5 ms·
Lawyers aren't known for their stock picking, I wonder if she was piggybacking on insider trading by M&A lawyers.
by klochner 8y ago
Lawyers aren't known for their stock picking, I wonder if she was piggybacking on insider trading by M&A lawyers.
- meric 8y agoShe had many years to compound.
- wjn0 8y agoQuick script, to show some example numbers on how this could happen (assumes she worked for 75 years, that her salary kept up with annual rate of inflation and she always invested 10%, and a very high annual rate of return of 10%) [1]. [1] https://gist.github.com/wjn0/67641a83d61e2fe74f8729f65fe4bdb4 https://gist.github.com/wjn0/67641a83d61e2fe74f8729f65fe4bdb...
- pedrocr 8y ago10% isn't a very high annual rate, it's probably almost exactly what the stock market returned over that period.
- wjn0 8y agoWarren Buffet says 6-7%, and by rules of compound interest, that 3-4% difference is a lot over 75 years, so I'd say "high." I'd guess a really good, modern, algorithm from the past couple years could average, maybe, 15%? I actually have no idea.
- garmaine 8y agoThere’s no need to quote authority; this is public data. The annualized return on the S&P 500 over the last 75 years (Mar 1943 - Mar 2018) was 11.35%. Adjusted for inflation, 7.45%.
- andrewprock 8y agoWarren Buffet: 6-7% S&P returns: 7.45% Looks like Warren Buffet knows what he's talking about.
- garmaine 8y agoWe shouldn't defer to authority on things that can be readily checked ourselves.
- Spooky23 8y agoMy personal overall rate of return is 13% over the last 20 years, without any algorithmic bullshit. Just 80% in a basket of dollar cost averaged mutual funds and 20% in cash strategically invested when opportunity arises. Iirc, last year was around 14% in the mutual funds, with the “fun money” mostly cash.
- voxadam 8y agoI'll take 'Insider Trading' for $8.2M, Alex.
- Andre_Wanglin 8y agoSaving $5000 per year for 75 years compounded annually at 6.2% would net you a little over $8M. An unremarkable return on an unremarkable savings rate.
- davidgay 8y agoI don't think a 21year old secretary was saving the equivalent of $70k 2018 dollars in 1943.
- garmaine 8y agoWho said anything about $70k?
- newnewpdro 8y agoParent is stating $5k in 1943 dollars is $70k in 2018 dollars (a claim I did not verify).
- garmaine 8y ago6.2% would be inflation adjusted returns. Actual inflation adjusted returns were 7.4%. So investing the equivalent of $5k each year from then until now (so starting at $350 or whatever) would yield >$8.2M.
- Mtinie 8y agoAndre_Wanglin alluded to it, though $70k was a slight overstatement. With the effective inflation rate, $5,000 in 1947 was equivalent to $58,035 in 2018. https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=5000&year1=194701&year2=201803 https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=5000&year1=194...
- Retric 8y agoHe was using 5k inflation adjusted dollars so starting with ~350 actual $/ year in 1947. Really, just do the calculation.
- sveng 8y agoActually M&A lawyers know the law, and have a lot more to lose than the average person. So insider trading amongst them is quite rare. Ask around at work and see what your GC thinks about your hypothesis.
- asdsa5325 8y agoUh, no. $8 million after 75 years of compound growth isn't significant.
- jandrese 8y agoI think it's more the fact that they were a two income family and never had kids. Their apartment was probably paid off and they were one of those couples that was perfectly happy not taking expensive vacations or buying expensive things. Combine that with smart investing and you an amass quite a fortune over a lifetime. Of course then you are 95 and realize that without descendants about the only thing you can do with the money is give it to a charity and hope they don't squander it.