FR: It’s More Than Just Luck for the 1%

Article: It’s More Than Just Luck for the 1%

My final “Fool Revisited” piece today was a “response piece” to my colleague Alex Planes’ article on The Luck of the 1%. At the time, the Occupy movement was happening, and Alex used very poignant examples of how reaching the upper echelon of wealth in this country is often more about when you happen upon something – like meeting Bill Gates before he founded Microsoft – or simply being able to take advantage when opportunities present themselves. His article also uses a very prescient quote from our current president, back when he was just a flailing New York real estate developer and reality television host, proving that the idea of luck may not be as farfetched as we think.

In my article, I acknowledge that there is some luck to the vast success of the 1%. Using the Forbes 400 list as a guide, however, I tried to identify three people from that list who combined luck with perseverance and found a place on that esteemed list. The three people I profiled – Larry Ellison of Oracle (Nasdaq: ORCL), Sheldon Adelson of Las Vegas Sands (NYSE: LVS) and Michael Dell of, well, Dell – each overcame some level of adversity on their way to the upper reaches of wealth, showing that while luck is important, there are other factors that contribute to the success of some of our most prosperous businesses.

Unfortunately, all the success that those companies had prior to my article didn’t translate after, with both Oracle and Las Vegas Sands losing out to the S&P 500. At the time, Dell was going through some major struggles as a public company, and nearly two years later went private, though it reemerged as a public company as Dell Technologies (NYSE: DVMT) through its merger with EMC in 2016. The performance of the companies from November 7, 2011 through March 2, 2018 (or through October 29, 2013 for Dell after it went private):

Stock Start Price End Price CAGR Total Growth Value of $10,000
Oracle $29.97 $50.32 8.54% 67.90% $16,790
Las Vegas Sands $35.97 $71.51 11.48% 98.80% $19,880
Dell $15.40 $13.73 -5.65% -10.87% $8,913
S&P 500 $1,261.12 $2,691.25 12.74% 113.40% $21,340

Source: Yahoo! Finance & author calculation; Stock prices include dividends & stock splits

The premise of my original article still stands; for every person that lucked themselves into being wealthy, there is another person out there that started from nothing to succeed. Granted, Americans kind of won the “ovarian lottery” by being born in this country, so we already have a leg up on the rest in the world in that regard. But there is still a place in this world to succeed based on hard work, though luck could determine the level of that success. But back to these companies: there are probably better options out there for your money than these three companies, but I would urge you to do further research on your own before making any final determination about their prospects.

Until next time…

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