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This is like writing without reading. Will fix! Thanks, best, Larry

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Hi Michael,

You make excellent points.

It's clearly case by case. Jobs was quite special. Zuckerberg, not so much.

best, Larry

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Hi David, Ok, but I mentioned 2. Re 1, the billionaire is risking his descendent's patrimony, so it's their spending that matters. On 3, yes, but I think that this is overwrought egotism. And you can lead your company while owning a small share of stock. As for 4, these folks paid a huge price for this pleasure. I should also mention that not selling let's them avoid capital gains taxes. But better to pay those taxes than lose two-thirds of your wealth.

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Question 4 - answer option d - is this new Economics - like new Math?

d) a and d

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I would give you push back on #5... While it is true that had Zuckerberg et all had a more diversified portfolio in 2022 their net worths would not have declined as much they did, obviously, how do you account for timing?

When should each of them have "diversified" their holdings? At the IPO? One year later? 5yrs later? 20yrs later? I think you have not accounted for that.

Had any of them diversified their portfolio upon the IPO it is highly unlikely that they would have deployed those assets in a manner that would have provided the returns they saw through 2021. And even if they had what are the chances those investments would not have re priced similar to the stocks in the companies they control? Look at Musk as an example. He sold Tesla shares, pushing the price of those shares down for numerous reasons and re deployed his asset earning even less return than had he held on to Tesla.

I see no evidence of founders being particularly good at deploying assets outside of their own companies, other than in bull markets.

Further, it is not always true that a founder can be easily replaced simply because the company is extremely large. Look at Apple for instance. It literally took the founder returning to the company to not only restore share holder value but more importantly to take the risks that paid spectacular long term share holder value as well.

No "hired hand" CEO would have been able take the risk that Jobs took to launch the iPod and later iPhone. The CEO's compensation package will navigate how they lead the company... And a "hired hand" CEO is only encented to use financial manipulation or monopoly creation to increase profits. Certainly not true product innovation as Jobs did with the iPod and iPad.

I think there is a very big difference in the wisdom of looking at how labor in a company manages over exposure to an individual stock when compared to the founders over exposure. For the later is does not usually make sense, for the former i think it can make a lot of sense.

I also think that in the long run, keeping owners attached to the stock price is most likely better for the total returns on the company as evidence by founders and their families at companies like Walmart, Berkshire Hathaway, Microsoft, Nike etc....

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I think billionaires have good reasons not to diversify. 1. Even the most extravagant of families needs only a limited amount of wealth for spending. Anything above that is useful only as a means to a goal. 2. Estimates of a majority shareholder's wealth are overestimates based on current price of shares. As he sells more shares supply increases and the price decreases, and investor confidence decreases and the price decreases. 3. He may well think his leadership of the company adds value, but his investment in other companies may not. 4. He may gain more pleasure and status from leading a company/taking risk than from having secure investments.

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