You want your kids to play team sports because they learn so much about team work, about how to recover from a loss and how to behave when you win, (it used to be gracious) and now the Clippers deal is teaching us how to do the math.
So, Donald and Shelly Sterling bought the Clippers in 1981 for $12.5 million. Shelly as sole trustee has sold the team to Steve Ballmer, formerly of Microsoft for $2 billion. Without looking at the financial statements for the last 33 years, just working with the raw numbers, the Sterling Trust will have made 160 times its original investment or 15,900% before tax!
A month ago, the Clippers were valued at about 1/3 that amount. So, 2/3 of the appreciation could be said to have accumulated in 1 month. That would be $1.325 billion or $44.16 million each day. These numbers seem like pure fantasy, but they are real! Do the math yourself.
What can we learn from this crazy scenario?
1. Invest in something that could grow in value. (investments like property or stocks, not expenses like clothes and cars)
2. Analyze your Return on Investment from time to time.(Especially if you are an entrepreneur or business owner)
3. Hold assets over time. (compound interest is your friend)
4. Hope for luck. (work hard and keep your fingers crossed)
5. Play the percentages. (Know your probabilities and understand the risks)
6. Life isn’t fair. (Go back to 4)