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Lawyers aren't known for their stock picking, I wonder if she was piggybacking on insider trading by M&A lawyers.
by klochner 8y ago
Lawyers aren't known for their stock picking, I wonder if she was piggybacking on insider trading by M&A lawyers.
- jandrese 8y agoI think it's more the fact that they were a two income family and never had kids. Their apartment was probably paid off and they were one of those couples that was perfectly happy not taking expensive vacations or buying expensive things. Combine that with smart investing and you an amass quite a fortune over a lifetime. Of course then you are 95 and realize that without descendants about the only thing you can do with the money is give it to a charity and hope they don't squander it.
- meric 8y agoShe had many years to compound.
- wjn0 8y agoQuick script, to show some example numbers on how this could happen (assumes she worked for 75 years, that her salary kept up with annual rate of inflation and she always invested 10%, and a very high annual rate of return of 10%) [1]. [1] https://gist.github.com/wjn0/67641a83d61e2fe74f8729f65fe4bdb4 https://gist.github.com/wjn0/67641a83d61e2fe74f8729f65fe4bdb...
- pedrocr 8y ago10% isn't a very high annual rate, it's probably almost exactly what the stock market returned over that period.
- wjn0 8y agoWarren Buffet says 6-7%, and by rules of compound interest, that 3-4% difference is a lot over 75 years, so I'd say "high." I'd guess a really good, modern, algorithm from the past couple years could average, maybe, 15%? I actually have no idea.
- garmaine 8y agoThere’s no need to quote authority; this is public data. The annualized return on the S&P 500 over the last 75 years (Mar 1943 - Mar 2018) was 11.35%. Adjusted for inflation, 7.45%.
- andrewprock 8y agoWarren Buffet: 6-7% S&P returns: 7.45% Looks like Warren Buffet knows what he's talking about.
- garmaine 8y agoWe shouldn't defer to authority on things that can be readily checked ourselves.
- Spooky23 8y agoMy personal overall rate of return is 13% over the last 20 years, without any algorithmic bullshit. Just 80% in a basket of dollar cost averaged mutual funds and 20% in cash strategically invested when opportunity arises. Iirc, last year was around 14% in the mutual funds, with the “fun money” mostly cash.
- voxadam 8y agoI'll take 'Insider Trading' for $8.2M, Alex.
- Andre_Wanglin 8y agoSaving $5000 per year for 75 years compounded annually at 6.2% would net you a little over $8M. An unremarkable return on an unremarkable savings rate.
- hunter23 8y agoYou are neglecting inflation. There was no way this secretary was saving $5000 a year 75 years ago - her yearly salary was mostly likely around that amount.
- loeg 8y agoThe 6.2% return on investment is after subtracting inflation. Think of the $5k in 2018 dollars.
- Andre_Wanglin 8y agoI didn't need to consider inflation to make my point.
- davidgay 8y agoI don't think a 21year old secretary was saving the equivalent of $70k 2018 dollars in 1943.
- loeg 8y agoThe $5k figure is in 2018 dollars and the rate of return is inflation-adjusted.
- pliny 8y agoThat's not true, you only get to that figure with 5,000 nominal dollars and 6.2% unadjusted interest >>> def comp(s, n, i): ... m = 0 ... for x in range(n): ... m *= i ... m += s ... return m ... >>> comp(5000, 77, 1.062) 8201943.704759633 So there were some abnormal returns (or inheritance) involved.
- sveng 8y agoActually M&A lawyers know the law, and have a lot more to lose than the average person. So insider trading amongst them is quite rare. Ask around at work and see what your GC thinks about your hypothesis.
- asdsa5325 8y agoUh, no. $8 million after 75 years of compound growth isn't significant.