8 ms·

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

by 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.
    - mycorrhizal 8y ago
      No, the discussion was specifically a response to a comment speculating that a person with 100M in 1971 would have been better offer investing in the S&P 500. Quotes from the GP > Actually, from the article it's unclear if he's beaten the S&P500 as an investor. > 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. And the parent made a snarky comment about why internet commentators always bring up the s&p 500. And the simple answer is that for most of us ETFs are probably one of the best options for growing wealth. No one actually thinks they will be billionaires by retirement age with ETFs. So if you want to be a billionaire go get richer parents and if that doesn't work, invent Google. Good luck.
    - fgonzag 8y ago
      Most billionares don't make their fortunes playing the stock market either, what's your point? They make billion dollar companies, except for a very select few.
- osrec 8y ago
  Are you saying that they're wrong? Because they're not - the maths is black and white. People have a tendency to trade in and out of securities because they feel it will give them an edge over the market, but in reality, most people struggle to outperform the market. Often they really are better off just buying and holding an index.
skookumchuck 8y ago
> in a margin call If you're willing to go way out on margin, you can substantially improve investment returns.

by Arcuru 8y ago

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.
  - mycorrhizal 8y ago
    No, the discussion was specifically a response to a comment speculating that a person with 100M in 1971 would have been better offer investing in the S&P 500. Quotes from the GP > Actually, from the article it's unclear if he's beaten the S&P500 as an investor. > 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. And the parent made a snarky comment about why internet commentators always bring up the s&p 500. And the simple answer is that for most of us ETFs are probably one of the best options for growing wealth. No one actually thinks they will be billionaires by retirement age with ETFs. So if you want to be a billionaire go get richer parents and if that doesn't work, invent Google. Good luck.
  - fgonzag 8y ago
    Most billionares don't make their fortunes playing the stock market either, what's your point? They make billion dollar companies, except for a very select few.
osrec 8y ago
Are you saying that they're wrong? Because they're not - the maths is black and white. People have a tendency to trade in and out of securities because they feel it will give them an edge over the market, but in reality, most people struggle to outperform the market. Often they really are better off just buying and holding an index.

skookumchuck 8y ago

> in a margin call If you're willing to go way out on margin, you can substantially improve investment returns.