to all of us.

• Christine Benz, Director of Personal Finance and Retirement Planning, Morningstar, Inc., author of bestselling book How to Retire.

One of the main lessons I’ve learned from John over the years is the importance of seeing the big picture. John has always had an expansive personality, and that personality matches his approach to his work. Like most people who write about investing for a living, John can often be found with his head down buried in his work, banging away on the keyboard. But just as often, he’s roaming the aisles, chatting with colleagues about the latest developments—either good or bad—in the investment world. John’s approach has always been “writing by wandering around,” meaning that he actively seeks out new fodder for column topics and bounces ideas around with friends and colleagues. As a result, he’s written about nearly every investment-related topic under the sun and often comes up with fresh insights while revisiting a previous subject. His weekly observations on the investment world are beyond compare and will be sorely missed.

• Amy Arnott, Portfolio Strategist, Morningstar, Inc.

Regular readers of the Rekenthaler Report will not be surprised to learn that not all of John’s writing sat well with its subjects. John regularly took on popular, long-held investing trends and portfolio-construction practices and methodically cataloged their shortcomings. In recent months, he’s taken this approach with annuities, the “Magnificent Seven,” and long-ago predictions from Bill Gross, whose Pimco career earned him the nickname “The Bond King.”

Sometimes those John criticized came around to argue their points via emails, phone calls, and sometimes phone calls to his superiors at the time. This escalation didn’t happen too often, because John’s columns are master classes in how to construct well-supported arguments. And at Morningstar, all analysts and writers come to work prepared to defend the last rating, article, or press quote.

But when the critics came to John, he was smiling, unfazed. There was no hand-wringing or bashing his opponents. John is a polite and careful listener, using critiques of his work as opportunities to consider new points of view and to his sharpen his arguments. If he was wrong about something, that was often fodder for another column. A gift!

Thank you, John, for modeling grace, good thinking, and excellent writing. May retirement be full of smiles, too!

• Laura Lutton, Global Head of Manager Research, Morningstar Research Services

More than anything, John taught me what compelling financial writing gets done, occasionally with direct advice, but far more frequently by example: Run all the numbers, come to the point, and don’t waste words. After a decade of clumsy imitation, I could get close, but only on my best days and with a full moon. But beyond the critical literary and financial advice was his decency and considerateness; almost 30 years ago he took the time to encourage my financial writing at a time when I was a burned out physician scribbling away on the internet. (The term “blogging” had not yet come into fashion.)

Finally, I learned from hard experience to heed Rekenthaler’s Rule: If the bozos know about it, it doesn’t work any more.

• William Bernstein, author and investor, Efficient Frontier Advisors

Go where your intellectual curiosity takes you, even if that means questioning orthodoxy. In the 1990s John challenged the famous Brinson Beebower paper about asset allocation. John dug in to point out that people were reading way too much into it about the importance of asset allocation.

Over time, he probably questioned the work of every big fund company and thinker in investing. And when he found something different, he explained it but didn’t pound the table as though his word was final. Rather, he saw it as continuing the discussion.

Some of the biggest themes of his work are ones we should all take to heart. Investing is pretty easy with these three ingredients: low costs, patience, a healthy weighting in stocks. Stray from those ideas and it gets harder and harder.

John also showed that a lot of readers are capable of going along on his journey of testing investing principles. If you write clearly, you don’t need to dumb it down. There’s an audience for work that engages academic and investing research.

• Russel Kinnel, Director, Ratings, North America, Morningstar Research Services

When I think back on who has had the greatest impact on my investing, two names come to mind—Jack Bogle and John Rekenthaler. Long before I met John, he and Don Phillips invented the iconic Morningstar Style Box in 1992. Before then, I was assuming fund managers in styles like small-cap value were brilliant stock-pickers when, in reality, they were often underperforming in that particular riskier style.

Over the last couple of decades, I’ve been lucky enough to have frequent contact with John. Our discussions are fascinating, and I so enjoy debating the few areas we disagree on. And, of course, in the majority of the cases, it turned out that John was right. Aside from all he has done to help me and millions of investors understand the importance of fees, diversification, and discipline in reaching financial goals, he is one of the nicest and most humble human beings on the planet. I aspire to be more like John, and appreciate all he has taught me.

• Allan Roth, author and financial advisor, Wealth Logic, LLC

When you begin your employment at Morningstar, you hear a lot about thinking independently. To be honest, I was not an independent thinker when I arrived here. It took me a while to even understand what that means, and it’s still something I work on. More than anyone else on earth, John taught me the value of independent thinking. You could see it in the words he published and overhear it in editorial meetings and conversations he’d have with reporters. John understood Morningstar’s position in the investing industry and embraced it, arguably even before we had quite achieved and earned that independence. It was a presumptive move on his part. Morningstar has been a perfect match for his personality.

John also taught me to establish my own standards rather than basing them on others'. And John had very high standards. I worked in data analysis at first, and when he found an error, I heard about it. Which brings me to the third thing that John taught me: To expect as much of your colleagues as you expect of yourself. Finally, John is always open to his ideas being challenged. In my early years at Morningstar, this was a frightening experience, because John has a very sharp, quick mind. In recent years, time and fatherhood may have tamed him a bit, but he has remained keen to hone his ideas through debate with others and kept his mind wide-open. To be a great thinker, you have to be a great listener.

• Sylvester Flood, Senior Product Manager, Morningstar, Inc.

I learned more about investing in a month of listening to and reading what John had to say than I had in two years at a mutual fund company. More importantly, John seemed like he was having fun. He was always laughing, smiling, or chuckling wryly, just before darting in another direction down the hall. I felt like I was learning from a Happy Warrior at work.

