4 ms·

I don't see any inconsistency between what you've said and the idea that having more money makes it easier to get more money. If you start with $10M then, sure

by gjm11 17y ago

I don't see any inconsistency between what you've said and the idea that having more money makes it easier to get more money. If you start with $10M then, sure, you may well end up with less than that, especially if you aggressively try to turn it into much more. On the other hand, you're also much much more likely to turn it into $100M in ten years or so than someone who starts with $1M -- who, in turn, is much much more likely to be able to turn that into $100M than someone who starts with $100k. If you're claiming that someone who starts with $10M is likely to end up with less than someone who starts with $1M then, sorry, I don't believe you. (But feel free to convince me otherwise.)

HeyLaughingBoy 17y ago
When I said "start with money" I meant that literally. That most people who inherit or are given large quantities of cash will tend to fritter it away since it doesn't have the value to them as it would to someone who worked hard to acquire it. The track record of lottery winners tends to bear this out.
- earl 17y ago
  But lottery winners are not the right example. Those who inherit wealth will be far different than lottery winners, not least because their parents tend to instill values and practices that help produce wealth. They also have greater access to schools and universities, etc etc. In the USA, in particular, wealth is very very heritable. I'll try to dig up some studies, though I have work to do today...
nostrademons 17y ago
The article is about which matters more: smarts, wealth, hard work, or risk-taking. Thought experiment: given a dumb person with $10M (say, Britney Spears) and a smart person with $1M (say, Warren Buffett), who is more likely to turn that into $100M within a generation? I would bet money on the smart person. It's really easy to lose a lot of money if you make the wrong decisions.
- santamaria 17y ago
  But Ms. Spears wouldn't invest it herself. She'd place it with some popular wealth manager her friends recommended. The spread between him and Mr. Buffet wouldn't be that high. I'd bet on $10m with a decent manager vs. $1m with Buffet any day.
  - loganfrederick 17y ago
    Hasn't this effectively been proven wrong by the fact that Buffett has outperformed so many over time?
    - gwern 17y ago
      And Buffett thinks he could do very well with a small sum: > "If I was running $1 million today, or $10 million for that matter, I'd be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I've ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It's a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that. "

by gjm11 17y ago

HeyLaughingBoy 17y ago

When I said "start with money" I meant that literally. That most people who inherit or are given large quantities of cash will tend to fritter it away since it doesn't have the value to them as it would to someone who worked hard to acquire it. The track record of lottery winners tends to bear this out.

earl 17y ago
But lottery winners are not the right example. Those who inherit wealth will be far different than lottery winners, not least because their parents tend to instill values and practices that help produce wealth. They also have greater access to schools and universities, etc etc. In the USA, in particular, wealth is very very heritable. I'll try to dig up some studies, though I have work to do today...

nostrademons 17y ago

The article is about which matters more: smarts, wealth, hard work, or risk-taking. Thought experiment: given a dumb person with $10M (say, Britney Spears) and a smart person with $1M (say, Warren Buffett), who is more likely to turn that into $100M within a generation? I would bet money on the smart person. It's really easy to lose a lot of money if you make the wrong decisions.

santamaria 17y ago
But Ms. Spears wouldn't invest it herself. She'd place it with some popular wealth manager her friends recommended. The spread between him and Mr. Buffet wouldn't be that high. I'd bet on $10m with a decent manager vs. $1m with Buffet any day.
- loganfrederick 17y ago
  Hasn't this effectively been proven wrong by the fact that Buffett has outperformed so many over time?
  - gwern 17y ago
    And Buffett thinks he could do very well with a small sum: > "If I was running $1 million today, or $10 million for that matter, I'd be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I've ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It's a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that. "