Warren Buffett ’s 89th birthday is a good occasion to revisit a question that has been weighing on financial minds lately—what price to put on Greenland. As far as we know, President Trump hasn’t contacted the Oracle of Omaha on the question of valuation, much less negotiating tips. But one of Mr. Buffett’s earliest letters to investors has an interesting way to think about such outlays. He quipped that Queen Isabella of Spain, who gave Christopher Columbus the equivalent of $30,000 to find the New World, could have instead invested it at 4% interest and had $2 trillion by 1963—nearly $18 trillion today. Denmark spurned an offer from President Harry Truman of $100 million in 1946 to sell Greenland. It is unlikely that a then-17-year-old Buffett, already a budding value investor, would have made the offer. The same sum invested in the S&P 500 would have compounded since then, with dividends reinvested, to a whopping $163 billion.
Denmark may have missed a huge opportunity, but don’t judge too harshly—the future author of “The Art of the Deal” was only born that year.
I wrote about the phenomenon of tech stock doppelgängers showering riches on people who can act quickly, but mostly parting fools from their money.
Zoom Technologies is carrying on a long American tradition: making people rich by accident.
Not to be confused with Zoom Video Communications, a unicorn that went public in April, making its backers truly wealthy, the similarly named penny stock appears to have benefited from mistaken identity. A $1,000 investment in late March would have been worth over half a million dollars by mid-April. Even now, assuming one were able to find a buyer, it would be worth $175,000.
Zoom joins the likes of doppelgangers Tweeter and Snap Interactive. Similarly confusing episodes happened in the last tech bull market. For example, penny stock Appian Technology surged by nearly 19,000% because it shared a ticker with a hot initial public offering on Nasdaq, AppNet, in 1999.
Of course all of these scenarios enriched people already owning the shares of the “wrong” company, and only if they acted quickly. Buyers fooled by similar names or tickers usually regret it. Not always, though. Mistaken buyers of food company Sysco back in March 2000—when red-hot Cisco Systems briefly the world’s most valuable company—have made 571% since then compared with a loss of 12% by owning the “correct” stock.
Pundit Stephen Moore withdrew last month from consideration for a position on the Federal Reserve Board. Now he is joining a group that wants to “perform Fed-like duties,” but not for traditional money. He will, according to Fox Business, join Decentral, which aspires to be “the world’s decentralized central bank,” performing a stabilizing role for cryptocurrency.
This raises a few questions. Bitcoin, the most valuable cryptocurrency, is hugely volatile in dollar terms, but its supply is famously limited by design. Its appeal lies in the lack of a central bank.
But supposing Mr. Moore’s outfit were able to stabilize values, would it be hawkish or dovish? Back when Barack Obama sat in the White House, Mr. Moore decried the Fed’s “easy money policy” as the recipe for the next crisis and advocated a return to the gold standard. When he was hoping to be nominated by Donald Trump, though, he advocated cutting rates by half.
Crypto investors eager to see their purchasing power maintained would prefer the 2015 version of Stephen Moore.
The column I edit, Heard on the Street, has to find one mildly ridiculous business story for each issue of the paper, in addition to all the serious, analytical stuff. This usually isn’t a challenge, though there are occasional droughts when we have to dig deep.
Thank goodness for people like Patrick Byrne, CEO of Overstock.com. He is a gift to seekers of corporate hilarity and I was a bit mean to him today.
Patrick Byrne felt a great disturbance among his shareholders, as if millions of voices suddenly cried out for an explanation. This compelled the chief executive officer of Overstock.com to write one of the more bizarre news releases in recent memory about his reasons for selling 900,000 “founder’s shares” of the retailer. “Frankly, I had no idea that shareholders would demand explanations of why and how I might want to use my cash derived from my labor and my property to pursue my ends in life,” he wrote. Mr. Byrne detailed a number of personal projects, including charitable causes, for which he needed the cash. Even after all these years, he is most famous for a different rant about an alleged conspiracy to damage Overstock’s share price involving a “Sith Lord.” Mr. Byrne backed efforts to expose and punish allegedly manipulative short sellers.
Despite some spikes in the share price, the short sellers were basically right. Since the 2005 “Sith Lord” speech, the stock has dropped by 77% compared with a 133% gain for the S&P 500. Perhaps Mr. Byrne should have directed more energy to running the company. Do or do not. There is no try.
So we decided a year ago to poke some fun at the masters of the universe who unveil their stock picks each year at the Sohn Investment Conference . My team and I decided to throw darts at stock listings and see how things panned out. It was a blowout.
No animals were harmed in this financial experiment, but some human egos were bruised. Burton Malkiel famously wrote in “A Random Walk Down Wall Street” that “a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by the experts.” A year ago the journalists at Heard on the Street decided to see if they could beat the crème de la crème—fund managers presenting their stock picks at the annual Sohn Conference in New York. The results were brutal. Heard columnists, not monkeys, threw the darts at newspaper stock listings, but Mr. Malkiel would still approve. The columnists’ eight long and two short picks beat the pros’ selections by a stinging 27 percentage points in the year through April 22. Only 3 of 12 of the Sohn picks even outperformed the S&P 500.
I sat down to speak with Doug Goldstein of the Money Tree Investing podcast to discuss whether it’s realistic to expect to beat the market with any consistency and the media’s role in spooking or exciting investors. He asked smart questions and I tried to give smart answers based on the findings in my book and other personal finance sources. Check it out!