In response to the Davis Dynasty post by Volfan84…
So this is well documented and he is famous, but I feel skeptical. Clearly he did not turn $50K into $900m without adding money, so how much is due to great returns or just adding lots of money. He ran and investment company, so he could have made major money from client fees. It has also been said they he “never sold” his stocks, so he had to be adding new funds. (Ok, leverage gets you new money if your stocks are rising).
Here some stuff I found.
http://csinvesting.org/2012/03/18/great-investor-series-shel…
he took $50,000, provided by his wife Kathyrn, and amassed it into a $900 million fortune in 47 years (or 23.18% CAGR over 47 years!)
The 23 CAGR assumes he never added money to the $50k. That seems unlikely.
Although he bought insurance stocks his portfolio acted like a modern-day tech portfolio, rising from $100,000 to $234,790 in one year (he always bought on margin).
Ok, that helps.
A year prior to this [1942] he bought a seat on the New York Stock Exchange merely because it was cheap, having no use for it himself. He paid $33,000 for the seat which had fetched $625,000 in 1929
So before starting to invest, he bought a seat for $33k, no doubt with his wife’s money since his job bio was did not indicate any high income jobs. he worked odd jobs as a European correspondent with CBS in Geneva, as a “statistician” (before “stock analyst” was invented) for his brother-in-law’s Delaware fund, as a speechwriter and economic advisor for Thomas E. Dewey (then Governor of New York), a freelance writer, and author.
This article also says
Patriarch Shelby Cullom Davis, who all but cornered the market in insurance stocks in the 1950s, began seriously investing at age 40 with a bankroll supplied by his wife.
Which is different enough from the “age 38” mentioned in the link that follows.
Another source: https://www.suredividend.com/shelby-davis/
Shelby Davis did not start investing until he was 38. He started investing with $50,000…
By the time of his death he amassed a $900 million fortune and joined the list of the Forbes 400 wealthiest individuals.
…
Shelby Davis used leverage to boost his returns. He purchased a seat on the New York Stock Exchange which gave him access to lower margin rates than the typical investors. He used the maximum allowable amount of margin (slightly over 50%). The interest payments on his margin were tax deductable, which helped him save money on taxes.
Notice that Shelby Davis purchased about 50% of his stocks on margin.
Born 1909, so he was 38 in 1947, the start of a great post war run for the stock market.
In 1947 he created Shelby Cullom Davis & Company, which became a leading investment firm.
Q: So, how much of his wealth came from client fees?
Q: did he really start an investment company the same year he starting investing?
*Stock exchange seats produced a “dividend” based on trading activity, so if he traded for his clients, he could have generated income in addition to any fees he charged them. If he was constantly investing this new money, I have to wonder if the 23% CAGR is being calculated correctly.
This makes me suspicious of this link:
https://www.suredividend.com/shelby-davis/
Warren Buffett and Shelby Davis have very similar investing styles and compound annual growth rates. Both employed about the same amount of leverage (1.5x) to their investments.
Warren Buffett is the more well known of the two because he started investing earlier, which has given him a far larger net worth
Buffet was born in 1930. Davis started investing in 1947 with $50K. Warren was 17 in 1947, he did not have $50k while he was in high school. Warren went on to college before doing real investing. Hmmm.
I don’t doubt that if you invest in the right stocks at the right time and use leverage during a long bull market, you can do great things. I just think some of the articles on the web are inconsistent if not dubious.
I guess I better read the book. I think the FOOL sent it to me when I joined a service a while back.