CNBC: iBillionaire Index: Investing like a billionaire

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Howard Donnelly
Posts: 470
Joined: Tue Dec 14, 2010 3:19 pm

CNBC: iBillionaire Index: Investing like a billionaire

Post by Howard Donnelly » Wed Nov 13, 2013 2:46 pm

What do you think of this new index fund?
http://video.cnbc.com/gallery/?play=1&video=3000217883

User avatar
CABob
Posts: 4583
Joined: Sun Feb 25, 2007 8:55 pm
Location: Southern California

Re: CNBC: iBillionaire Index: Investing like a billionaire

Post by CABob » Wed Nov 13, 2013 3:48 pm

If you build it, they will come.
:twisted:
Bob

User avatar
abuss368
Posts: 12730
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!

Re: CNBC: iBillionaire Index: Investing like a billionaire

Post by abuss368 » Wed Nov 13, 2013 3:53 pm

Is there a low cost tax efficient option with Admiral shares?
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

YttriumNitrate
Posts: 1062
Joined: Tue Mar 26, 2013 12:13 pm

Re: CNBC: iBillionaire Index: Investing like a billionaire

Post by YttriumNitrate » Wed Nov 13, 2013 3:54 pm

Don't most billionaire's make their money by owning lots and lots of a single stock? Looking at the top 10 billionaires in the USA, it would seem the billionaire index should consist of 1 part MSFT, 1 part BRKA, 1 part ORCL, and 4 parts WMT.

umfundi
Posts: 3361
Joined: Tue Jun 07, 2011 5:26 pm

Re: CNBC: iBillionaire Index: Investing like a billionaire

Post by umfundi » Wed Nov 13, 2013 3:54 pm

The really rich people I know are terrible investors. Not a problem, it does not really matter to them.

Keith
Déjà Vu is not a prediction

chaz
Posts: 13601
Joined: Tue Feb 27, 2007 2:44 pm

Re: CNBC: iBillionaire Index: Investing like a billionaire

Post by chaz » Wed Nov 13, 2013 3:56 pm

I like Vanguard for my tiny investment.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page

bogleviewer
Posts: 343
Joined: Thu Aug 25, 2011 11:01 pm

Re: CNBC: iBillionaire Index: Investing like a billionaire

Post by bogleviewer » Wed Nov 13, 2013 4:14 pm

Even the name makes me sick.

dad2000
Posts: 642
Joined: Fri Feb 03, 2012 7:04 pm

Re: CNBC: iBillionaire Index: Investing like a billionaire

Post by dad2000 » Wed Nov 13, 2013 4:16 pm

As if billionaires only get rich from investing in publicly traded companies, and that their level of risk tolerance is the same as yours and mine...

The Wall Street marketing machine at it's finest!

User avatar
nisiprius
Advisory Board
Posts: 36456
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: CNBC: iBillionaire Index: Investing like a billionaire

Post by nisiprius » Wed Nov 13, 2013 4:18 pm

Why on earth would it make any sense for me to invest like a billionaire? It would make as much sense as my dancing like Miley Cyrus.

"In theory you should be able to get rich by investing in the same stocks they invest in." What theory is that? I don't know that theory. Where would I go to find published research on that theory?

Oh, wait. Here's the video asterisk:

Image

The person talking makes another point that should be on the slide but isn't. He says the billionaires have "risk tolerance very different from the average investor." By "different," I rather suspect he means "higher."

Now, not all wealthy people necessarily do. The more wealth you have, the more your investing strategy is dominated by your "relative risk aversion" which can go either way. Someone with increasing relative risk aversion says "I've won, why should I continue playing?" and throttles down risk in order to preserve what's been gained. Suze Orman (who alas only has 1/40th of a billion) has less than 4% of her portfolio in stocks according to interviews a few years ago, would seem to fall in that category. Someone with decreasing relative risk aversion says "I have so much now I can go for the gusto, grab for the brass ring, etc. etc. because now I can afford to lose a high percentage of it." So, what do we know about the risk aversion of these billionaires? If it is "very different" from ours, either way, we should not be investing like them.

And there's another problem. Is this index tracking the investments these billionaires make personally, or is it tracking the investments they make in their roles as investment managers of their firms? Because that would not be the same thing.
Last edited by nisiprius on Wed Nov 13, 2013 6:56 pm, edited 2 times in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Gleevec
Posts: 269
Joined: Sun Mar 03, 2013 11:25 am

Re: CNBC: iBillionaire Index: Investing like a billionaire

Post by Gleevec » Wed Nov 13, 2013 6:39 pm

Buffett is a billionaire, and he says the rest of us should invest in low-cost index funds. So I guess Ill invest like a billionaire by following his advice.

bondsr4me
Posts: 900
Joined: Fri Oct 18, 2013 7:08 am

Re: CNBC: iBillionaire Index: Investing like a billionaire

Post by bondsr4me » Wed Nov 13, 2013 7:28 pm

I agree...if Buffett and Bogle say so, that's good enough for me.
I don't pay much attention to CNBC anymore, but I do like Bloomberg.
Don

umfundi
Posts: 3361
Joined: Tue Jun 07, 2011 5:26 pm

Re: CNBC: iBillionaire Index: Investing like a billionaire

Post by umfundi » Wed Nov 13, 2013 7:34 pm

The rich are not like you and me. They have more money.

Why are people so enamored of Warren Buffett? He is playing a game that is totally out of our league.

You'd be far better off listening to Victoria and nisiprius. (umfundi is somewhat whacko.)

Keith
Déjà Vu is not a prediction

maitrina
Posts: 30
Joined: Thu Aug 02, 2012 8:20 pm

Re: CNBC: iBillionaire Index: Investing like a billionaire

Post by maitrina » Wed Nov 13, 2013 10:12 pm

nisiprius wrote:"It would make as much sense as my dancing like Miley Cyrus."
I would be willing to invest a few dollars to see Nisi dance like Miley Cyrus.
"I'd like to live like a poor man with lots of money." - Pablo Picasso

User avatar
Runalong
Posts: 138
Joined: Mon Jun 13, 2011 5:22 pm

Re: CNBC: iBillionaire Index: Investing like a billionaire

Post by Runalong » Thu Nov 14, 2013 12:28 am

I was looking at this today. On the website's holdings page they list 30 holdings. Of those paying a dividend of 2% or more, 2 beat the median and 9 lagged. Of those paying less (all of which were less than 1.5%), 13 beat, 2 lagged and 4 approximately matched. Which would (forgive the over-generalization) indicate that the dividend stocks are intended as conservative lower-beta investments and the real money is being made in the others.

I then compared the list to the QUAL etf which I hold and which has outperformed. 9 of these stocks are in the QUAL holdings.

I then compared to the Schwab stock rating system, which has also served me well when I have used it for guidance and all 9 of those stocks were rated C (average, hold) or D (sell) by Schwab.

I have no idea what to make of all this but I do think that in a market where bonds are risky and many pundits are calling for the bull to continue roaring for a few more years and others are calling for an imminent crash, a rotation from small to large and from growth to value makes sense as a way to reap the benefits of a bull and dampen the losses of a correction (i.e., a low volatility strategy). And indeed that is what we've been seeing over the past month (compare the relevant Vanguard funds). In which case a stock like MA which is held by QUAL and by the billionaires and is rated hold by Schwab, might just be an example of the type of holding that will do well in the near term (at least). (I don't hold it directly and don't plan to as it doesn't fit my current allocation needs).

Post Reply