• Eric Jacobson, Director of Manager Research, Morningstar Research Services

When John hired me as a young and inexperienced fund analyst 30-plus years ago, I said something about how I was glad I must have passed the difficult writing test. He said, “Oh, you didn’t, but you failed less badly than others.” And that was the start of a long and productive relationship with John as my boss, teacher, editor, mentor, and friend. John proceeded to teach me all sorts of things—how to not fear failure, how to be a better writer, how to think analytically and creatively about data, how to grapple with serious topics without taking yourself too seriously, how to be courageous and steadfast in advocating for investors. With much gratitude for all this and more.

• Catherine Voss Sanders, Strategic Projects, Morningstar, Inc.

I met John early in my Morningstar career, when I was given a few hours off from my product support phone duties each week to assist him with his already voluminous correspondence with Morningstar readers. (On paper, of course, as this was the mid-1990s!) A few years after that, I worked directly for John on the ClearFuture project. It was an intense experience—it felt like a startup within a company that was still itself relatively young. John was a generous leader, always open to whatever made the most sense for the product and its end users, and giving full acknowledgment of the contributions that each of us made.

In the early days of Morningstar.com, all of us on the editorial team were in awe of John’s ability to turn in a daily version of the Rekenthaler Report, in addition to his many other responsibilities, seemingly constructed in his mind as he read The Wall Street Journal during his morning commute. He somehow made the creation of a cogent, expertly written, and thoroughly entertaining daily column that offered his unique take on a wide variety of investment topics look easy. As it was then, the Rekenthaler Report remains one of the highlights of Morningstar.com, and I looked forward to reading every installment. I’m sorry to see the end of the regular column but am glad to know that we’ll still be hearing (and learning) from John on an ongoing, if now less frequent, basis.

• David Harrell, Editorial Director, Morningstar Investment Management

John was an early mentor who always offered honest, unfiltered advice. In a world full of jargon and complexity, his ability to simplify difficult concepts through his prolific writing was unmatched. Beyond his writing, his humility and openness to differing viewpoints set him apart. John thrived in thoughtful debate, yet never clung too tightly to his own beliefs, welcoming new perspectives despite his deep expertise. He was, without a doubt, an inspiring figure.

• Sanjay Arya, Head of Index Innovation, Senior Vice President, Morningstar, Inc.

On my first day at Morningstar, back in August 1992 in the Monadnock Building, I was introduced to John Rekenthaler, the editor of Morningstar Mutual Funds. He was a defining presence at the time and has pretty much remained that way ever since. For me, John and a handful of other folks from those early years have embodied the firm—people like Haywood Kelly, Don Phillips, Amy Arnott, and Joe Mansueto (of course). We all made it up as we went along in those days. But John made up some of the things that are most characteristically and distinctively Morningstar—our clarity, our honesty, and our advocacy on behalf of investors.

John has the best prose at Morningstar, hands down. He writes elegantly, economically, and with real wit. He can be quite amusing, but that sense of humor betrays a keen intelligence that can deflate the extravagant claims of asset managers or expose half-baked investment notions as bunk. He does it with grace, with data, and with honesty. John has that rare and refreshing ability to admit when he’s wrong—often publicly. He never takes anything at face value, and he always gives credit where credit is due.

He’s also an excellent conversationalist. He’s worldly and erudite, careful with his words (as you’d expect). But he’s also an excellent listener. He remembers what you tell him, and he responds thoughtfully. He’s widely read and (reasonably) cultured, and he brings that to bear in his conversation and in his commentaries. Time with John is always memorable because he’s so engaging, and, to be frank, he has a certain self-effacing, goofy charm. He’s humble (another rare and refreshing trait).

I’ve learned from John that we’re better experts—however narrow the field—if we can draw from other domains in the world at large. It helps, of course, if we have John’s insight and honesty to take what he’s learned in other areas of life and put it to good use in his vocation.

• John Tipton, Head of Research Operations, Morningstar, Inc.

For a manager-research analyst and column writer, John’s approach provided the ideal model. With his articles, he showed how to criticize without resorting to snark, and to praise without being obsequious. Reading John’s work, you learned the value of researching and thinking about an issue before reaching a conclusion, rather than firing away with your first reaction. Just as important, he proved that a financial analyst can write in a manner that’s understandable for a nonspecialist reader, no matter how weighty the topic—and that a touch of humor is acceptable, even welcome.

In addition to his work as a researcher, analyst, innovator, and writer, for much of his career at Morningstar, John was also a people manager. He demonstrated the same skills in that realm. He could criticize or correct a team member when necessary without that person feeling attacked or condescended to, and he would champion his team’s work. And he welcomed debate and accepted criticism of his own work without complaint, incorporating others’ suggestions into his next article or investment tool or performance review.

Finally, I learned from John to pay attention to promising youngsters playing in the early rounds of tennis tournaments. In a couple years some of them will be semifinalists at Wimbledon and you can say you knew them when they were kids and their overhead still needed work.

• Gregg Wolper, Senior Analyst, Morningstar Research Services

John has taught me many things, but what stands out is his fearlessness. He would take on some of the gnarliest topics in finance and do it with such flair that you’d almost forget it was an issue few of us could have said anything intelligible about. And it made you proud you worked here, because no one else was doing it quite like John was, untangling complexity and spitting truth with an individual investor in mind.

Ironically enough, considering this is a tribute to the lessons John has imparted, he also taught me you’re better off adopting a learner’s mindset. Principled, sure, but also wide-eyed and curious, knowing that you never really graduate from investing and markets. And so rather than spout doctrine or cling to orthodoxy like a lot of others in his position might have, he presented his ideas in ways that left open the possibility he could have it wrong or change his mind. It was his unique gift that he could make this figuring-it-all-out-as-I-go so darn entertaining to read.

• Jeffrey Ptak, Chief Ratings Officer, Morningstar Research Services