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Not sure what your point is. The average person should just own a stock index fund. In fact, this is the exact advice that Buffett gives.

by 21 8y ago

anaphor 8y ago
My point is that billionaires like Mark Zuckerberg whose wealth is concentrated in equity for a single company are different from people like Buffett, who actually spent most of their life working on managing different investments in order to create stable growth of their portfolio. So we're comparing someone who is 87 years old and has steadily increased their wealth over time, to someone who basically got rich very quickly, and whose wealth is open to extreme fluctuations. I'd much rather be the first person.
- petercooper 8y ago
  Interesting. I'd much rather be a 34 year old with extremely risky/fluctuating wealth than an 87 year old with even a trillion in the bank.
  - 21 8y ago
    FTFY: I'd much rather be 34 than 87
- 21 8y ago
  Nothing stops Zuck from selling some/all of his shares and buying BRK.A, SPY or treasuries. Sure, if he wants to do it quickly he will need to do it at a discount, but I'm pretty sure it's under 10% if he is willing to spread it over a year or so. You can argue that he is so rich exactly because he didn't diversify. Obligatory Warren Buffett quote: "Keep all your eggs in one basket, but watch that basket closely"
- moate 8y ago
  Why? Zuck is 34 years old and a billionaire. Buffet didn't become a billionaire until his 60s. A point can be made for being obscenely wealthy for the extra 30 years allows you to appreciate the fruit of your labor while still in the prime of your life. If this is a "virtue of work" thing where Buffett is somehow "better" because he "earned" his money I don't buy it. Being the son of a wealthy politician and using that influence and money to procure MORE wealth and influence isn't somehow more noble than creating one of the most powerful companies in the world. But I mean, if you're more into the whole "old money" crowd, that's your choice I guess.
  - anaphor 8y ago
    Nope, it's simply about less risk. Of course we know now that Zuckerberg is wealthy, but Facebook could easily go under or lose a lot of value. If the entire market were to crash, then either it will stay that way (in which case everyone is poor), or (as history shows), it will bounce back up in a few years or so.
    - moate 8y ago
      I don't think you understand what being a billionaire is. Zuckerburg has hundreds of millions of dollars in real estate holdings in Hawaii alone. His seat at the top of this list is contingent on Facebook continuing to make him money, but he is wealthy independently of it at this point I get that humans are, by design, way too risk averse, but what do you define "could easily go under" as meaning? What odds would you actually give of these outcomes: Facebook keeps stays a top 10 business for the next 20 years, Facebook stays a top 10 business for the next 5 years, Facebook implodes and is worthless in the next 5 years. I get your point, which I think is extremely narrow, is that "a diverse portfolio is better than a single stack investment plan", but to say you'd prefer to be one billionaire vs being another different billionaire because the first billionaire meets some weird criteria you've devised for determining how best to become a billionaire is not an objective point to be made. TL-dr; you're not playing the same game either of these guys are, and your suggestion that trying to model your life after one vs the other is a weak point to make because of it.

Not sure what your point is. The average person should just own a stock index fund. In fact, this is the exact advice that Buffett gives.

by 21 8y ago

Not sure what your point is. The average person should just own a stock index fund. In fact, this is the exact advice that Buffett gives.

anaphor 8y ago

My point is that billionaires like Mark Zuckerberg whose wealth is concentrated in equity for a single company are different from people like Buffett, who actually spent most of their life working on managing different investments in order to create stable growth of their portfolio. So we're comparing someone who is 87 years old and has steadily increased their wealth over time, to someone who basically got rich very quickly, and whose wealth is open to extreme fluctuations. I'd much rather be the first person.

petercooper 8y ago
Interesting. I'd much rather be a 34 year old with extremely risky/fluctuating wealth than an 87 year old with even a trillion in the bank.
- 21 8y ago
  FTFY: I'd much rather be 34 than 87
21 8y ago
Nothing stops Zuck from selling some/all of his shares and buying BRK.A, SPY or treasuries. Sure, if he wants to do it quickly he will need to do it at a discount, but I'm pretty sure it's under 10% if he is willing to spread it over a year or so. You can argue that he is so rich exactly because he didn't diversify. Obligatory Warren Buffett quote: "Keep all your eggs in one basket, but watch that basket closely"
moate 8y ago
Why? Zuck is 34 years old and a billionaire. Buffet didn't become a billionaire until his 60s. A point can be made for being obscenely wealthy for the extra 30 years allows you to appreciate the fruit of your labor while still in the prime of your life. If this is a "virtue of work" thing where Buffett is somehow "better" because he "earned" his money I don't buy it. Being the son of a wealthy politician and using that influence and money to procure MORE wealth and influence isn't somehow more noble than creating one of the most powerful companies in the world. But I mean, if you're more into the whole "old money" crowd, that's your choice I guess.
- anaphor 8y ago
  Nope, it's simply about less risk. Of course we know now that Zuckerberg is wealthy, but Facebook could easily go under or lose a lot of value. If the entire market were to crash, then either it will stay that way (in which case everyone is poor), or (as history shows), it will bounce back up in a few years or so.
  - moate 8y ago
    I don't think you understand what being a billionaire is. Zuckerburg has hundreds of millions of dollars in real estate holdings in Hawaii alone. His seat at the top of this list is contingent on Facebook continuing to make him money, but he is wealthy independently of it at this point I get that humans are, by design, way too risk averse, but what do you define "could easily go under" as meaning? What odds would you actually give of these outcomes: Facebook keeps stays a top 10 business for the next 20 years, Facebook stays a top 10 business for the next 5 years, Facebook implodes and is worthless in the next 5 years. I get your point, which I think is extremely narrow, is that "a diverse portfolio is better than a single stack investment plan", but to say you'd prefer to be one billionaire vs being another different billionaire because the first billionaire meets some weird criteria you've devised for determining how best to become a billionaire is not an objective point to be made. TL-dr; you're not playing the same game either of these guys are, and your suggestion that trying to model your life after one vs the other is a weak point to make because of it.