Bill Gates proves that the son of a mullti-millionaire can grow up to be a billionaire. Bill Gates was not the self-made, bootstrap type story of a Jobs and Wozniak.
By Peter Brimelow, CBS.MarketWatch.com Last Update: 12:52 AM ET March 27, 2003 NEW YORK (CBS.MW) -- Despite the bear market, there's always a new crop of wunderkinds. But don't eat your heart out. "Hi, I just read your article on Coolcat (Read Feb. 20 column) and I'm tired of you guys highlighting these 'star returns' when people beat the market but still lose money," Tim Sykes just wrote me. He went on: "Let me introduce you to me, a 21-year-old stock trader who was up 96 percent last year, fully audited. That 96 percent gave me income of just under $600,000 for the year and I hardly use any leverage. Altogether I have not had a down quarter the past 2.5 years..." Wow! Roll over Kevin (Coolcat Explosive Small Cap Growth Stock Report) Kennedy. A new experience for you! Sykes says he's just created his own hedge fund, Cilantro Fund Partners, LP and endowed a scholarship at Tulane University. This is how he describes his method: "Lots of little gains from trading about once a week. I started trading penny stocks when they were soaring, but then that market became illiquid and so now I have been short biased the past few years in my trading of small- and micro-cap stocks, like Coolcat..." He adds: "I have had three main strategies throughout my trading career, when one stops making profits for me, I look for another one. 18 months ago, I didn't trade for a few weeks while I searched for a new strategy. My latest one appears sparingly, but it works 95 percent of the time. I don't know how long it will last, but I anticipate it to last at least one to two more years and so my goal for this year is to be up 80 percent. I'm up 18 percent YTD already. "But if I start losing (I take 5-7 percent losses on a position max), I will stop trading and my hedge fund will basically be a money market fund and my accredited investors know this. I only trade when forced due to a high probability of profits. Until the next perfect trade comes along..." Let me say right away that I have no independent verification of Sykes' performance. But -- and this is the maddening thing about trying to assess trading prowess -- it's not impossible. Still, it could just be blind luck. Of course, there is such a thing as a kids' market -- where the rules don't apply, for a while. The late 1990s were an example. But more recently, the rules have had their revenge. That's why I've been writing so much about the geezers -- who were around at the last market bottom in 1974. (See March 21 column). Kids like Sykes have been in short supply. More than 20 years of monitoring by the Hulbert Financial Digest monitoring has convinced Mark Hulbert and me that it's essentially impossible to achieve sustained returns that are more than 2 to 3 percentage points above the market's underlying growth trend -- 6 to 7 percent over 200 years, including dividends and adjusting for inflation. Which is still enough to compound very dramatically. The top performer over the past 20 years: The Prudent Speculator, at 13.6 percent annualized. Over the past 5 years: Wall Street Winners, up 17.9 percent, in a flat market. Still, Hulbert and I have observed the even rarer phenomenon of the hot hand -- trading frenzies in which advisers can have brief (months, maybe a year) bursts of spectacular success. Examples: James Dines of The Dines Letter; Bob Prechter of the Elliott Wave Financial Forecast. It's hard to account for in a way that factors out luck. But it does seem to happen. And initial bursts of spectacular success can sometimes subside into merely superior performance, as with Louis Navellier of MPT Review. (See July 18 column). So maybe Sykes will be around in 20 years' time. But he won't be averaging anything like 80 percent compounded. For more information or to subscribe to the Hulbert Financial Digest, click here.
not a bad idea even if he is full of it. <i>pick your spots.</i> do you have the link to the March 21 article he mentions?
I don't have the link. But I think you have to registered in CBSMarketwatch to get archives of old articles. good luck
But I think his point is that Gates put himself in a position to take advantage of the opportunities. Genius, though, he is NOT! He is simply a very good businessman who "borrowed" ideas and took advantage of some business opportunities, and then he created a monopoly through tough (some would say monopolistic and perhaps unethical) business practices, to make his 2nd rate products the standard.