The world’s greatest investors: Anne Scheiber
After suffering big losses in the 1930s due to poor advice from her stockbroker, Anne Scheiber took direct control of her investments.
Anne Scheiber, who was born in 1893, studied at secretarial school before working as a bookkeeper. She later graduated from George Washington University with a degree in law.
In 1924 she took a low-level auditing job at the Internal Revenue Service, retiring in 1944. Over the next 51 years she lived an anonymous life in a rent-controlled apartment in New York. When she died in 1995 she made headlines by leaving an estate valued at $22m to Yeshiva University in New York.
What was her strategy?
After suffering big losses in the 1930s due to poor advice from her stockbroker, she took direct control of her investments, opening a Merrill Lynch account in 1944 with $5,000 in savings. She put the financial skills she had gained as an auditor to work, buying the industrial companies and blue-chip shares she thought best placed to prosper. She was a "buy and hold" investor, rarely selling her stocks and reinvesting the dividends. She was also frugal, wearing clothes that were decades old.
Did this work?
Growing $5,000 into $22m implies an annual rate of return of 17.9%, far higher than the stockmarket over this period, which only returned 12.35%. She also received a government pension of around $3,100, a large portion of which she managed to save, thanks to her lifestyle. Her executor thinks that in 1936 her portfolio was worth around $21,000.
This works out at a return of around 12.6% still impressive, given that she shifted a large amount of her investments into municipal bonds in the late 1970s (which would be expected to have lower returns) and that she had to pay taxes on any stock dividends.
What were her biggest successes?
In 1950 Scheiber bought 1,000 shares in Schering-Plough for around $10,000. By 1995 the capital value of the stock had risen to $7.5m, a return of around 15.9% a year for Scheiber. Another big winner was Coca-Cola. Even excluding dividends, the price of the shares alone grew by 26 times from $28,000 to $720,000 between 1980 and 1995, a return of 24% a year.
What lessons are there for investors?
Scheiber's story demonstrates the value of sensible long-term investing. She also shows that you don't necessarily have to have a lot of money when you start out to accumulate a small fortune. Being frugal (though you might not need to be as austere as she was), reinvesting your dividends and avoiding overpriced shares vastly increases your chances of ending up very wealthy.
Scheiber had an advantage in that she lived a long time. To increase your chances of amassing wealth, it makes sense to start your saving as early in life as possible.