Ted Weschler Turned $70k into $264M in a Retirement Account

https://blog.umd.edu/davidkass/2021/08/27/how-ted-weschler-turned-70000-into-264-million-in-a-retirement-account/

by chollida1 • 2 years ago

26 39 2 years ago

blog.umd.edu

immibis• 2 years ago

It's called gambling. Sometimes by doing this your money increases 1000000% but most of the time it decreases 100%.

charlie0• 2 years ago

It can go beyond the 100% loss if you leverage.

icedchai• 2 years ago

Generally, you can't get that leverage in a retirement account. They don't let you trade on margin there.

willcipriano• 2 years ago

Only if you pay it back.

datavirtue• 2 years ago

Gambling? The odds are always in favor of the gambling house. You can't do anything about their odds which ensure that you lose nearly 100% of the time.

There is a lot that you can do in the market where the odds are technically in your favor AND you can adjust the number with your own behavior to manage risk, further bettering your odds.

All of this is well known and provable. Spreading FUD about the market is a great way to keep people poor, indignant and suffering a lack of freedom.

woooooo• 2 years ago

If you're making a play with a small chance of huge upside, but a big chance of losing, most people colloquially call that "gambling".

superb_dev• 2 years ago

The stock market requires someone to fail for someone else to win, the moneys gotta come from somewhere. People who are poor, indignant, and suffering will just be more fodder for those who’ve already won.

bsder• 2 years ago

Someone will win the lottery. It just won't ever be you.

phendrenad2• 2 years ago

Hmm time to adjust the old IRA investments.

bdjsiqoocwk8• 2 years ago

I wish this would shut up the disciples from the church of Efficient Market, but I know that it won't.

whywhywhydude• 2 years ago

How does this discount efficient market hypothesis? You can find plenty of examples of people buying 2$ lottery tickets and becoming millionaires.

bdjsiqoocwk8• 2 years ago

If you believe the EMH you shouldn't compare stocks to lottery tickets. It sounds like you just don't want to look too closely.

Let's try differently. What evidence would you require to conclude "EMH is false"?

Edit: I have to make this edit because someone will point it out. YES I realize I didn't actually answer your question but the thing is this has been discussed ao thoroughly that I don't think i have anything new to add.

ProcNetDev• 2 years ago

What do you think the Efficient Market theory says?

bdjsiqoocwk8• 2 years ago

As I said in a sibling comment, the interesting version of EMH is "all publicly available information is already incorporated in the price".

People who believe it to be false, also believe that "if I analyse all information about some stocks I might find some which are priced less than their intrinsic value, wait for everyone else to come to the same conclusion, and once the price has appreciated to intrinsic value, I can sell it"

People who believe it to be true believe that the above is futile, because whatever price you see is already the intrinsic value so every time you try and buy at discount youre actually unknowingly buying at intrinsic value, and so you make no profit on each buy.

bdjsiqoocwk8• 2 years ago

Weschler says that he used to buy beaten-down bonds of companies that were in less dire straits than they seemed to be

Anyone knows how to see and buy publicly traded bonds?

mikestew• 2 years ago

https://fixedincome.fidelity.com/ftgw/fi/FILanding?bar=p#tbi...

silexia• 2 years ago

I still don't get how he multiplied $70k to $264m... And this reporter seems to just take all of Weschler's claims at face value... BUT Warren Buffett is famous for great due diligence and high levels of ethics... So I guess it probably is legit?

486sx332• 2 years ago

The more I read about the stock market the more I start to think about the negatives of EFTs and index funds. They’re like taking an antidepressant, the lows aren’t as low but the highs aren’t nearly as high. The market was more volatile when more “retail” investors purchased individual stocks.

Lots of people lose big, personally my biggest loss was $WISH wow I got hammered there. Had it been an index fund that incorporated WISH I would have been more protected… then again my direct purchase of NVDA more than paid that back

Obviously 70k into 264M is insane and either is like one in a billion luck or the result of insider information

kjellsbells• 2 years ago

Weschler makes essentially the same point: if you dont have the time or desire to spend 24x7x365 thinking about money, index funds are for you. sed s/money/life problems/g.

I think that people forget that these homely-sounding guys like Buffett and Weschler have serious, serious time and mental investments in thinking about money. Theyre not serious like you or I, maybe, who watch a few hours of Bloomberg each week. They eat, sleep, and dream about investing. Theyre basically money monks. Theyre also (and I think they would admit it too) lucky. You can make some of your own luck in investing, by studying businesses like these guys do, but you still need to be lucky. I observe that many of their investments eschew fashionable sectors like tech. I wonder if that is, again, making their own luck. I think Buffett would have choice words to say about investing in Nvidia for example.

