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In this article, we will cover success secrets of 8 investing legends:
- Warren Buffet
- Bill Gross
- Jack Bogle
- Cathie Wood
- Ray Dalio
- Guo Guang Chan
- Michael Burry
- Koh Soo Boon
An article about investment legends would not be complete without Warren Buffet, the legendary stock picker who once stood as the wealthiest person on earth. He is the Chairman and CEO of Berkshire Hathaway and is considered one of the most successful investors in the world. He is widely known for this simple lifestyle and is, perhaps unsurprisingly, friends with Jack Bogle.
Lots of Reading
Apart from his infamous daily diet of Coke and McDonalds breakfast, Warren Buffett’s day is largely centred on reading. He estimates that 80 percent of his daily work routine is spent on reading – financial statements, journal, business reports, newspapers and books.
He once told an investing class to “Read 500 pages every day” in response to a question about how to succeed in investing.
This illustrates the effort and research that Buffett puts in on a daily basis to ensure his continued success. Nothing beats consistent effort and lifelong learning for investing success.
Warren Buffett is also famed for his simple and frugal lifestyle. He lives in a home that is 0.001% of his net worth and eats at McDonalds. His simple lifestyle belies his investment philosophy. Buffett’s patient decision-making process was highlighted by Jeff Bezos, “Warren Buffett says he’s good if he makes three good decisions a year”.
If Warren Buffett can live below his means and lead a simple and frugal life, so can we.
Bill Gross is an investor and fund manager who co-founded Pacific Investment Management Co (PIMCO), the largest global fixed income investment company in the world. He is known as the “Bond King”.
Getting an Early Start to the Day
In this article, Gross details how he adheres to a strict morning routine, awaking at 4:30 a.m. and arriving at the office by 5:30 a.m.
Gross begins the day by exercising and doing yoga. It was during a yoga session that Gross had the idea to dispatch analysts to pose as homebuyers in various cities, bringing back street-level intelligence that affirmed his hunch of a mortgage crisis.
Gross has been diagnosed with Asperger’s syndrome, and is self-described as “obsessive”. In his personal life, he once ran more than 120 miles over six days and not stopping even when his kidney ruptured. He also has one of the world’s largest and finest stamp collection which sold for a total of $10 Million USD in 2018.
In his professional life, he is known to focus, in silence, for hours in front of his trading screens when he was still at PIMCO. In this article, he mentions that when he fell out with PIMCO and joined Janus Capital Group, he positioned his office to be in sight of PIMCO’s office tower. He did this as he was “fixated on proving that they were wrong” and that “the numbers will prove it”.
Gross’ determination and absolute focus in his daily and professional life is a trait that we can learn in our personal investment journey. As we invest, there will be moments where others doubt our strategy or the market makes us doubt ourselves, however if we are confident in the effort we have put into our research, we are able to stay on track and not lose focus.
Jack Bogle was the founder and CEO of The Vanguard Group, the world’s largest provider of mutual funds and second largest provider of exchange-traded funds (ETF). Bogle is credited with creating the first index fund and what we now know as “Passive Investing”.
Bogle has a reputation for living a frugal lifestyle. In this article, Bogle has flown first class ONCE, and he only did so because the upgrade cost $50. He has been known to take an early train into new York city for a meeting rather than renting a hotel room and even deliberately avoided a $5.95 buffet for a cheaper item in the menu during a meeting with a reporter.
This frugality can be seen in how Vanguard boasts the lowest expense ratios for their ETFs, which are usually below 0.5%, which was way lower than what other mutual funds offered when Vanguard was founded.
For investors, this is a reminder to pay careful attention of the expense ratios of funds and fees we pay to financial advisors or asset managers, as fees do add up, and eat into our returns in the long run.
Investing doesn’t need to be Complicated
Bogle’s only indulgence was vacationing in Florida with his wife every winter as revealed in this interview. Bogle’s simple lifestyle also translates into his investment philosophy. He felt that most people they did not require complicated investment products and pay exorbitant fee to managers. He championed for investments in large broad-based funds in a repetitive and “passive” manner.
This philosophy helped to change how Wall Street operated and created a new generation of middle class retail investors. Many directed their funds into large broad-based funds instead of paying fees to advisers.
We should not underestimate our ability to make our own investment decisions. Investments can be simple, and we should take ownership of our own wealth.
Cathie Wood is the Founder, CEO and Chief Investment Officer (CIO) of Ark Invest. She rose to superstar status as her actively managed ETF, Ark Innovation (Ticker ARKK) out beat JP Morgan’s as the largest active traded ETF with a meteoric 150% gain in 2020 and a further 20% this year.
What can we learn from this superstar stock picker?
In this article, she details her daily routine and how it has shifted in the pandemic.
Cathie starts the day at 7.00am and begins reading research. By 8.45am, the entire firm is brought together virtually. By 9.15am, non-research personnel are dropped off, with research personnel continuing discussions through to 10.30am. At noon, after many hours of virtual meetings, Cathie tries to get some fresh air by taking walks.
Learning to Delegate
As Chief Investment officer, she is cognisant that her main role is to monitor and identify investment opportunities. As a result, much of management is delegated to her managers. This allows her to be extremely focused in finding new and better investment opportunities.
ARK invests solely in disruptive innovation. Innovation requires a dynamic approach.
