A Quiet Billionaire

Bill Parrott |

Most investors have heard of Warren Buffett and Peter Lynch, but what about Herbert Wertheim? Dr. Wertheim is worth $5 billion, according to Forbes. In a Forbes Magazine article, he credits his substantial wealth to buying and holding individual stocks forever. Dr. Wertheim said, "My goal is to buy and almost never sell."[1]

His strategy follows the tracks of Messrs. Buffett and Lynch, who own great companies and hold them for years. His top two holdings are Apple and Microsoft, which he "purchased decades ago during their IPOs."

Apple and Microsoft look like no-brainers today, but they suffered mightily on their way to greatness. Apple fell 71% in 2000, dropped 57% in 2008, and crashed 26.4% in 2022. If you purchased Apple in 1980 and held it through 1997, you made $8.

Microsoft stock fell 63% in 2000, 22% in 2002, 45% in 2008, and 28% in 2022. If you purchased Microsoft in January 2000, it took fifteen years to recover your cost.

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Dr. Wertheim is an optometrist by training and is keen on understanding patents. He put his knowledge to work when he discovered a "small airline parts maker" named Heico. It was trading for 33 cents per share, and he said, "Heico was a disaster." However, he understood the company, and his original investment of $5 million is now worth $800 million![2]

How can we benefit from Dr. Wertheim's insight?

  • Buy. Buy companies you're familiar with – a classic Peter Lynch move. In addition, make sure you understand what you're buying, and don't buy a company if you can't explain what it does to others.
  • Patience. To generate wealth, hold onto stocks during the dark days. Dr. Wertheim did not panic and sell his holdings. He adds, "If a stock continues to go down, and you believe in it and did your research, then you buy more."
  • Hold. If you own quality investments, hold them forever. Timing the market based on economic indicators, price levels, or expert opinions is madness.
  • Give. Dr. Wertheim and his wife Nicole have pledged to give half their wealth to groups and organizations they support.
  • Enjoy. The Wertheims travel often and enjoy the gift of time. Dr. Wertheim says, "Having time is the most precious thing."

You might not become a billionaire, but you can pick up a few extra dollars by following the lead of great investors like Dr. Wertheim.

The real key to making money in stocks is not to get scared out of them. ~ Peter Lynch

February 8, 2024

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren't suitable for every investor. Prices and yields are for today only and are subject to change without notice. Past performance is not a guarantee of future performance.