PDA

View Full Version : The Accidental Billionaire



wolfdancer
08-20-2008, 02:00 PM
"About 10 years ago Forbes, the magazine ran an article about an "accidental billionaire" named Franklin Otis Booth Jr.

In the early 1960s, Booth tried to buy a printing company that contracted with The Los Angeles Times. The deal fell through, but he became good friends with the lawyer working on the case.

After discovering they had similar investment philosophies, they partnered up to build a 40-unit condo complex in Pasadena, Calif. -- and managed to double their money in just two years.

Booth decided he wasn't up for pursuing further real estate development, but he did agree to put $1 million into an investment partnership the lawyer put together. Thirty-five years later his stake was worth $1.2 billion.

How'd he do it?
You may already know where I'm going with this, but either way I'd suggest you stick with me. After all, who among us doesn't want to learn how to "accidentally" increase the value of our portfolio 1,000 times over just three decades?

The cynics and risk-takers among you will undoubtedly chalk Booth's success up to "luck."

Granted, his is a case of being in the right place at the right time, but the actual process that grew his fortune had very little to do with luck.

He didn't dump his money into penny stocks that took off. He didn't get in on the ground floor of Oracle (Nasdaq: ORCL) or IBM (NYSE: IBM). He didn't make smart options trades.

And he was already a billionaire long before anyone was talking about Google (Nasdaq: GOOG) or First Solar (Nasdaq: FSLR).

Things are about to get boring
What he did do was hand his $1 million over to that lawyer and a "clever young fellow." They, in turn, made big bets on unexciting businesses with wide moats that were selling at a discount to their fair value. These businesses all had strong brands, outstanding returns on capital, consistent or improving profit margins, and substantial cash profits.

That's all -- big bets on great companies selling at good prices.

Among their biggest winners were Coca-Cola (NYSE: KO), Washington Post (NYSE: WPO) -- which turned $11 million into $1.3 billion between 1973 and 2006 -- and Wesco Financial, which was run by Booth's lawyer friend and returned nearly 200 times its investment over a 31-year period.

Of course, by now I'm sure you know that the lawyer was Charlie Munger and the clever young fellow he teamed up with was none other than Warren Buffett. "
Fool (http://www.fool.com/investing/general/2008/08/13/how-to-become-an-accidental-billionaire.aspx?source=iflfollnk0000003)

eg8r
08-21-2008, 09:32 AM
Wow, talk about making the right decision at the right time. /forums/images/%%GRAEMLIN_URL%%/smile.gif

Thanks for the story.

eg8r