You’d think it would be pretty hard to hide a billionaire these days. After all, tax returns and SEC filings can be accessed by intrepid reporters.
Still, a new billionaire crops up from time to time.
More often than not, new billionaires own businesses that hit it big. Of the 19 new American billionaires that Forbes identified in 2013, eight of them inherited their fortune. Three are in real estate and loan financing. The rest own successful business.
That’s the case with one of the newest American billionaires, Stewart Horejsi (his last name is pronounced “Horish”).
And the thing is Horejsi used a surprisingly simple strategy to make his fortune.
I use this strategy, and you probably are, too.
If you’re not, you should start immediately.
Investing to Make Your Fortune
Stewart Horejsi was running the company his grandfather founded.
It was 1980, and Brown Welding Supply was struggling. Other companies that sold oxygen and hydrogen tanks to welders were moving into his Kansas turf.
So, in a moment of desperation (or genius), Horejsi took $10,000 of company cash and bought 40 shares of Berkshire Hathaway stock. A friend had told him about Warren Buffett. Shares were trading around $265 at the time.
Two weeks later, Horejsi bought 60 more shares at $295.
A month after that, he doubled down for 200 shares at $330.
Horejsi eventually owned 5,800 Berkshire Hathaway shares. He sold 1,500 shares in 1998 as they traded as high as $80,000 a piece.
That was worth a cool $120 million that he parlayed into a successful money management firm.
Today, his 4,300 shares are worth $742 million or so.
He’s done pretty well.
And let’s not forget that Berkshire Hathaway has been a phenomenal success story. From Stewart Horejsi’s first buys at $265, the stock has run to over $170,000 a share.
That’s a 640,509% gain over 33 years.
It’s Easier than You Think
Now, Horejsi’s story may sound like a once-in-a-lifetime windfall.
It’s easy to hear a story like this and immediately think “Oh, that could never happen to me.”
But the fact is massive gains over a span of 20 or 30 years are not once-in-a-lifetime events…
An investment might not gain 640,509% like Stewart’s did, but you absolutely can pull down a 200,000% or 300,000% gain with a 30-year time horizon.
Say you bought Starbucks when it went public in 1992. Shares were $17. $100,000 would have gotten you 5,882 shares.
Starbucks has split its shares five times over the last 20 years — and it just started paying a dividend in 2010.
Today, if you had reinvested those dividends, your 5,882 shares would have grown to 196,761 shares. That $100,000 would be worth nearly $15 million dollars! Not only that, but you’d be raking in $165,279 in dividends this year.
That amounts to a 148,222% gain in 20 years.
And that’s just one example…
A lot of other stocks could have given you similar results.
Take McDonald’s…
Let’s go back 25 years this time to 1988, when your $100,000 would have bought 2,173 shares of McDonald’s at $46. Today, if you reinvested those dividends, you’d have 25,833 shares of McDonald’s worth $2,531,700 — and you’d get $79,565 in dividend payments this year alone.
McDonald’s was hardly an unknown stock at the time; and you still could have made enough in 25 years to live a pretty good life.
The bottom line is you just have to get started.
Don’t worry if you don’t have $100,000 ready to deploy… Start with what you can and add to it when you can.
The point is to start.
Find a good dividend payer, and use a Roth IRA account so you can avoid all taxes when it comes time to start spending your fortune.
Until next time,
Until next time,
Briton Ryle
@BritonRyle on Twitter
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A 21-year veteran of the newsletter business, Briton Ryle is the editor of The Wealth Advisory income stock newsletter, with a focus on top-quality dividend growth stocks and REITs. Briton also manages the Real Income Trader advisory service, where his readers take regular cash payouts using a low-risk covered call option strategy. He is also the managing editor of the Wealth Daily e-letter. To learn more about Briton, click here.
