The lady also worked until her 90s and died soon after her retirement. Working an extra 25 years past typical retirement age and barely drawing on principal helps also.

Absolutely, I would call it an extra 30+ years, since she retired at 96 and many people retire at 65 or 62 these days.

In other words, the length of time has more to do with the remarkable sum than the investment strategy.

That math really doesn’t work - $6,300 67 years ago (1951) in today’s money would be $61,478.82 (https://www.bls.gov/data/inflation_calculator.htm).

She would definitely have to do well in the market, but I wonder what her earnings looked like as well over time - Cleary Gottlieb is a VERY successful law firm. If there was any kind of profit sharing or other incentives, it could have been fairly lucrative. Stock would have been better, but still.

If the 7% number he's quoting is real returns rather than nominal returns (which historically it is), inflation is already factored in. Total nominal returns (including dividends) have been 11% over 1950-2009, with inflation running at 3.8% over the time period:

http://www.simplestockinvesting.com/SP500-historical-real-to...

Yeah, that's the point I mentioned in "6K is easy to save today but wasn't in 1955".

I'm interested to see an analysis that takes that into account. But I don't think it changes the overall conclusion. I think that starting in 1951, on a secretary's salary, you could have used an indexing strategy to end up with $8.2M. Should be pretty easy to prove or disprove.

One thing I don't know is how much secretaries made back then. Presumably her wages increased a non-neglible amount over time.

In 1955 $6k was very much likely over 50% of her yearly income. Agreed, unlikely.

Two big issues with these simplifying assumptions: 1. The stock market is not a constant return, and 2. People don't invest a constant amount per year. When times are good (and the market tends to be up during these times), you can usually save. When times are not good (and the market is usually down), you're either not saving or even digging into your savings. If you're betting on the stock market, this means you're buying when times are good (buying high) and not when times are bad (not buying low). Sounds like a recipe for investment disaster.

I know there were only a few times in my life when I've made enough to invest a substantial amount, and they were all at market high points. Whoops!

OK, those can be factored into the simulation. Care to add it?

As mentioned in the last paragraph, I don't think it will substantially change the results. Maybe you need to save $11K, or $15K. Personally as a software engineer, I've saved $15K+ every year for over a decade, and I live smack in the middle of San Francisco, one of the highest cost-of-living cities in the US.

Point is: you absolutely don't need to be insider trading to amass $8.2M over 67 years, working a normal job. (Or at least you didn't in the last 67 years, not saying anything about the next 67).

That's too clever by half.

In 1950 the average income was $3,210. How would a secretary get $6,300 to invest?

The 7% rate quoted is after inflation. The actual historical rate of return was more like 11% over that time period if you ignore inflation.

See my response here: https://news.ycombinator.com/item?id=17011298

> Why do you say she "obviously beat the market"?

> Feel free to post a better analysis, using real data instead of the annualized return.

Honestly, I get what you're saying, but compound interest doesn't add up here unless she was seriously killing in terms of both her income and the amount of it she was saving. $6300 is probably not enough in terms of saving in her later years, but in her early years it's probably way too high. The early years contribute massively to her investment returns, so i think if you were to pick an error to be on, you're on the side that gives her a little too much credit.

To illustrate this, I created a model that gives one scenario I feel is very generous to her but corrects for the arbitrary $6300 number. The issue with any model here will likely come down to a debate around a) what she earned and b) How much of that she saved. Neither of us have that info, so I'm going to just say that I do feel its obvious you need to beat the market to save ~$9m on the income of someone of her employment class given what I see here, but I'd love to learn more to improve it.

Link: https://docs.google.com/spreadsheets/d/1_Q_HopM3vEHE0qBtfCeQ...

Outcome is that she would have saved $4,469,208.39. If she wanted $9m she had to beat the market, and likely do so in her earlier years of investing.

Assumptions I made:

1. She was at the top of her earning class in 1969 (1), making $200 / week (and having no tax responsibilities).

2. She managed to save 25% of her income, every pay cheque (i think this is unlikely, but generous while not being totally impossible).

3. She managed to get a 4% raise every single year until she retired.

4. Prior to 1969, her income was at least what it was in 1969 (again generous i suspect)

If we switch this to suggest she likely earned less in her early years the model produces much worse outcomes. I.e. If we lower her salary to more realistic levels for 1950-1969 (i picked 1969 as a starting point as it was a healthy year for the economy and in prior years she would have earned less), she had to either get much higher returns, or save a much higher % in order to get close to even the number I've suggested was possible. Overall I've tried to be generous at every turn, and still struggle to get above $5m. I think it's pretty obvious she beat the market in order to get where she landed.

(1) https://fraser.stlouisfed.org/scribd/?item_id=498533&filepat... [TL;DR; Women Secretaries in NY, NY made approx $120-180 / week depending on industry in 1969, again making $200 / week a generous number to work with]

Thanks for the additional analysis. Overall, I agree your assumptions are probably more accurate, and the end total is less.

Still, it's within a factor of 2. She did beat the market, but it feels like it's within the realm of good decisions / luck, not insider trading.

On the other hand, the article does say it: she copied trading from her colleagues. It's certainly plausible that her colleagues' decisions were that shrewd and gave her a bump.

I wouldn't expect a bunch of lawyers in NYC in 2018 to consistently do much better than average in the market, but in the 60's in 70's the market was completely different. They could probably do much better back then, since information didn't spread as fast, and they were close to it. I mean, at that time I wouldn't be surprised if simply working physically near Wall St. led to better returns.

Though I still think the more remarkable thing here is the amount of time, not the investment strategy. The 31 years of working past retirement age multiplied the total by significant factor no matter how you look at it.

Agreed, i didn’t talk about option c) time. However, even if we extend the analysis i cannot get it there with ease. It is a shame we cannot just ask her about her contribution amounts and timing!

I don’t recall the source but i was recently reading about a long term study on insider trading and it was found to be somewhat common. Like damn, i even have insider tips i could offer (don’t ask, i won’t!) but I’m not the only one with this info and some of the people i work with I’ve witnessed do questionable things in other areas of life that lead me to think it’s possible they might wink the right way as they talk to someone that shares a tip.

At the end of the day investing is something we should probably all do, but i wouldn’t use this as an example of what most people will achieve. It demonstrates a very happy outcome, and while i think it shows what can happen, i wouldn’t call it average, I’d still have to say she did better than most; she beat the market, somehow, either through info or by having more time to execute a better strategy that most cannot achieve.