The Aleph Blog » Blog Archive » How to Become Super-Rich?

How to Become Super-Rich?

My main goal this evening is to discredit those who tell you that you can get rich quick by investing in the secondary markets. That won’t work.  It sort of worked for Buffett, but a lot of his success came from creating a holding company, and buying entire businesses, not just fractions of companies that he would not control.

Even the top entertainers and sports stars rarely become super-rich unless they have an iron discipline, and hand over their excess assets to an honest and talented advisor, who shepherds them and grows them, and gives the client personal advice as needed.  That’s what I do, though I have no famous clients.

As with so many things, it comes down to self-control.  Can you defer self-gratification?  Will you seek talented advisors who are honest?  They aren’t easy to find.

Those that become super-rich form their own firms, and use them to further their wealth.  They hire talented people to grow their wealth.  It can be a purely industrial firm.  It can be part industrial and investing, like Loews, Berkshire Hathaway, Leucadia, Icahn, etc.  It can be a private firm, whether private equity, a hedge fund, or an industrial firm.

The main idea here is that great wealth typically comes through running a large firm that is very profitable, which concentrates the efforts of others.  Significant wealth never comes through your own labors or secondary-market investing.  It comes through creating a very profitable firm.

Now, I want to add one more tangential observation here.  It’s easier to make a lot of money by offering investment advice, than by investing your own money yourself.  Why?  In offering advice, your margins are virtually unlimited.  Every new subscriber is gravy.  Your own capital is limited, so your returns are limited.

But the record of newsletters is poor; that’s why I have never considered a newsletter.  I buy no newsletters because they have no value.  I sell no newsletters because my best insights should go to my clients.  I have never seen a newsletter in my life that genuinely offered value.

Far better that you build your own firm with your valuable differential insights, than that you try to make money in the public markets.  Those who are very rich managed large firms that became dominant.

-=-==-=-=–==-=-=-=-=-=-=-=-=-=–==-=-=-=-=-=-=-=-=-

Now, few of us can do that.  That’s the way the world works.  And most who try it will fail. Far better to aim lower and achieve a happy outcome, than strain after riches that never come.

Full Disclosure: long BRK/B, L






bloggerbuzzdeliciousdiggfacebookgooglelinkedinmyspacenetvibesnewsvineredditslashdotstumbleupontechnoratitwitteryahoo
Personal Finance, Portfolio Management | RSS 2.0 |

3 Responses to How to Become Super-Rich?

  1. [...] David Merkel: "Significant wealth never comes through your own labors or secondary-market investing."  (AlephBlog) [...]

  2. [...] David Merkel, “Significant wealth never comes through your own labors or secondary-market investing. It comes through creating a very profitable firm.”  (Aleph Blog) [...]

  3. [...] David Merkel, “Significant wealth never comes through your own labors or secondary-market investing. It comes through creating a very profitable firm.”  (Aleph Blog) [...]

Disclaimer


David Merkel is an investment professional, and like every investment professional, he makes mistakes. David encourages you to do your own independent "due diligence" on any idea that he talks about, because he could be wrong. Nothing written here, at RealMoney, Wall Street All-Stars, or anywhere else David may write is an invitation to buy or sell any particular security; at most, David is handing out educated guesses as to what the markets may do. David is fond of saying, "The markets always find a new way to make a fool out of you," and so he encourages caution in investing. Risk control wins the game in the long run, not bold moves. Even the best strategies of the past fail, sometimes spectacularly, when you least expect it. David is not immune to that, so please understand that any past success of his will be probably be followed by failures.


Also, though David runs Aleph Investments, LLC, this blog is not a part of that business. This blog exists to educate investors, and give something back. It is not intended as advertisement for Aleph Investments; David is not soliciting business through it. When David, or a client of David's has an interest in a security mentioned, full disclosure will be given, as has been past practice for all that David does on the web. Disclosure is the breakfast of champions.


Additionally, David may occasionally write about accounting, actuarial, insurance, and tax topics, but nothing written here, at RealMoney, or anywhere else is meant to be formal "advice" in those areas. Consult a reputable professional in those areas to get personal, tailored advice that meets the specialized needs that David can have no knowledge of.

 Subscribe in a reader

 Subscribe in a reader (comments)

Subscribe to RSS Feed

Enter your Email


Preview | Powered by FeedBlitz

Seeking Alpha Certified

Top markets blogs award

The Aleph Blog

Top markets blogs

InstantBull.com: Bull, Boards & Blogs

Blog Directory - Blogged

IStockAnalyst

Benzinga.com supporter

All Economists Contributor

Business Finance Blogs
OnToplist is optimized by SEO
Add blog to our blog directory.

Page optimized by WP Minify WordPress Plugin