What is a person’s market cap?
Sounds crude, but really — what is the value of a person? Really … what I am asking is … what is the net-present value of a person??
The net present value of a 93-year-old who is worth a billion dollars is probably worth less then a billion (unless, of course, you are Anna Nicole Smith). Whereas the net present value of a smart 23-year-old computer science major in Silicon Valley is a lot higher then her $4000 in savings.
When looking at a person there are growth stocks that are highly volatile and mature stocks that pay dividends. Some people have lots of assets on the books but are stodgy and risk-averse and thus have a low P/E ratio. Other people might have a really high P/E but a really low E.
Henry Ford, before he started Ford Motor Company, was essentially a failure. He tried and failed at numerous businesses. But he still had a high P/E as he was persistent and a good risk.
Obama has a high P/E while Senator Byrd has an extremely low P/E. Some people, like Warren Buffet and Michael Dell and Arnold Schwarzenegger, have had an high P/E ratios all their life — and those are the people you want to invest in.
What makes a person a good investment?
Dare I say it is someone that is ethical? OK … I said it. Ethics matter. You want to invest in someone that isn’t going to sell you out and transfer the funds to the Bahamas.
So does consistency. Erratic behavior causes too much uncertainty. Generally you are looking for someone that stays in the same location for a while, keeps friends for a long time, and has some roots.
Does intelligence matter? Probably not. Joanna Gallanter, one of the top venture capitalists (and Managing Partner at Venture Strategy Partners) likes to say that “smart is like vanilla ice cream.” Meaning — everyone is smart … what else is new? She looks for persistent, driven, honest, hard-working, personable people. And those that have the “leadership gene.”
Something else you might want to look for … loyalty … can make a big difference …
more of this line of thought in the future ….