Ballmer Is the 'Noninvesting,' Undiversified Guru of Investing

The ultrawealthy tend to follow a time-honored model of investing: diversifying.

- JULIET CHUNG AND BEN COHEN

Much like universities and pensions, the richest people on earth spread their money across stocks, bonds and a cadre of alternatives, such as private equity, hedge funds and real estate.

Or at least most of them do. There is one very glaring exception: Steve Ballmer.

The former Microsoft chief executive has put nearly all his eggs in one basket and kept them there for years. Ballmer has virtually no exposure to alternative investments. Instead, he keeps more than 80% of his portfolio in Microsoft stock and the rest in stock index funds.

As the stock market has climbed to new heights and Microsoft has transformed into one of the best-performing stocks of the past decade, Ballmer's investment strategy has proven incredibly effective.

"Microsoft's outperformed just about every other asset I could have owned," said Ballmer, Microsoft's top individual shareholder, in a recent interview with The Wall Street Journal. "It's a little hard to say that it hasn't worked out."

Ballmer, 68 years old, served as CEO from 2000 until stepping down in 2014, after coming under pressure for not moving fast enough to compete with Apple and Google in key consumer markets. During his tenure at Microsoft's helm, the company's stock price fell by about one-third. When he left the company, Microsoft's capitalization was market around $300 billion.

These days, powered by its cloud business and the company's prescient bets on artificial intelligence, it is more than $3 trillion.

To put it another way, Microsoft has gained an average 28.8% annually, including dividends, over that rough time span. In that same time, the S&P 500 returned an average 12.9% a year, including dividends. Endowments of more than $1 billion gained an average 7.8% a year, according to Wilshire Trust Universe Comparison Service.