486sx332• 2 years ago

Further - just remember Jeffrey Epstein got all his wealth investing for rich people… how? We still don’t know those details

gamblor956• 2 years ago

Step 1: have $70k several decades ago, when it would have been the equivalent of about $250k today taking into account inflation. Taking into account the time value of money, that $250k would be worth several million in current purchasing power. (For comparison, most Hollywood stars made about this much back then and lived like kings; nice houses could be purchased for <$100k that today would cost >$10 million.)

Step 2: Be an investment banker and have access to lots of capital that lets you make repeated risky bets.

Step 3: Benefit from bailouts when many of those risky bets fail.

So, his story is not in any way replicable by normal people and isn't even replicable by most of his peers or new entrants into his own industry today.

banku_brougham2• 2 years ago

Dont you see? Just 10 dollars invested in 1933 could have become 80 bazillions.

samus• 2 years ago

True, he is a billionaire because he started early and . Most of us start late and don't have so much capital, so naturally we will never be billionaires, but investing regularly is still the way to make the most out of our money.

Investing in shares truly carries a lot of risk if the stocks are not researched properly. In this age it is even harder since there is now a lot more dangerously inaccurate information to sift through. Thus TA recommends index funds. The S&P 500 compounds a lot over 30 years.

Don't invest money you can't afford to lose.

exabrial• 2 years ago

Everyone is moaning about people not paying taxes.

I pay a metric shit ton of taxes to fund the exotic lifestyles of federally elected officials and to fund wars overseas. And before you go “oh who is paying for the fire department” that is less than .02% of my taxes, a reasonable amount.

I applaud people that found a way around the utter bullshit. I’m working for free, under threat of arrest, for 3-4 months every year. Unbelievable.

dxs• 2 years ago

Principles:

1) Asset allocation: Basically, how much you want in stocks, how much in bonds. Those are the two major asset classes. Go way heavier on stocks early in life and maybe trend toward 50-50 later in life when you have less time to ride out dips.

2) Diversification: What specific entities you invest in. Suggestion: Total US stock market index, total world non-US stock market index, total US bond market index. This way you don't have to pick winners. You just buy everything. Let the bad stuff drop off along the way, and let the good stuff do its thing.

3) Rebalancing: Like once a year, or every time your chosen asset allocation gets at least 5% off. Whatever feels good, but keep your asset allocation under your own conscious control.

As a note, Ric Edelman, when he had a radio show, went over the IRA to Roth conversion. Several times. According to him, it's a wash. Pay tax before you invest or when you withdraw, but either way the net effect is almost identical.

I like silexia's comment. There is a lot of information not included in the story, and, if you think about it, this whole story is one data point. One guy did some things/had some things happen at a particular time in history. Don't expect to cut and paste into your own life and get rich by next week.

Important points:

1) Start as early as you can.

2) Be religious about regular investing without fail.

3) Never break into the piggy bank to buy a house or a fancy car, or for any other reason short of a dire medical emergency.

4) Take advantage of every break you can find, and any employer matches.

5) Wait.

There is a huge amount of information at Bogleheads Investing Advice and Info ( https://www.bogleheads.org/ )

BizarroLand• 2 years ago

Also, get as many 20,000/1 profit ratio private insider secret deals as you possibly can under your belt and let other people work their lives away to enrich you.

toast0• 2 years ago

As a note, Ric Edelman, when he had a radio show, went over the IRA to Roth conversion. Several times. According to him, it's a wash. Pay tax before you invest or when you withdraw, but either way the net effect is almost identical.

It depends on where the tax rates are when you deposit and when you withdrawal. Some of that is politics, and some of that is where you fit in the tax brackets.

There's some amount of unknown and unknowable there, but if you're early in your career and not making a lot of money, Roth contributions might make a lot of sense --- might as well pay taxes upfront while they're low. Once you start making more money, traditional contributions start making more sense, as you're likely to have lower income as a retiree than while employed.

If you have some years later in life where you aren't earning much (by choice or not), roth conversions can make sense then, although that gets real complex if the reported income will interfere with benefit programs you would otherwise qualify for.

banku_brougham2• 2 years ago

If all americans would simply follow the principles laid out in this article we could all become staggeringly rich.

frogperson• 2 years ago

If you like stories like this about outsized successes of investors, checkout the Market Wizards books. They are a series of interviews with successful and often famous investors.

Ted Weschler Turned $70k into $264M in a Retirement Account

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