OK, I suggested something a little like this 29 years ago, in The Funny Money Game, when I proposed taking my 22-year-old self public. But reader Bill Saguto has really done this much better:
“I have a proposal for all of those people ‘investing’ in computer/Internet stocks,” Bill writes, “with prices that are hundreds of times their prospective earnings five years out. (Or investing in any other stocks with ridiculous PE ratios.) Simply give me $30 million dollars, which is approximately 300 times my projected earnings in five years, and you get my paycheck and I am stuck living off of whatever I manage to make off of the thirty mil. The advantages I offer over computer stocks:
“1. I have a job and have positive earnings now.
“2. I will take out life, disability, and extra unemployment insurance so you are guaranteed a return even in the darkest of economies, and payback of your initial investment when I pass on.
“3. To replace the excitement factor, every month I will roll a die and give a 50/50 chance that one investor will win $100k. The investor will be randomly chosen with the odds being increased based on his investment. This would be paid out of my thirty mil, as would be the insurance premiums and other expenses.
“4. Then I will open an options market. You would be able to sell someone else the right to your monthly entry in the die pool. As market-maker, I would take a little bit of each trade-enhancing my earnings, and thus your pay-out, even more. Just think of the possibilities.”
Sounds good to me. I’ve long felt the U.S. Treasurer, “if she really wanted to sell her bills,” would add a little lottery feature to them to add some excitement. Drop the yield a tenth of a percent but add a $25 million jackpot. Now you’re talking.
I think Bill is onto something big.
Quote of the Day
Very few American investors buy any stock for the sake of something which is going to happen more than six months hence, even though its probability is exceedingly high; and it is out of taking advantage of this psychological peculiarity of theirs that most money is made.~John Maynard Keynes
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