4 ms·

his wealth has barely beaten the s&p 500 since he left though. The growth is more to do with the bull market in general than the specific feats of his money ma

his wealth has barely beaten the s&p 500 since he left though. The growth is more to do with the bull market in general than the specific feats of his money manager

MLR 9y ago
He's surely been spending many billions of dollars in that time period though, we can't know how much but I think it would be more than enough to be significant.
mattnewton 9y ago
Barely beating the sp500 at the scale his money is at is still not bad though, no?
- ams6110 9y ago
  Beating the S&P500 at all is better than most money managers can do, also.
  - greenshackle2 9y ago
    About one third of managers beat the market. The problem is that there is no correlation between year-to-year performance of managers: the manager who beat the market this year is no more likely to beat it next year than any other manager. https://blog.wealthfront.com/illusion-stock-picking-skill/ https://blog.wealthfront.com/illusion-stock-picking-skill/
    - Scea91 9y ago
      That is a very bold claim. As a counterexample, I bet that some of them are more likely to beat the market than me if I started investing.
      - rayvd 9y ago
        Unless you invested in the S&P 500 :)
      - greenshackle2 9y ago
        By managers I mean professional portfolio managers. Individual investors pretty much all do worse than market. EDIT: obviously that means there is skill involved. But it seems that professional managers are close enough in skill that luck is the dominant factor.
    - monktastic1 9y ago
      Right, the point is that his manager consistently beat the market (even if by a small amount). Not that I knew this before just now.
      - greenshackle2 9y ago
        I wasn't able to find actual data on his performance, what I found is that: "Cascade does not publicly disclose its performance results". If someone has actual numbers I'd be happy to see them.
      - hinkley 9y ago
        It occurs to me that maybe the way to beat the S&P is to focus on the losers and not the winners. That is, if you could figure out which listed companies were going to fare the worst and build a partial index fund with the rest, you'd beat the index. Similar research style to short selling but with less downside.
        Retric 9y ago
        I don't think it's any easier to find companies that will under preform. Apple stock seems over priced right now with P/E:17.66 and not so great growth prospects, but so does Amazon and Facebook and the rest of the S&P 500 when you take a close look.
        gozur88 9y ago
        In theory a company's expected poor performance is already priced into the stock.
        dandr01d 9y ago
        If picking the winners is impossible, how would picking the inverse set (e.g. losers) be any different?
        apetresc 9y ago
        I'd assume it's because most companies aren't big winners or big losers.
  - GCA10 9y ago
    Yes -- especially because just about every diversification strategy being promoted over the past 20 years involves putting money into other asset classes that have under-performed the S&P by large amounts. And the arguments for diversification are everywhere. Hard to ignore them. Wealthfront, for example, currently cites a 3-year annualized return of 5.67% on its best batch of portfolios (ie tax-advantaged), and a 5-year annualized return of 9.44%. By contrast, a pure S&P play would have provided 10.09% annualized over 3 years and 15.17% over five. Links are here: https://www.wealthfront.com/historical-performance https://www.wealthfront.com/historical-performance http://quicktake.morningstar.com/index/IndexCharts.aspx?Symbol=SPX http://quicktake.morningstar.com/index/IndexCharts.aspx?Symb... I don't believe BillG had all his money in S&P index funds. But he and/or his managers were able to find other investments that did even better. That's not easy to do, given markets of recent years, as the Wealthfront data indicates.
chimeracoder 9y ago
Aside from the fact that he's been aggressively donating his personal assets to philanthropy rather than accumulating them in recent years, it's very difficult to beat the S&P when you're talking about tens of billions of dollars. At that scale, the S&P isn't even a good benchmark, because it's not like a single investor can just dump that much in an index fund or even in the underlying companies directly.
- kobeya 9y ago
  SPY and the Vanguard version together represent half a trillion dollars of wealth under management. And that's just the top two. So yes, you can dump that much in index funds.
  - TotallyHuman 9y ago
    That's the same amount he has. Vanguard can't just double their fund like that...
    - LukeShu 9y ago
      From other comments: Vanguard's 500 index manages ~500 billion (dmoy), Gates is worth ~100 billion (kevindqc). Even so, Vanguard can't just increase their fund by 20% like that.
      - dmoy 9y ago
        Right you're sorta missing the point though. Vanguard outside of the s&p 500 has another 3.5 trillion or something. They could absorb bill gates net worth.
  - dmoy 9y ago
    Vanguard's 500 index alone represents 550 billion under management. (It's split into 4+ expense ratio classes depending whether you have 0, 10k, 5m, 50m, 5b or whatever)
tommynicholas 9y ago
matching the S&P 500 with billions of personal assets is reallllly hard. Almost nobody in that position would just put $30B in NEA with Vanguard and wait - not diversified enough.
- Finnucane 9y ago
  If you've got $30B in personal assets, it's hard to imagine any investment situation short of the complete collapse of the monetary system that wouldn't leave you as immensely wealthy until you die.
  - sqeaky 9y ago
    Putting it all in any one thing could be bad. Its easy to imagine ridiculous phrases like "Put it all in Twinkies". But yeah any halfway sensible plan will leave a billionaire fantastically wealthy even in failure.
    - Finnucane 9y ago
      With that much money, you could literally shovel cash into the furnace every day, and probably never run out.
      - eric_h 9y ago
        Indeed. I've always preferred using one billion seconds as a way of understanding just how much a billion is (hint: it's 31 and change years). The average American lifespan is 2.4 billion seconds. If you were shoveling 100 dollar bills, you could actually do some damage in the relatively short term (you could probably reasonably shovel $5k-10k/10s, or $500-1k/s, so you could burn through a billion every 1.5-3 weeks (assuming you never sleep or eat). If you were working a 40hr week shoveling hundreds, it would take 6-12 weeks to burn through a billion. If you were doing the same but with singles it would take 6-12 _years_ to burn through a billion. So if you started with $30B - it would take between 180 and 360 years to get rid of all that money by shoveling it into a furnace. You could literally have a few generations of heirs whose job is shoveling money into a furnace and they would be considered significantly wealthy for most of those generations.

