Short Seller Goes Long on the Future

When we're young, we build castles in the sand. And when we grow up, some of us build empires.

Robert Wilson, a retired 82-year-old investment legend, never did get around to building an empire. But he managed to dazzle Wall Street with a remarkable achievement. Namely, he parlayed $15,000 that his parents gave him in the 1940s into an astonishing $800 million net worth.

During the 1970s, an essentially flat period for the market, Wilson, a renowned short seller (a bettor that stock prices will go down, not up), wowed Wall Street with his money-making prowess by racking up a snazzy 30% annual gain,

Now he's wowing the philanthropic world with what he's doing with his money. Very few rich folks give away the bulk of their wealth when they're still alive. Not only that, many wealthy individuals, given their hefty stock market losses, have dramatically cut back on their charitable contributions. Not so Wilson, who also has incurred large market losses.

Over the last 10 years he has given away about $500 million to various charities and he figures he has at least another $100 million to go.

His intent, he explains, is to encourage other people to follow his lead since charities constantly need money "and I'm not going to live forever."

His charitable interest largely centers on conservation -- that is, conservation of buildings, land, oceans, endangered animals and the air we breathe. Likewise, environmental protection is another of his favorites.

Among his principal beneficiaries have been the Public Library, which Wilson describes as a conservator of books; Environmental Defense, one of whose concerns is global warming; the World Monuments Fund, which is in the business of preserving beautiful buildings around the world, and the Nature Conservancy, which acquires land to prevent it from being developed and thus enable wild life and vegetation to be preserved.

One of his current pet charitable efforts involves initiatives to preserve Roman Catholic schools, notably those catering to kindergarten through the eighth grade, which are closing left and right, by encouraging their alumni to take a more active role in prolonging their lifespan.

In a sense, observes one of his Wall Street buddies Wilson is using his money to bet on the country's future. "He's not hoarding paintings or collecting antique cars, but he's using his money to create a better America. It's philanthropy at its best."

What's ahead for investors in these troubled times? Nothing to cheer about, according to Wilson. His outlook for the economy, as well as the stock market, is pretty abysmal. He sees a relative period of stagnation for both, at least over the next five years, similar, he says, to the 1970s, a difficult decade which was characterized by a troubled economy, accelerated inflation and student uprisings.

Making matters worse, he envisions significant problems stemming from higher taxes, escalating costs of medical care, the inability of the consumer to spend as much as in the past and weak exports.

The Obama administration is viewed as negative for the market, partly because of it's hostility to the past (chiefly a reference to the prospects of higher taxes for the rich and everybody else), Wilson also feels President Obama won't be able to accomplish much because he's beholden to the medical unions and will be unable to temper sharply rising medical costs, including pricey life-extending drugs.

His advice to the average investor: "I would avoid the stock market and put my money in short-term Treasuries and savings accounts and wait for interest rates to go up, which they're already doing on the long end."

Describing himself as "an old man now," Wilson says "anyone who thinks they're young at 82 is on their way to dementia." Still though, he remains an active 82-year-old. A world traveler, a lover of the arts and a former chairman of the New York City Opera, Wilson exercises 45 minutes a day and he's still running. In July, he'll be off to Paris for art exhibitions and then on to London for some theatre. After that, he's bound for Liverpool and northern Wales.

Born in Detroit, Wilson, the son of a fire and casualty insurance agent, kicked off his career in the investment arena in 1949 at the age of 23 as a trainee at First Boston. He left for a two-year stint in the Army (1951 and 1952) and then returned to First Boston as a securities analyst. Subsequently, he worked for a number of other investment firms and went out on his own in the late 1960s. Then in 1969, he started Robert Wilson Associates, a hedge fund for family and friends, and soon thereafter he gained a reputation as Wall Street's premier short seller.

He retired in 1986 and placed most of his assets with a group of money managers. Unfortunately, they couldn't match Wilson's standard of performance, causing him the loss of a fair amount of money.

I always thought Wilson's great success largely reflected his ability to spot the difference between authenticity and pretention. He sees it somewhat differently, noting "I was always net long (meaning he owed more stocks than he was short) no matter how bearish I was since I never wanted to get up in the morning hoping things would be worse."