The Mysterious Fortune of the “Witch of Wall Street”

Adjusted for inflation, she would have been worth up to $5.4 billion today. [Katusa Research] Katusa's Investment Insights February 9, 2024 The Mysterious Fortune of the “Witch of Wall Street” By Marin Katusa Whispers of the 'Witch of Wall Street' still echo through the canyons of New York's financial district. During the Panic of 1907, financial institutions from New York to San Francisco crumbled like sandcastles against a relentless tide of bank runs, market declines, and economic woe. With no all-powerful entity to swoop in and save the system and provide much-needed liquidity like the Federal Reserve… The burden of rescue fell upon the shoulders of private wealth. Some names you’re probably familiar with: J.P. Morgan, Andrew Carnegie, John D. Rockefeller, and Cornelius Vanderbilt... But one name often overlooked, yet pivotal for anyone seeking a proven path to wealth in turbulent times, is… Hetty Green, AKA The “Witch of Wall Street.” While most investors were left reeling in Panic of 1907, Green's investment acumen and keen foresight allowed her to not only emerge from the chaos unscathed, but wealthier than ever before. Known for her eccentric frugality, gaunt appearance, and the daily wearing of a simple black dress, the Witch of Wall Street accurately anticipated the 1907 economic crisis three years before the devastation hit. The Witch of Wall Street even made a fortune bailing out the City of New York by offering the city a $1.1 million loan in exchange for short-term government bonds. It was a bold move that pulled the city back from the brink of destruction while handing her a handsome return. Not only was Green known as the Witch of Wall Street, but she was also known as the richest woman in the world during the late 19th and early 20th centuries. At the time of her death in 1916, its estimated Green's net worth was between $100 million and $200 million and this was all earned before women were even allowed to vote in the US. Adjusted for inflation, she would have been worth up to $5.4 billion today. What was the secret to amassing a fortune of such magnitude? According to the Witch of Wall Street, there was none… “There’s no great secret in fortune making. All you have to do is buy cheap and sell, act with thrift and shrewdness and then be persistent.” - Hetty Green The Witch of Wall Street excelled in securing profits from industries like railroads and real estate, drawn to investments with regular returns like dividends. Post-Civil War, she heavily invested in Greenbacks, the first U.S. paper currency, trading at steep discounts due to economic uncertainties. Due to the uncertainty whether the US economy would be able to recover, these bonds traded at a huge discount to their face value. Predicting their gold redemption, she netted $1.25 million in profit, earning up to $200,000 in a day. Taking a Page from the Witch’s Book… Investors have long reaped rewards by mirroring the strategy of the Witch of Wall Street. She was a pioneer in value investing, a concept later popularized by the likes of Warren Buffett and Charlie Munger. Green's strategy was simple yet profound: buy undervalued assets, then hold until their value peaks. “I buy when things are low and no one wants them. I keep them until they go up, and people are crazy to get them,” she famously said. Known for her simple black dress and secretive nature, Green's genius lay in her financial acumen. She excelled in identifying 'unsexy', undervalued assets, then profiting from their eventual rise. Her knack for earning steady income from dividends and interest made her a paragon of consistent cash flow. Take for instance, a company like Microsoft. By licensing its software, a form of royalty, Microsoft has been a cash cow for more than 25 years. Enough to hand stock investors a gain of 11,000%. Then there’s Broadcom, a global technology leader in semiconductor and infrastructure software solutions. Broadcom earns a significant part of its revenue from licensing its intellectual property. Over the last 10 years, investors in Broadcom have seen gains as high as 2,800%! Then there’s Nvidia, in addition to selling its own microchips, Nvidia also licenses its AI architecture to firms like Samsung and Qualcomm. This royalty-based model gives Nvidia the ability to generate huge cash flows as it continues to dominate the market for gaming chips and AI technology—enough to send the company's stock soaring by 13,506% over the past 10 years. However, these examples, while impressive, are not undervalued in today's market. True to her principles, intelligent investing focuses on assets that are both undervalued and offer steady income. As an investor, I seek opportunities that align with the wisdom of the Witch of Wall Street... One gold company that I think merits review: - It's thriving on royalty income and trading well below the Net Asset Value (NAV) of its peers. - Its CEO shows growth based on existing lucrative deals on ramping up mines and some recently acquired royalties. During times like these, like the Witch of Wall Street, I’m more than content to watch overpriced, headline stocks go to the highest bidder. But for those looking to… “Buy when things are low, and no one wants them. And keep them until they go up, and people are crazy to get them.” I’m working on sending out an alert on one stock that’s well worth your time to take a closer look… Before people are “crazy to get them”. Regards, Marin Katusa and the KR Special Situations Team [Share]( [Share]( [Tweet]( [Tweet]( [Share]( [Share]( Copyright © 2024, Katusa Research, All rights reserved. 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