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| (This graph shows net worth over time with net worth of each of the Koch brothers) |
Recently, Forbes came out with the richest people in
America. As some of you may know I have
covered Charles Koch Relentless Goals here.
If you want to see all the Koch articles I have done over the years you can go here. Charles Koch and David Koch were on the list
again this year (from looking at the top 10 of this list seem to be the only
ones that believe in free markets). Their net worth increased to $34 billion
from $31 billion last year (only a 9% increase while the overall stock market
did a little better). What is
interesting is that what may explain why the Koch brothers are so rich is that
they do take on more risk. The technical term is standard deviation which just
simply means how much things deviate from the normal. When I looked at the standard deviation of their net worth it was 44%. The long run
standard deviation on stocks is less than half of this. The compound annual
return of the Koch brothers is 16.2% which decreased from last year. If things
continue on this pace the Koch brothers would be worth $100 billion (each) by
2020. Of course by this time Charles would be 85 and David would be 80. Personally, I enjoy following the Koch brothers as I believe
they are true American heroes building a successful company with 60,000
employees creating products that every day products people use from nylon,
beef, paper products, and even drinking water. Truly, this is a company that is
diversified and not simply in oil as many claim. The only way the Koch brothers
got rich was as Dr. Walter E. Williams would say “serving their fellow
man/woman”. Consumers were not forced into buying all these products Koch makes.
People voluntarily decided “well Koch makes a better product at a lower price
than the rest of the competition let me give them my money”. Koch practice
something called market based management (MBM) which I discussed on this post.
MBM really does seem to work for Koch Industries and I wonder if other
companies have used it.
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