Funeral director had $250 million stash of IBM stock
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Funeral director had $250 million stash of IBM stock
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Re: Funeral director had $250 million stash of IBM stock
#2Although it is tempting to think "Wowza, this is a story about the enduring power of stock options to make big fortunes", it is more about the enduring power of compound interest to make fortunes. Although his benefactors are lucky he held IBM stock rather than something that went bankrupt in the interim, really, if you hold just about any diversified equity portfolio for 100 years when you're done, boom, you're worth really huge amounts of money.
Heck, my meager Roth IRA savings plus 100 years of 8% compounding would be worth about $25 million, give or take. That is below the actual performance of the American stock market these last 100 years, to boot.
(Granted, most of us can't directly benefit from 100 years of appreciation, but most of us could directly benefit from well more than 40, and if you have kids or causes that will survive you, hey, the sky is the limit.)
Re: Funeral director had $250 million stash of IBM stock
#3Although it is tempting to think "Wowza, this is a story about the enduring power of stock options to make big fortunes", it is more about the enduring power of compound interest to make fortunes. Although his benefactors are lucky he held IBM stock rather than something that went bankrupt in the interim, really, if you hold just about any diversified equity portfolio for 100 years when you're done, boom, you're wort…
With the 40+% drop in 2008, I'm not sure that the 100-year average for American stock market/broad-indexes is still over 8%-per-year.
Re: Funeral director had $250 million stash of IBM stock
#4This mans sounds pretty cool, although I'm not about to defend IBM either. Lots of money, yet lived frugal. Reminds me of Buffett (although I recently keep wondering why Steve Jobs, who is very frugal, bought an SL 55). Anyone know why people buy stuff like that when they typically lead pretty frugal lives relative to their monetary wealth? Same thing with Larry and Sergey buying a jet. Any ideas?
Re: Funeral director had $250 million stash of IBM stock
#5Although it is tempting to think "Wowza, this is a story about the enduring power of stock options to make big fortunes", it is more about the enduring power of compound interest to make fortunes. Although his benefactors are lucky he held IBM stock rather than something that went bankrupt in the interim, really, if you hold just about any diversified equity portfolio for 100 years when you're done, boom, you're wort…
With the 40+% drop in 2008, I'm not sure that the 100-year average for American stock market/broad-indexes is still over 8%-per-year.
That's where mean-reversion-averaging-down-buy-and-hold comes into play.
If you're into that sort of thing.
Re: Funeral director had $250 million stash of IBM stock
#6Although it is tempting to think "Wowza, this is a story about the enduring power of stock options to make big fortunes", it is more about the enduring power of compound interest to make fortunes. Although his benefactors are lucky he held IBM stock rather than something that went bankrupt in the interim, really, if you hold just about any diversified equity portfolio for 100 years when you're done, boom, you're wort…
With the 40+% drop in 2008, I'm not sure that the 100-year average for American stock market/broad-indexes is still over 8%-per-year.
Over that time scale a 40% drop is not that big a deal.
1.08^100 = 2200 so 1$ = 2200$
(2200 * .6)^(1/100) = 1.0745, and 1$ = 1320$
PS: A 40% drop might seem like a huge deal but over time it's just not that important. ~8% vs ~7.5%
Re: Funeral director had $250 million stash of IBM stock
#7This mans sounds pretty cool, although I'm not about to defend IBM either. Lots of money, yet lived frugal. Reminds me of Buffett (although I recently keep wondering why Steve Jobs, who is very frugal, bought an SL 55). Anyone know why people buy stuff like that when they typically lead pretty frugal lives relative to their monetary wealth? Same thing with Larry and Sergey buying a jet. Any ideas?
An SL 55 is about $120k. Plenty of non millionaires drive cars that cost half that (and I bet there are non millionaires that drive SL 55s) - for a billionaire, where it's a rounding error on his net worth (though probably not on his liquid cash), it basically is frugal.
Re: Funeral director had $250 million stash of IBM stock
#8Earlier quoted context omitted.
With the 40+% drop in 2008, I'm not sure that the 100-year average for American stock market/broad-indexes is still over 8%-per-year.
That's where mean-reversion-averaging-down-buy-and-hold comes into play. If you're into that sort of thing.
aka. Dollar-cost averaging?
Re: Funeral director had $250 million stash of IBM stock
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Re: Funeral director had $250 million stash of IBM stock
#10Earlier quoted context omitted.
That's where mean-reversion-averaging-down-buy-and-hold comes into play. If you're into that sort of thing.
aka. Dollar-cost averaging?
Long story short: you can't predict the market. If you buy all your stock on one day, and in hindsight it turns out to have been at a peak, we'll you're screwed aren't you. If you buy your stock in periodic roughly equal sized increments over a period of time, the average cost of the stock will correspond to the stock's average over the long term. (i.e. sometimes you get it "cheap" when the market is beaten down, sometimes you get it "expensive", but it all comes out in the wash.)
This is a common strategy for long-term investors.