7 ms·

An Optometrist Billionaire Investor

102 points by tbgvi 8y ago

jbyers 8y ago
This article does its subject something of a disservice in the fourth paragraph: "His fortune comes not from some flash of entrepreneurial brilliance or dogged devotion to career, but from a lifetime of prudent do-it-yourself buy-and-hold investing." We learn later in the story that Wertheim did in fact demonstrate enterpreneurial brilliance and dogged devotion to his career and was an unimaginably successful buy-and-hold investor. The company he founded, BPI, threw off up to $10M / year in cash that funded his investment portfolio. That he he was successful not just as an investor, but also as an inventor and entrepreneur, is what's truly amazing.
- Arcuru 8y ago
  Actually, from the article it's unclear if he's beaten the S&P500 as an investor. It doesn't mention much about what he invested in before 1980, but it does say he lost about $50 million dollars in a margin call in 1982 so he was already quite wealthy either from BPI (the company started in ~1971) or from investing in the 60's/70's. If his total investments at that time was $100 million, which seems somewhat reasonable given how much he lost in the margin call, investing that in the S&P500 would be worth $4 billion today, which is quite a bit more than the $2.3 billion he's actually worth. That's also ignoring his currently $10 million a year income from BPI, so he could have spent 100% of that money.
  - JohnJamesRambo 8y ago
    I’m constantly finding this to be the case when you research the rich and their business moves. Most seem to be elaborate ways to waste a lifetime of attention and energy and not beat an index fund.
  - xiphias2 8y ago
    This may be true, but also it's one of the most dangerous times to invest in S&P 500: there hasn't been a recession for more than 10 years, which is pretty unique. Of course this is not a problem if somebody really takes a 50 year view.
  - mrcoder111 8y ago
    I wonder why internet commentators who haven't made billions always bring up this index fund stuff, when no one who actually has made billions did it by piling their money into the S&P 500.
    - jedberg 8y ago
      Well one reason was because before 1978 you couldn't really invest in the S&P500, unless you had the time to manage a portfolio of 500 stocks. And back then most people laughed at the idea. It's only very recently that people have started to realize that it's a good bet.
      - lsiq 8y ago
        It may be a good bet, it may not be. Hedge funds now buy up stocks before they get indexed. Stocks will still beat cash in the long run but the main thing is to be ahead of the curve.
    - enoch_r 8y ago
      No one who won the lottery invested the money they spent on the ticket. That doesn't mean that "buy lottery tickets instead of investing" is sound financial advice.
    - mycorrhizal 8y ago
      Because it has been very well demonstrated that almost all active investors, fund managers etc... virtually never beat the market cumulatively over decades. There are some exceptions, but not more than you would expect from random chance due to large sample size (a lot of people playing). So given that information why should most of us spend the effort trying to beat the market especially considering the low expense ratio on some really solid ETFs. Generally speaking if you expect the economy to continue to grow for the next few decades than index funds are a pretty good option.
      - throwawaymath 8y ago
        What does any of that have to do with the simple fact that billionaires don't make their fortunes through index funds? This isn't a discussion about active versus passive investing. It's a discussion about whether to attribute wealth to entrepreneurial acumen or to an index fund.
  - skookumchuck 8y ago
    > in a margin call If you're willing to go way out on margin, you can substantially improve investment returns.
ChuckMcM 8y ago
I realize that this guy fits the profile of someone from the future who is thrown back in time and left stranded :-)
blaze33 8y ago
> “My thing is I wanted to be able to have free time. To me, having time is the most precious thing.” Interestingly it's a backward model when compared to people that use time as a resource towards money/success/<your_goal>... I guess actual freedom indeed requires both free time and available resources (money/skills/knowledge/etc.). I see many people always filling up their schedules months in advance while I always feel better without the constraint to follow past decisions. Maybe linked to control seeking & risk aversion vs. interest for unexpected opportunities...
RickJWagner 8y ago
Apple and Microsoft? How could this guy miss out on RED HAT?
