Working on the Book and Investing

The view from where I am sitting in my investing office.

I decided to start working on the book again today (forgive the HP notebook; I had to use a specific program that required Windows so the MacBook Pro is elsewhere until I recall it). I ended up watching the Goldman Sachs testimony to Congress.

I’d rather have a business (and will have) like Tweedy Browne & Company. They (Tweedy) manage $6.5 billion in assets, of which $740 million or so belongs to the managing directors, their families, and employees. The firm is approaching its 100 year anniversary and were originally Benjamin Graham’s broker, as well as the business through which Warren Buffett bought his Berkshire Hathaway shares at as little as $8 each.

It just isn’t hard.  Imagine in 3 years, when I turn 30, I got together with friends and family to create a side investment partnership that owned shares of privately held businesses.  The average American business earns 12% on book value.  If the partnership were tiny, say had $1,000,000 in capital, and we managed to be perfectly average, 50 years from now when we are Buffett’s age, it would have a net worth of $289,000,000 and be generating $34,680,000 in annual profits.  All from that initial investment. All without ever adding another penny. 

If we were only slightly above average, at 15% compounded, the $1,000,000 partnership would grow to nearly $1,100,000,000 and generate $165,000,000 in annual profits.

Maybe I’ll do that.  I could probably create some side limited partnership, have 20 of my close family members and friends each kick in $50,000, and set it up so that it becomes a retirement-class holding.  It could be like a self-created insurance fund for them that was silently compounding in the background.

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