On Billionaires, Their Buys, and Buffett
I recently read a post by Barry Ritholtz over at “The Big Picture“. It’s called “Investing Advice: If you are NOT a billionaire“. Ritholtz starts with a good premise: don’t try to “tag along” on stock market investments made by billionaires simply because they’re billionaires.
Unfortunately, his argument goes off the tracks pretty quickly. He singles out three billionaires: Kirk Kerkorian, Michael Dell, and Warren Buffett. Ritholtz has a point with Michael Dell, but the same point is applicable to an awful lot of insider buying at large, public companies.
As for Kerkorian and Buffett, I’m afraid I can’t find anything to agree with in those arguments. Regarding Kerkorian he writes:
He has a long and storied history as a corporate raider, greenmailer, etc. When one gets closer to the long dirt nap, one thinks of their legacy. For all we know, this GM bid was an attempt to improve his reputation.
I have to admit smiling when I read this, because about a year ago I wrote a post on some notable billionaires (from the Forbes list) that included a fairly long digression on comments made by bloggers about Kerkorian’s advanced age:
There’s been more than enough written about General Motors (GM) over the past year; so, I won’t add anything here. I will, however, mention that one point made by some blogs (and even some “mainstream” media sources) is nonsensical. It’s been written (presumably with a straight face) that Kerkorian can’t possibly be making a long-term investment in GM, because (at 89) he simply doesn’t have enough time left to see such an investment through.
The strongest argument against this line of reasoning is that making investment decisions based on your anticipation of imminent death is akin to making life choices based on the belief that you don’t have free will and all future events are predestined. In both cases, if your assumption is correct, you gain little or nothing. If your assumption is incorrect, you lose a lot.
Besides, all of this assumes you have no interest in leaving greater wealth behind (whether to charity or your family), which seems rather absurd. Kerkorian isn’t exactly forgoing his own enjoyment; he already has far more money than he could ever spend on himself (that would be true even if he were 29 instead of 89).
Also, it’s worth noting that Phil Carret lived to be 101. I don’t mean to suggest Kerkorian may live just as long; rather, I mean to suggest even at 89, you could be hanging up your cleats twelve years too early. To put that in perspective, if the average American male expected to die twelve years before he actually did, he would be planning to die around the time he would start collecting Social Security.
As a rule, investors who are as passionate as Kerkorian usually die long before they retire.
I don’t have anything more to say about Kerkorian. I do, however, have quite a lot to say …
Read more