7 ms·

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

by 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.

by jbyers 8y ago

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.