Whitney Tilson: It’s What You Learn After You Know It All That Counts

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An old friend of Whitney Tilson with some interesting data from each decade since he graduated from college in 1975:

Tom Carpenter’s email to Whitney Tilson

From: [email protected] On Behalf Of Tom Carpenter
Sent: Wednesday, December 30, 2015 9:21 PM
Subject: It’s What You Learn After You Know It All That Counts

Dear Friends,

I graduated from the University of Illinois in 1975, and I was about as “wet behind the ears” as you can imagine (maybe even more than you can imagine – it was pretty bad).  But I didn’t know that at the time.  Actually, I thought I knew it all . . . .

After trying my hand at professional photography for six months (don’t ask), I took my first real job as a runner at the Chicago Board of Trade.  Pretty heady stuff for a lad of 22.  But not to worry, I knew it all . . . .

Although I find it hard to believe, 2015 marks 40 years since I entered the financial business (split almost equally between stocks and commodities).  So bear with me as I reminisce a little and, hopefully, I’ll show you a few things I learned after I knew it all.

It’s difficult to keep your eye on the big picture with the financial journalistic community constantly telling us about the “apocalypse du jour.”  So, I’m going to try something a little different and focus on some simple metrics (population, GDP, and total earnings and total dividends from the S&P 500 index) every 10 years since 1975.  I’ll also note a few items that were prominent in those particular years, and the year-end close of the S&P 500 index. Then I’ll share some of my conclusions.

So here we go . . . .

1975:  Saigon falls;  President Ford survives two assassination attempts within 17 days;  Margaret Thatcher becomes the first female leader of Britain’s Conservative Party;  Saturday Night Live debuts;  American and Soviet spacecrafts link up in space, and the event is memorialized on a beautiful 10-cent First Class US postage stamp.

Global Population: 4.1 billion, fully half of whom live in extreme poverty.

US Population:      216 million

US Real GDP:      $5.49 trillion

S&P 500 year-end close:  90.19

Total Index Earnings: $7.71

Total Index Dividends: $3.73

1985:  Gorbachev comes to power in the Soviet Union and meets with President Reagan;  The Internet domain name system is created;  Windows 1.0 is released;  The first successful heart transplant takes place;  A First Class US postage stamp costs 22 cents.

Global Population:  4.9 billion

US Population:  238 million

US Real GDP:  $7.71 trillion

S&P 500 year-end close: 211.28

Total Index Earnings  $15.68

Total Index Dividends:  $8.20

1995:  The Oklahoma City bombing, the greatest domestic terrorist atrocity in American history, occurs;  O.J. Simpson’s murder trial begins;  Israeli Prime Minister Yitzhak Rabin is assassinated;  The Rock and Roll Museum opens in Cleveland;  A First Class US postage stamp costs 32 cents.

Global Population:  5.7 billion

US Population:  266 million

US Real GDP:  $10.28 trillion

S&P 500 year-end close:  615.93

Total Index Earnings:  $37.70

Total Index Dividends:  $14.17

2005:  Hurricane Katrina devastates the Gulf Coast;  Saddam Hussein goes on trial;  Terrorist attacks on London’s bus and subway system claim 52 lives;  Pope John Paul II dies;  A First Class US postage stamp costs 37 cents.

Global Population:  6.5 billion, but by the turn of the century, the rate of extreme poverty has fallen to one person in three.

US Population:  296 million

US Real GDP:  $14.37 trillion

S&P 500 year-end close:  1,248.29

Total Index Earnings:  $76.45

Total Index Dividends:  $22.38

2015:  A radical Islamic faction, ISIS, casts the Middle East into chaos and carries out terrorist atrocities in Paris and elsewhere;  Refugees pour into Europe;  The world’s leading nations reach accords on limiting Iran’s nuclear development and global climate change;  Yogi Berra dies;  A First Class US postage stamp costs 49 cents.

Global Population:  7.3 billion, less than one in ten live in extreme poverty.

US Population:  322 million

US Real GDP:  $18.13 trillion (full-year estimate)

S&P 500 as of 12/30/15: 2,063.36

Total Index Earnings (full-year estimate): $118

Total Index Dividends (full-year estimate): $43


In the years from 1975 to 2015:

  • Global population grew nearly 80%, while extreme poverty plummeted from one person in two to one in ten, creating wave upon wave of new middle class consumers.
  • The US population increased 50%, but the country still has staggering natural resources and 100 years’ worth of hydrocarbon energy reserves.
  • Real US GDP more than tripled, while the population increased only 50% (i.e., real GDP per capita has soared).
  • The S&P 500 rose more than 20-fold, with an earnings increase in excess of 15-fold and a dividend boost approaching 12-fold.
  • Significantly, these gains occurred while the general level of consumer prices increased by a factor of scarcely more than 4.5.

There’s no doubt that this spectacular economic and financial progress was helped by the continuing spread of capitalism (and free markets), as well as the exponential progress in information technologies. Can this continue? Let’s hear from Lowell Wood, who just recently surpassed Edison’s record for total US patents in one person’s name:

“It’s irrational.  It’s frankly illiterate to not be optimistic.  We’re going to see a blossoming across essentially every front, unprecedented in human technological history.  This is not something that’s hoped for.  This is baked in the cake.”  

Best wishes for a happy and healthy New Year, with many more lessons to be learned!

All the best,


Tom Carpenter, CAIA, CRPC

Cantebury Capital, Inc.

Registered Investment Advisor


Whitney Tilson
Whitney Tilson

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