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Financial Freedom

Is Bill Gates the New Ben Franklin?

Is Bill Gates the New Ben Franklin?

by Dr. Mark Skousen, Advisory Panelist, Investment U
Thursday, July 31, 2008: Issue #830

Last week, I had the unique opportunity of meeting Bill Gates, founder of Microsoft, and until last year, the world’s richest man (worth $58 billion).

If you go into the stock market thinking only in terms of greed and making money, you are likely to get involved in a lot of schemes and short-term trading systems. Most will fail. But if you choose stocks of companies with good long-term fundamentals, you will make a lot of money in the stock market.

The meeting was arranged by friend John Mackey, CEO of Whole Foods Market, who was invited by Time magazine to appear on a panel with Bill Gates and other luminaries to comment on Gates’ vision of “creative capitalism” and how business can help alleviate world poverty. The panel discussion will be a cover story in Time this month.

The moderator, Time’s managing editor Rick Stengel, started the panel by suggesting that Ben Franklin set the standard for good business when he said that business should “do well by doing good.”

Is Bill Gates the Next Ben Franklin?

Like Ben Franklin, Bill Gates is a brilliant entrepreneur and inventor who created a new technology that transformed the world. In the process, he became a very wealthy man, and so did thousands of his employees and millions of investors. And like Franklin, Gates retired in his 40s to devote the rest of his life to civic service and philanthropy on a global scale by establishing the Bill & Melinda Gates Foundation.

Gates is a firm believer in the vital role of market forces and the benefits of free-market capitalism, but thinks big corporations should be nudged into providing products and services that may not be affordable to the poor, such as vaccines. His foundation, the world’s largest after Warren Buffett’s donation doubled its size, works to improve health care and reduce extreme poverty, and to expand educational opportunities and information technology.

Profiting from John Mackey’s “Conscious Capitalism”

The appearance of John Mackey, CEO of Whole Foods Market, on this panel is a paradigm shift of monumental importance. It demonstrates the breakthrough Mackey is having in the corporate world and the media.

Mackey was introduced as a “pure libertarian” who is taken seriously, thanks to his creative genius in the natural foods grocery business and his advocacy of “conscious capitalism.” Bill Gates appeared to agree wholeheartedly when Mackey defined “conscious capitalism” as:

  • Business having a deeper purpose than maximizing profits.
  • Stakeholder philosophy (harmony of interests among shareholders, officers, workers, customers, suppliers and the community, rather than the traditional “conflict of interests” between labor and management).

Mackey used Bill Gates as a perfect example of his first point: Gates started Microsoft not simply as a way to make a ton of money, but to provide a useful service to customers – the MS-DOS system followed by Windows software. By focusing on customer needs first, Gates became wealthy.

Bill Gates Teaching Investors

Investors can learn a lot by Bill Gates’ example…

If you go into the stock market thinking only in terms of greed and making money, you are likely to get involved in a lot of schemes and short-term trading systems. Most will fail. But if you choose stocks of companies with good long-term fundamentals, you will make a lot of money in the stock market.

As J. Paul Getty states, “It is possible to make money – and a great deal of money – in the stock market. But it can’t be done overnight or by haphazard buying and selling. The big profits go to the intelligent, careful and patient investor, not to the reckless and overeager speculator… The seasoned investor buys his stocks when they are priced low, holds them for the long-pull rise and takes in-between dips and slumps in his stride.” (See his classic book, “How to Be Rich.”)

John spoke about how free-market capitalism does a better job than the government of alleviating poverty – by creating new products and higher income for everyone. Bill Gates kept smiling and nodding his head. But Gates does think government has an important role, especially when some vital services and products, such as vaccines, are not affordable to the poor.

In talking to Mr. Gates after the panel, it was clear his interests have shifted from Microsoft to the Gates Foundation. He resigned as chairman of Microsoft only last month, leaving behind a company that is flush with cash ($21 billion), with revenues exceeding $60 billion, earnings jumping 40% in the most recent quarter, and profit margins approaching 30%. He was passionate in discussing how his foundation is dramatically reducing diseases such as malaria and tuberculosis in poor countries.

Follow the link for more information on Bill Gates’ “Creative Capitalism.” And click on the following link to find out more about John Mackey’s breakthrough concept of “Conscious Capitalism.”

Good trading,


“It is incredible the quantity of good a single man can do if he makes a business out of it.” – Benjamin Franklin

Today’s Investment U Crib Sheet

  • Along with creative and conscious capitalism, we’d like to add “careful capitalism.” Careful investors know that how much you are investing is just as important as what you’re investing in.
  • Any stock, no matter how strong, can turn into a liability overnight. Just ask the shareholders of Enron how confident they were about the company before its implosion. Knowing how much to invest in each and every situation is crucial to building long-term wealth. It also limits the inherent risks of investing in stocks.
  • As a guideline, no more than 4% of your equity portfolio should be invested in any particular stock. If you want to be conservative, invest less. If you want to be aggressive, invest more – but not too much more. Proper position sizing* ensures that even if a number of your investments turn sour, you’ll never lose your shirt.
  • Combined with a trailing stop strategy, these methods can assure that small losses don’t become big losses.

*The views and opinions expressed in this article are those of the author and do not necessarily reflect the official position of Wall Street analysts.

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