Meaningful Returns

Barry Ritholtz (one of the good guys in finance) wrote a great piece yesterday at Bloomberg about all of the recent calls from a number of billionaires to essentially “sell everything.”

Barry’s main point is that you shouldn’t much bother about these calls unless you, too, are a billionaire and share a billionaire’s reasons and purposes for investing in the first place. But of course you aren’t (unless, wait, is that you Carl Icahn?).

The bottom line is that billionaires can and do make specific investments for reasons that have nothing whatsoever to do with saving for a house, putting together a college fund for their children, or making sure they have a financially secure retirement. At times they are propping up a weakened company, creating a personal legacy or stroking their own egos. Their different objectives likely mean that following their trade recommendations may not work out well for you.

Think of it this way: Katie Ledecky is 19 years old and swam maybe the most dominant race I’ve ever seen the other night on her way to claiming a gold medal in the 400m freestyle. She beat her own previous world record by two seconds, and when she finished, the second place swimmer was hardly even visible on the TV screen. But here’s the thing, you wouldn’t dream of going to the YMCA pool tomorrow and trying to replicate Katie’s workout routine, at least not in your right mind you wouldn’t. It would be suicide. You would almost certainly drown.

So forget about the billionaires and their crazy admonitions and predictions–they’re playing a different sport altogether (and one that’s significantly more complex than swimming).