KKR's Roberts, SkyBridge's Scaramucci Betting Small on Powerballby
Charles Schwab says pot not big enough for him to buy a ticket
Lottery `a fraud, a tax on the poor,' Charles Royce says
Among Powerball ticket holders for today’s more-than-a-billion pot, count George Roberts, the ‘R’ of KKR & Co.
“I always buy a ticket," Roberts said Tuesday night at the Museum of American Finance annual gala. To be precise, he puts up the money and a buddy named Sam, who has worked for him for 26 years, buys the tickets. And his advice for a winner? “Buy some index funds, live frugally, give what you don’t need away because other people can use it, don’t try to do anything fancy, and don’t invest with your friends."
Despite that last rule, Roberts has asked friends to invest with his firm, as he explained while introducing honoree Charles Schwab during dinner at Cipriani Wall Street (former Treasury Secretary Robert Rubin was the other honoree).
Early on in their friendship of more than 50 years, Roberts asked Schwab after one of their weekly tennis matches to invest $50,000 with KKR. Schwab said if he had $50,000, he’d invest in his own firm. “And obviously he’s done very well with that," Roberts said.
Years later, Schwab enlisted KKR to help him buy back his company from Bank of America for $280 million. “Today, Schwab has a market cap of about $40 billion, so, pretty good deal Chuck," Roberts said.
The lesson: there are probably better ways to make a fortune than buying a lottery ticket.
Schwab was honored as an innovator whose company has made investing (and potential fortune-building) accessible to millions of Americans. Low-priced commissions and the ability to trade online and over the telephone are a few examples of how.
Schwab said he’d buy a ticket only if the pot was really big -- $2 billion or more. But this week’s payoff was large enough to lure other gala guests, among them Michael Sullivan, chief of staff at Point72 Asset Management, who said he bought 20 Quick Pick tickets.
Anthony Scaramucci of SkyBridge Capital bought two tickets and, if he wins, “Mario’s going to run the money," he said, of Mario Gabelli, founder of Gamco Investors Inc.
Gabelli said he’d advise a winner to “Take 5 percent and just go crazy. The other 95 percent, put it away." Gabelli’s wife, Regina Pitaro, head of institutional marketing at Gamco, bought 10 tickets.
Glenn Kaufman, who runs a family office, said he’d received a lottery ticket as a gift from his carpenter. If he wins, Kaufman said he’d split the winnings because the carpenter wants to start a nonprofit.
One nonprofit that a winner could support would be the Museum of American Finance, suggested its president, David Cowen.
“This museum can teach about how to pull people out of poverty," Scaramucci said surrounded by exhibitions on bonds, commodities trading and stock markets.
“A large player in wealth generation, historically, has been Wall Street," said Joe Ricketts, founder of TD Ameritrade. “So we ought to celebrate capitalism and celebrate the benefits of our free enterprise system, which is evidenced in all these pictures."
Lotteries have long been a form of public financing and the museum has tickets from the Revolutionary and early Federal era in its collections, said Richard Sylla, the museum’s chairman. He said his dorm at Harvard was built in the early 1800s partly with lottery money.
That illustrious history was not enough, however, to convince Charles Royce of a lottery’s virtues. “It’s a fraud, basically a tax on the poor," said the chief executive officer of Royce and Associates.
John Davidson, chief compliance officer at Citigroup, had a professional excuse for not playing. “Compliance guys can’t buy lottery tickets," he said.
Even though whole branches of mathematics have developed out of gambling, it won’t be a permanent exhibition topic at the National Museum of Mathematics. “There’s still a sector for whom gambling is a vice," said Glen Whitney, the museum’s founder. “It’s not a family topic."
Whitney said those who buy lottery tickets “want to pay for the entertainment -- that little extra thrill when you watch the draw on TV. Your life will be better off if you take that dollar and deposit it in a bank account."
The Museum of American Finance’s director of education, Chris Meyers, offered three-part advice for the people who beat the odds:
"One, do whatever you can to try to remain anonymous," Meyers said. "Two, get sound legal advice. Now all of the sudden you have a net worth which somebody might be willing to do you harm to get, you want to make sure your assets are protected. Three, get a financial adviser." Specifically, Meyers said seek out help that offers a mix of self-education and advisement.
What would Meyers do if some of the Powerball money came to the museum? Perhaps, he’d steal a move out of the movie “The Big Short" and hire “hot models to sit around in a hot tub with champagne to explain" the vernacular of finance.