his wealth has barely beaten the s&p 500 since he left though. The growth is more to do with the bull market in general than the specific feats of his money manager

MLR 9y ago

He's surely been spending many billions of dollars in that time period though, we can't know how much but I think it would be more than enough to be significant.

mattnewton 9y ago

Barely beating the sp500 at the scale his money is at is still not bad though, no?

ams6110 9y ago
Beating the S&P500 at all is better than most money managers can do, also.
- greenshackle2 9y ago
  About one third of managers beat the market. The problem is that there is no correlation between year-to-year performance of managers: the manager who beat the market this year is no more likely to beat it next year than any other manager. https://blog.wealthfront.com/illusion-stock-picking-skill/ https://blog.wealthfront.com/illusion-stock-picking-skill/
  - Scea91 9y ago
    That is a very bold claim. As a counterexample, I bet that some of them are more likely to beat the market than me if I started investing.
    - rayvd 9y ago
      Unless you invested in the S&P 500 :)
    - greenshackle2 9y ago
      By managers I mean professional portfolio managers. Individual investors pretty much all do worse than market. EDIT: obviously that means there is skill involved. But it seems that professional managers are close enough in skill that luck is the dominant factor.
  - monktastic1 9y ago
    Right, the point is that his manager consistently beat the market (even if by a small amount). Not that I knew this before just now.
    - greenshackle2 9y ago
      I wasn't able to find actual data on his performance, what I found is that: "Cascade does not publicly disclose its performance results". If someone has actual numbers I'd be happy to see them.
    - hinkley 9y ago
      It occurs to me that maybe the way to beat the S&P is to focus on the losers and not the winners. That is, if you could figure out which listed companies were going to fare the worst and build a partial index fund with the rest, you'd beat the index. Similar research style to short selling but with less downside.
      - Retric 9y ago
        I don't think it's any easier to find companies that will under preform. Apple stock seems over priced right now with P/E:17.66 and not so great growth prospects, but so does Amazon and Facebook and the rest of the S&P 500 when you take a close look.
      - gozur88 9y ago
        In theory a company's expected poor performance is already priced into the stock.
      - dandr01d 9y ago
        If picking the winners is impossible, how would picking the inverse set (e.g. losers) be any different?
        apetresc 9y ago
        I'd assume it's because most companies aren't big winners or big losers.
- GCA10 9y ago
  Yes -- especially because just about every diversification strategy being promoted over the past 20 years involves putting money into other asset classes that have under-performed the S&P by large amounts. And the arguments for diversification are everywhere. Hard to ignore them. Wealthfront, for example, currently cites a 3-year annualized return of 5.67% on its best batch of portfolios (ie tax-advantaged), and a 5-year annualized return of 9.44%. By contrast, a pure S&P play would have provided 10.09% annualized over 3 years and 15.17% over five. Links are here: https://www.wealthfront.com/historical-performance https://www.wealthfront.com/historical-performance http://quicktake.morningstar.com/index/IndexCharts.aspx?Symbol=SPX http://quicktake.morningstar.com/index/IndexCharts.aspx?Symb... I don't believe BillG had all his money in S&P index funds. But he and/or his managers were able to find other investments that did even better. That's not easy to do, given markets of recent years, as the Wealthfront data indicates.

