LA Lakers Best Sports Investment Ever?
In 1979, Dr. Jerry Buss made what’s often called the greatest sports investment ever. For $67.5 million, he bought the Los Angeles Lakers, the LA Kings hockey team, and The Forum arena. Over the next four decades, the Lakers won 10 NBA championships and became a global brand worth billions.
When the Buss family sold the Lakers stake recently (and related assets), the sale price was $10 billion.
This seems like an unbelievable return with such large numbers but the more unbelievable thing is that If Jerry Buss had simply invested his $67.5 million in the S&P 500 index in 1979 that same money would have grown to about $13 billion today. The S&P index wouldn’t have required cashflow either, although I’m sure Buss counts his Lakers investment as totally worth it.
What About EvidenceBased Investing?
If the S&P index is impressive a globally diversified Dimensional Fund Advisors-style portfolio, tilting toward small-cap, cheaper companies, and higher profitability companies has historically delivered higher returns than the standard market index.
If Jerry Buss had taken his $67.5 million and put it in a Dimensional fund in 1979, it would have grown to about $22 billion.
That’s more than double the value of the Lakers empire he built, and 61% more than the S&P index. And one other crucial aspect is that the S&P index had a decade of negative returns in this time, whereas Dimensionals worst decade performance was a cumulative gain of 78%. A smoother ride can be more important than better long term returns, because it helps you to stay on the ride.
And over more decades the comparison between the S&P index and Dimensional is more dramatic as the edge continues to add up over the years
Owning the Lakers gave Jerry Buss fame, fun, and a front-row seat to basketball glory and he made good money. But when it comes to looking at a surefire way to grow your wealth, the lesson is clear:
Markets work surprisingly, extraordinarily well in the long run
Evidence Based Investment processes work even better in the long run.
We believe our long term clients are set to be able to retire earlier than they thought possible with more money than they thought possible.