New Investing Stat: “Who’s Made the Most Money for the Most People?”
[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.]
Statistics geeks realized a long time ago that an individual athlete’s numbers don’t necessarily tell the whole story.
At one extreme, there’s the consensus Hall of Famer with perennially monster stats who always seems to be on losing teams.
At the other extreme, there are the statistical mediocrities who always seem to improve, sometimes dramatically, every team they play for.
If that sounds familiar, it’s because identifying and signing the latter type of athletes — a strategy first practiced by the small market and budget(!) Oakland A’s — was the subject of Michael Lewis’ “Moneyball.”
Investing Hall of Fame
But, how do you capture such a hard-to-quantify statistic?
With — yup — another statistic: measuring how much better an athlete’s team does with them on the field/ice/court than without.
It seems like the same idea could rather easily be applied to modern investing.
Namely, track CEO-types, who are entrusted with investors’ hard-earned savings, and calculate, long-term, how well the CEO’s various companies/funds/investing vehicles have done for stakeholders (includes lenders as well as equity investors).
Call it the, “Who’s Made the Most Money for the Most People” yardstick.
Or if you prefer, “Shareholder Champions” (Note: this would exclude luminaries like George Soros, who’s made a lot of money, but primarily for a small group of investors).
Just like you have to adjust movie revenues for inflation — by that standard, “Gone With the Wind” is still the all-time box office champ — you’d do the same for investing statistics.
Thousands of Millionaires
I have no doubt that Berkshire Hathaway Chairman Warren Buffett would be at the top of any all-time investing list, probably by a lot.
Scuttlebutt (and common sense) suggests that, since taking over the helm of a declining New England textile company in the 1960’s, Buffett’s stewardship and talents have created several thousand millionaires.
And that’s just in Omaha, Buffett’s hometown.
You’d certainly guess that people like Steve Jobs, Bill Gates, and Mark Zuckerberg would also be charter members of any Investors’ Hall of Fame.
Ditto for Peter Lynch, who brilliantly directed Fidelity’s Magellan Fund before retiring young in 1990 (compare with Fidelity’s High Tech Fund a decade later, per below); former CEO’s Jack Welch (GE), Lewis Gerstner (IBM), and Michael Eisner (Disney), whose lengthy tenures all produced financial bonanzas for loyal shareholders (albeit with a strongly rising market as a tailwind); and former Chrysler CEO Lee Iacocca, who decidedly did not have a tailwind helping him in the late 1970’s/early 1980’s (on the contrary).
“The Biggest (Financial) Loser”
Meanwhile, at the bottom of the list, you’d inevitably find people like Bernard Madoff, “Chainsaw Al Dunlap,” and the geniuses at Enron (once hailed as “the smartest guys in the room”).
But I’d speculate that you’d also find Donald Trump, who’s famously left a trail of bankruptcies, loan defaults, and failed companies over his 30+ real estate and business career (Atlantic City casinos, Trump Mortgage, Trump Steaks, Trump University, etc.).
Not to mention a long trail of litigation related to same.
P.S.: Also on the “Biggest Loser” list — but with a much more compelling excuse: a former Stanford classmate of mine and Harvard MBA, who took over the reins of Fidelity’s flagship High Tech fund just before the Dot.com crash in 2000.
Perhaps only Herbert Hoover had worse timing.
The fund quickly dropped from over $100 billion to less than 1/10th of that.
Call it, “a low tide lowers all ships.”
