Thursday, March 4, 2010


Michael M. Lewis wrote the 2003 book of the same title about the Oakland Athletics, who used close analysis of statistics to help itself assemble competitive teams despite a financial disadvantage.

While that may be a very tiny niche - no one I know personally needs to assemble a professional baseball team, let alone do it on a "budget" - but the idea speaks to the general population. Most citizens of the US are not Rockefellers or Vanderbilts. We have to do a lot on a little. And it would, probably, serve us well if we used researched facts to do it.

Lewis is back with another money-focused book. An excerpt of it is published in this month's issue of Vanity Fair. It's incredibly long - eight web pages - but the story he tells of Mike Burry is fascinating. Burry is one of the few men in America, and possibly the world, who saw the sub-prime mortgage crisis and subsequent economic collapse coming. And due to a market wrinkle he invented, he made a lot of people rich.

The stock market is a funny creature. Some might call it a terrible beast when it doesn't go their way, but it seems to me, in all my limited knowledge of it, that you can really do something if you have the guts to ride it out.

Grace Groner sat on an $180 investment made in 1935 and turned it into a $7 million gift to her alma mater on her death. A survivor of the original Great Depression, Groner lived frugally her entire life. According to the Chicago Tribune, when she died at 100, Groner left a tiny house with a few pieces of furniture and a fortune nearly no one knew she had. She had made a small bequest to her college and had funded anonymous charitable gifts in the past, but the president of Lake Forest College was stunned when he received word of the donation.

Perhaps it is the Midwest monetary restraint that served Groner and another world famous investor well. Warren Buffett has made billions by being a value investor - something touched on in the first story of this post - and buying up stocks from incredibly undervalued companies while those stocks are cheap. Once the company "makes it," Buffett's portfolio shows an often significant bump. A lot of people have tried to imitate him, but no one has ever really succeeded. Nevertheless, Yahoo! has posted five rules that Buffett uses to guide his own investing. While I have no idea how I would use them, they do seem to make a great deal of sense.

1 comment:

Jen said...

The Grace Groner story gives me hope! Yay for putting a little in and just letting it go.