- ggm 8y ago
  Yes. I saw the photos and this was my first question. Mind you the free red fedora they gave away around the time of the public share offering was truly trashy-bad. I suspect anyone with a real fur fedora saw warning signs there...
RickJWagner 8y ago
“My goal is to buy and almost never sell" Therein lies one of the great secrets to wealth. Buffett, Bogle, etc. all espouse it. For those who are looking for ways to level the economic field (at least personally), take note.
- maxxxxx 8y ago
  Unless you bought Kodak, Enron or Pets.com. You still have to pick the right stocks. For most it's probably better to buy an index fund. I bought Cisco in 1999 and I think it's barely back to that level right now and it will probably go down once this bull market ends.
  - quietthrow 8y ago
    “Almost never sell” doesnt mean he never sells. Most people read this quite literally. Giving it more weight than the actual investor. This guy by his own admission sells off when is loss 25% or more. So those positions that you mentioned would have been sold off for tax harvesting reasons. He might have acquired a new position in the same stock if he believed in the company and his investment thesis.
  - Fnoord 8y ago
    If you diversify enough then a tiny amount in Kodak, Enron, and Pets.com isn't going to hurt you. That whole HODLing thing isn't unique, Bitcoin is just a simulation
- throwawaymath 8y ago
  That's good for wealth preservation and nominal maintenance. But it's almost certainly not going to generate wealth. Buffett is one of the richest people in the world because he manages money for other people (and does it well), not because he bought and held index funds. Obtaining vast wealth requires doing things which have a multiplier effect well beyond the scale of your labor. That usually requires doing something related to the aggregation or generation of capital. It can't be done solely with your own capital unless you're already wealthy.
- 8y ago
jedberg 8y ago
1/3 of his net worth comes from a single good (almost lucky) investment in his friend's company, which he was an advisor for. That's sort of on the line between investor and entrepreneur. He's done really well, but it's a bit disingenuous to say that he did all through investing. He started a business that gives him 10 million a year to invest with! Yes, he appears to have taken that and increased it many times over, but it helps to start at a high base level.
davidkuhta 8y ago
Let's all just take a moment to acknowledge the awesomeness of naming your company Brain Power Inc.
m3kw9 8y ago
He got his first pot of gold from a very decent business, then brought into 2 of the best historic stocks of all times (AAPL and MSFT) at its lowest and held to it longer than most.
- gcb0 8y ago
  nothing to see be here other than survivorship bias cargo cult.
curiousDog 8y ago
What would be some reasonably priced stocks you could buy today and hold onto for the next 15-20 years? I'm thinking TSLA or may be AMZN too
- mruts 8y ago
  In general, here's what I think a good long-term stock selection strategy is: Look at all companies that will benefit from technology disruption and the future and discount the companies that will be hurt. An example of company that would be helped by future disruption would maybe be Amazon or Tesla. Examples of companies that might be hurt by the future would be Exxon or Phillip Morris or Safeway.
- sjg007 8y ago
  Back in 2000 if I had bought apple and amazon for a couple of student loans, I would be sitting pretty now.
cookieswumchorr 8y ago
The secret: he can see all time as you might see a stretch of the Rocky Mountains
nathan_f77 8y ago
I'm pretty sure they made a mistake with the "World Yacht". They linked to a small boat in New York [1] that is used for weddings and other events, which is pretty funny. I'm almost 100% sure that they were talking about "The World" yacht [2]. I found out about this last year, and I'd be tempted to buy an apartment if I could ever afford it (you need at least $10 million.) The expeditions are amazing [3], as well as the regular lectures and workshops [4]. It's also pretentious, dystopian, and a bit embarrassing. I don't know if those are the sort of people I'd want to spend all my time with, but maybe many of them are just ordinary people who happen to have a lot of money. It would certainly be an interesting place to live. [1] https://worldyacht.com https://worldyacht.com [2] https://aboardtheworld.com https://aboardtheworld.com [3] https://aboardtheworld.com/rare-expeditions/ https://aboardtheworld.com/rare-expeditions/ [4] https://aboardtheworld.com/experience/enrichment/ https://aboardtheworld.com/experience/enrichment/