chimeracoder 9y ago

Aside from the fact that he's been aggressively donating his personal assets to philanthropy rather than accumulating them in recent years, it's very difficult to beat the S&P when you're talking about tens of billions of dollars. At that scale, the S&P isn't even a good benchmark, because it's not like a single investor can just dump that much in an index fund or even in the underlying companies directly.

kobeya 9y ago
SPY and the Vanguard version together represent half a trillion dollars of wealth under management. And that's just the top two. So yes, you can dump that much in index funds.
- TotallyHuman 9y ago
  That's the same amount he has. Vanguard can't just double their fund like that...
  - LukeShu 9y ago
    From other comments: Vanguard's 500 index manages ~500 billion (dmoy), Gates is worth ~100 billion (kevindqc). Even so, Vanguard can't just increase their fund by 20% like that.
    - dmoy 9y ago
      Right you're sorta missing the point though. Vanguard outside of the s&p 500 has another 3.5 trillion or something. They could absorb bill gates net worth.
- dmoy 9y ago
  Vanguard's 500 index alone represents 550 billion under management. (It's split into 4+ expense ratio classes depending whether you have 0, 10k, 5m, 50m, 5b or whatever)

tommynicholas 9y ago

matching the S&P 500 with billions of personal assets is reallllly hard. Almost nobody in that position would just put $30B in NEA with Vanguard and wait - not diversified enough.

Finnucane 9y ago
If you've got $30B in personal assets, it's hard to imagine any investment situation short of the complete collapse of the monetary system that wouldn't leave you as immensely wealthy until you die.
- sqeaky 9y ago
  Putting it all in any one thing could be bad. Its easy to imagine ridiculous phrases like "Put it all in Twinkies". But yeah any halfway sensible plan will leave a billionaire fantastically wealthy even in failure.
  - Finnucane 9y ago
    With that much money, you could literally shovel cash into the furnace every day, and probably never run out.
    - eric_h 9y ago
      Indeed. I've always preferred using one billion seconds as a way of understanding just how much a billion is (hint: it's 31 and change years). The average American lifespan is 2.4 billion seconds. If you were shoveling 100 dollar bills, you could actually do some damage in the relatively short term (you could probably reasonably shovel $5k-10k/10s, or $500-1k/s, so you could burn through a billion every 1.5-3 weeks (assuming you never sleep or eat). If you were working a 40hr week shoveling hundreds, it would take 6-12 weeks to burn through a billion. If you were doing the same but with singles it would take 6-12 _years_ to burn through a billion. So if you started with $30B - it would take between 180 and 360 years to get rid of all that money by shoveling it into a furnace. You could literally have a few generations of heirs whose job is shoveling money into a furnace and they would be considered significantly wealthy for most of those generations.