Is Mitt Romney the Investor’s Best Friend?

The investor's best friend?

A group of socialists is competing to be the next President of the United States and World Policeman, and Mitt Romney is the leading contender. The others refrain from criticizing him for vastly expanding government involvement in health care when he was Governor of Massachusetts, serving as a role model for President Obama to force everyone to buy overpriced health insurance. Instead, they repeat President Obama’s criticism that Romney fired employees when he managed Bain Capital.

Romney used Other People’s Money to buy and attempt to resuscitate companies that are dead, or nearly so. Was he a good manager? According to the Wall Street Journal:

Bain produced about $2.5 billion in gains for its investors in the 77 deals, on about $1.1 billion invested. Overall, Bain recorded roughly 50% to 80% annual gains in this period, which experts said was among the best track records for buyout firms in that era.

The profits accrued over a 15 year period, 1984-1999, so the average yearly gain was 8%. The S&P 500 increased from 165 in 1984 to 501 in 1995 and entered a bubble, increasing to 1469 in 1999. The bubble was a form of mass lunacy, similar to the elections held in democracies like the USA, Europe, and Chile every 4 years. Romney’s performance was worse than the S&P 500 index, but he might have outperformed in a perfect world where the average investor and voter behaves rationally. The index remains lower than it was 12 years ago. Romney timed his exit well!

Romney was known as Mitt the Liquidator during his private sector career. In a rare moment when Hollywood defends capitalists, the video below shows how Romney should respond to his opponents and other critics.

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