102 points by tbgvi 8y ago

This article does its subject something of a disservice in the fourth paragraph: "His fortune comes not from some flash of entrepreneurial brilliance or dogged devotion to career, but from a lifetime of prudent do-it-yourself buy-and-hold investing." We learn later in the story that Wertheim did in fact demonstrate enterpreneurial brilliance and dogged devotion to his career and was an unimaginably successful buy-and-hold investor. The company he founded, BPI, threw off up to $10M / year in cash that funded his investment portfolio. That he he was successful not just as an investor, but also as an inventor and entrepreneur, is what's truly amazing.

Arcuru 8y ago
Actually, from the article it's unclear if he's beaten the S&P500 as an investor. It doesn't mention much about what he invested in before 1980, but it does say he lost about $50 million dollars in a margin call in 1982 so he was already quite wealthy either from BPI (the company started in ~1971) or from investing in the 60's/70's. If his total investments at that time was $100 million, which seems somewhat reasonable given how much he lost in the margin call, investing that in the S&P500 would be worth $4 billion today, which is quite a bit more than the $2.3 billion he's actually worth. That's also ignoring his currently $10 million a year income from BPI, so he could have spent 100% of that money.
- JohnJamesRambo 8y ago
  I’m constantly finding this to be the case when you research the rich and their business moves. Most seem to be elaborate ways to waste a lifetime of attention and energy and not beat an index fund.
- xiphias2 8y ago
  This may be true, but also it's one of the most dangerous times to invest in S&P 500: there hasn't been a recession for more than 10 years, which is pretty unique. Of course this is not a problem if somebody really takes a 50 year view.
- mrcoder111 8y ago
  I wonder why internet commentators who haven't made billions always bring up this index fund stuff, when no one who actually has made billions did it by piling their money into the S&P 500.
  - jedberg 8y ago
    Well one reason was because before 1978 you couldn't really invest in the S&P500, unless you had the time to manage a portfolio of 500 stocks. And back then most people laughed at the idea. It's only very recently that people have started to realize that it's a good bet.
    - lsiq 8y ago
      It may be a good bet, it may not be. Hedge funds now buy up stocks before they get indexed. Stocks will still beat cash in the long run but the main thing is to be ahead of the curve.
  - enoch_r 8y ago
    No one who won the lottery invested the money they spent on the ticket. That doesn't mean that "buy lottery tickets instead of investing" is sound financial advice.
  - mycorrhizal 8y ago
    Because it has been very well demonstrated that almost all active investors, fund managers etc... virtually never beat the market cumulatively over decades. There are some exceptions, but not more than you would expect from random chance due to large sample size (a lot of people playing). So given that information why should most of us spend the effort trying to beat the market especially considering the low expense ratio on some really solid ETFs. Generally speaking if you expect the economy to continue to grow for the next few decades than index funds are a pretty good option.
    - throwawaymath 8y ago
      What does any of that have to do with the simple fact that billionaires don't make their fortunes through index funds? This isn't a discussion about active versus passive investing. It's a discussion about whether to attribute wealth to entrepreneurial acumen or to an index fund.
- skookumchuck 8y ago
  > in a margin call If you're willing to go way out on margin, you can substantially improve investment returns.

ChuckMcM 8y ago

I realize that this guy fits the profile of someone from the future who is thrown back in time and left stranded :-)

blaze33 8y ago

> “My thing is I wanted to be able to have free time. To me, having time is the most precious thing.” Interestingly it's a backward model when compared to people that use time as a resource towards money/success/<your_goal>... I guess actual freedom indeed requires both free time and available resources (money/skills/knowledge/etc.). I see many people always filling up their schedules months in advance while I always feel better without the constraint to follow past decisions. Maybe linked to control seeking & risk aversion vs. interest for unexpected opportunities...

RickJWagner 8y ago

Apple and Microsoft? How could this guy miss out on RED HAT?

ggm 8y ago
Yes. I saw the photos and this was my first question. Mind you the free red fedora they gave away around the time of the public share offering was truly trashy-bad. I suspect anyone with a real fur fedora saw warning signs there...

