How to get richer, faster: Private equity is your best bet

[finetrader]

Good article.

 

 

Taking a private-equity approach to public equity, meanwhile, means making very concentrated bets on companies that you understand, know intimately and believe can survive difficult economic conditions.

 

http://business.financialpost.com/investing/investing-pro/how-to-get-richer-faster-private-equity-is-your-best-bet

[HJ]

Couldn't agree more. 

[Jurgis]

Good article.

 

 

Taking a private-equity approach to public equity, meanwhile, means making very concentrated bets on companies that you understand, know intimately and believe can survive difficult economic conditions.

 

http://business.financialpost.com/investing/investing-pro/how-to-get-richer-faster-private-equity-is-your-best-bet

 

And when you blow up, you can talk to the article author about what to do next.  ::)

[matts]

I think the article is very misleading actually.

 

The examples he lists, Gates, Walton, Bezos ect. were not private equity investors. They were entrepreneurs who STARTED their own companies. Buffett would be the only one that fits into the premise of the article.

 

It should be titled "Want to get rich? Innovate, create a fantastic new product, and start a business around it", not "invest in private companies"

[Jurgis]

I think the article is very misleading actually.

 

The examples he lists, Gates, Walton, Bezos ect. were not private equity investors. They were entrepreneurs who STARTED their own companies. Buffett would be the only one that fits into the premise of the article.

 

It should be titled "Want to get rich? Innovate, create a fantastic new product, and start a business around it", not "invest in private companies"

 

Right. And then there's survivorship bias to which I pointed in my previous post. For every Gates, Walton and Bezos there are probably 100 entrepreneurs who fail.

 

Not saying that entrepreneurship is a bad thing to do. Just don't expect it to be easy road to multibillions.

 

Same thing about concentrated bets on a few companies. For most people - CoBF-pros-possibly-excluded - index funds or other diversified portfolios are the way to prosperity. Not chart-topping wealth, just prosperity. Do you really need chart-topping wealth though? ;)

[constructive]

I think the article is very misleading actually.

 

The examples he lists, Gates, Walton, Bezos etc. were not private equity investors. They were entrepreneurs who STARTED their own companies. Buffett would be the only one that fits into the premise of the article.

 

It should be titled "Want to get rich? Innovate, create a fantastic new product, and start a business around it", not "invest in private companies"

 

I don't think it's misleading, he just uses a different definition of private equity than people are used to.

 

It is not just about great entrepreneurs becoming rich. There are other key advantages of the corporate format besides owning and controlling your own great idea.

 

1. You get to pay yourself a salary - not so if you own public equities.

2. You get to raise money at 10x book value if the market will support that valuation. This can be extremely helpful in increasing your wealth.

[KinAlberta]

I think the article is very misleading actually.

 

The examples he lists, Gates, Walton, Bezos ect. were not private equity investors. They were entrepreneurs who STARTED their own companies. Buffett would be the only one that fits into the premise of the article.

 

It should be titled "Want to get rich? Innovate, create a fantastic new product, and start a business around it", not "invest in private companies"

 

They were entrepreneurs who STARTED their own companies."  I'd say that is somewhat true for Buffett as well as some of his early earnings were driven by his partnership fee structures. 

[rmitz]

I think the article is very misleading actually.

 

The examples he lists, Gates, Walton, Bezos ect. were not private equity investors. They were entrepreneurs who STARTED their own companies. Buffett would be the only one that fits into the premise of the article.

 

It should be titled "Want to get rich? Innovate, create a fantastic new product, and start a business around it", not "invest in private companies"

 

I need to point out the order you’re stated here is usually not the way it goes.

 

Innovation usually comes *later*.  At first you’re just making money, doing something similar to other businesses.  You build on that, incrementally innovate on that.  There is rarely a single eureka moment at the start of a business.

 

Bezos is very close to fitting that description, but I’m not sure of the exact history.  Walton and Gates definitely don’t.  And there’s nothing wrong with that.