RickJWagner 8y ago

“My goal is to buy and almost never sell" Therein lies one of the great secrets to wealth. Buffett, Bogle, etc. all espouse it. For those who are looking for ways to level the economic field (at least personally), take note.

maxxxxx 8y ago
Unless you bought Kodak, Enron or Pets.com. You still have to pick the right stocks. For most it's probably better to buy an index fund. I bought Cisco in 1999 and I think it's barely back to that level right now and it will probably go down once this bull market ends.
- quietthrow 8y ago
  “Almost never sell” doesnt mean he never sells. Most people read this quite literally. Giving it more weight than the actual investor. This guy by his own admission sells off when is loss 25% or more. So those positions that you mentioned would have been sold off for tax harvesting reasons. He might have acquired a new position in the same stock if he believed in the company and his investment thesis.
- Fnoord 8y ago
  If you diversify enough then a tiny amount in Kodak, Enron, and Pets.com isn't going to hurt you. That whole HODLing thing isn't unique, Bitcoin is just a simulation
throwawaymath 8y ago
That's good for wealth preservation and nominal maintenance. But it's almost certainly not going to generate wealth. Buffett is one of the richest people in the world because he manages money for other people (and does it well), not because he bought and held index funds. Obtaining vast wealth requires doing things which have a multiplier effect well beyond the scale of your labor. That usually requires doing something related to the aggregation or generation of capital. It can't be done solely with your own capital unless you're already wealthy.
8y ago

jedberg 8y ago

1/3 of his net worth comes from a single good (almost lucky) investment in his friend's company, which he was an advisor for. That's sort of on the line between investor and entrepreneur. He's done really well, but it's a bit disingenuous to say that he did all through investing. He started a business that gives him 10 million a year to invest with! Yes, he appears to have taken that and increased it many times over, but it helps to start at a high base level.

davidkuhta 8y ago

Let's all just take a moment to acknowledge the awesomeness of naming your company Brain Power Inc.

m3kw9 8y ago

He got his first pot of gold from a very decent business, then brought into 2 of the best historic stocks of all times (AAPL and MSFT) at its lowest and held to it longer than most.

gcb0 8y ago
nothing to see be here other than survivorship bias cargo cult.

curiousDog 8y ago

What would be some reasonably priced stocks you could buy today and hold onto for the next 15-20 years? I'm thinking TSLA or may be AMZN too

mruts 8y ago
In general, here's what I think a good long-term stock selection strategy is: Look at all companies that will benefit from technology disruption and the future and discount the companies that will be hurt. An example of company that would be helped by future disruption would maybe be Amazon or Tesla. Examples of companies that might be hurt by the future would be Exxon or Phillip Morris or Safeway.
sjg007 8y ago
Back in 2000 if I had bought apple and amazon for a couple of student loans, I would be sitting pretty now.

cookieswumchorr 8y ago

The secret: he can see all time as you might see a stretch of the Rocky Mountains

nathan_f77 8y ago

I'm pretty sure they made a mistake with the "World Yacht". They linked to a small boat in New York [1] that is used for weddings and other events, which is pretty funny. I'm almost 100% sure that they were talking about "The World" yacht [2]. I found out about this last year, and I'd be tempted to buy an apartment if I could ever afford it (you need at least $10 million.) The expeditions are amazing [3], as well as the regular lectures and workshops [4]. It's also pretentious, dystopian, and a bit embarrassing. I don't know if those are the sort of people I'd want to spend all my time with, but maybe many of them are just ordinary people who happen to have a lot of money. It would certainly be an interesting place to live. [1] https://worldyacht.com https://worldyacht.com [2] https://aboardtheworld.com https://aboardtheworld.com [3] https://aboardtheworld.com/rare-expeditions/ https://aboardtheworld.com/rare-expeditions/ [4] https://aboardtheworld.com/experience/enrichment/ https://aboardtheworld.com/experience/enrichment/