As part of her daily work routine, Cathie carefully filters through company reports. Having sizeable investments in numerous firms, she focuses her attention on companies flagged by her analysts. While the reports contain plenty of important information, her five-year investment horizon means that she is more focused on what the numbers mean to Ark Invest and if the company is putting their assets to good use.
Insiders note that her leadership, experience in investing and curiosity, keeps her analysts on their toes.
Ray Dalio needs no introduction. He served as the co-chief investment officer in the world’s largest hedge fund, Bridgewater Associates, since 1985. What are some of his habits we can learn for our own investing journey?
Many of the investing legends in this article have mentioned the benefits of meditation, and Dalio is one of the most committed. As mentioned in this article, Dalio was first inspired by The Beatles when he was in his early 20s. And for the past 50 years, meditation remains a constant in his daily life for which he attributes his greatest career wins.
Dalio mediates in the morning and evening for 20 minutes each time. Meditation helped him cope with the ups and downs of running his firm and brings him a sense of calmness, which was crucial when he made a large bet in 1982 that caused a near-collapse of his business. It also provides an opportunity for creative thinking, away from the distractions of everyday life.
As investors, we can learn from Dalio and his practice of meditation. This will help us remain level-headed and calm as we inevitably make bad investments or live through times of financial crisis.
In Dalio’s 2017 book “Principles: Life & Work”, he mentions that money cannot be the only motivating factor for your success. He mentions that your “Achievement Orientation” is very important, the reasons behind why you want to succeed.
In this interview, he documents how his career has been driven by the “game” of the market instead of greed and money.
This can be translated to our own personal investment journey. By knowing what our needs and motivations are, this would give us the clarity to make investment decisions that serve us, and to temper our risk appetite accordingly.
GUO GUANG CHANG
Guo Guang Chang is the Chairman and Co-founder of Fosun International Limited. Often called the “Warren Buffett of China”, due to his similar approach in using cash flow from insurance operations to fund the acquisition of other companies. Fosun International Limited invests in a wide array of companies across multiple continents and is one of the largest privately owned conglomerates in China.
In this interview, the journalist documents how unlike most other “rich Chinese businessmen”, there was no scurrying around by staff before his arrival. Instead, the meeting was calm and “unfashionable”. This could be liked to Guo’s personal philosophy, to “do nothing by extremes”.
In this article, we are given insight into Guo’s daily life. Guo is an avid practitioner of Tai Chi. He uses Tai Chi assist in having “good mental outlook” and to “recover from general physical complaints”.
Guo is also a devout Buddhist and links its key principles to his investment strategy. Guo explains that Buddhism teaches you “everything starts from the heart and feeling the heart of others” which translates to doing business by viewing the perspective of others and to make things better for other people, for which money will come as a result. These Buddhist principles keeps him grounded.
We can learn from Guo in our personal investment journey to main a clear mind to make good investment decisions. Additionally, we can learn from the Buddhist principles in making wise investment decisions based off long term and sustainable gains.
A Journey of a Thousand Miles begins with a Single Step
Fosun was founded in the early days of China’s growth, where most of the large companies were state owned. In this interview, Guang Chang mentions how in the initial stages of Fosun International’s founding, the company was “down to earth” and continued learning “step by step”.
Guang Chang prides himself in making investment decisions which are “prudent decisions” because he knows that to make a deal, you first need the money to make it. In the same interview, he speaks on how investment decisions are not made through his own personal likings and interest but instead for the betterment of the company.
This discipline proved to be crucial during China’s crackdown on highly leveraged companies that affected companies such Anbang Insurance, HNA Group and Wanda. While other companies had to offload assets to reduce their debt, Fosun Internation was able to more than halve its net debt while reporting a 24.4% increase in revenue and avoided offloading many of its key investments.
His slow and steady approach can be clearly seen in how Fosun has grown in tandem with the Chinese economy and has aligned its goals to that of the Nation’s development goals. It is this discipline and long-term mindset that allows Fosun to remain unscathed during government business crackdowns.
While Fosun International has large stakes in the tourism and hospitality industry, Fosun’s past 12 years of steady investments into healthcare research and development finally came into fruition – through virus detection kits, negative pressure ambulances, ventilators and even Covid-19 vaccines.
Guang Chan also mentions in this article how Fosun has also invested into digital technologies such as Live-Streaming.
Guang Chan’s strategy of diversification is one we can all learn, to diversify our investments across industries, sectors and markets.
Michael Burry was the founder of hedge fund Scion Capital and is best known for having been able to foresee and profit handsomely, from the 2007 subprime mortgage crisis. His journey of uncovering the subprime mortgage crisis was turned into the popular film, The Big Short.
Find Out What Works Best for you
Michael Burry is self-diagnosed with Asperger’s Syndrome and style does differ from the Wall Street norm. He often makes unpopular decisions. One example as mentioned in this article, is his short position on mortgage bonds that triggered many investors to request for their money back.
However, the subprime mortgage crisis was an investment that Burry understood clearly and suited his own personality.
Burry is particularly interesting for investors in that he has adapted value investing principles to his personality, skills and nature.
“If you are going to be a great investor, you have to fit the style to who you are. At one point I recognized that Warren Buffett, though he had every advantage in learning from Ben Graham, did not copy Ben Graham, but rather set out on his own path, and ran money his way, by his own rules … I also immediately internalized the idea that no school could teach someone how to be a great investor. If it were true, it’d be the most popular school in the world, with an impossibly high tuition. So it must not be true.”
Burry is a value investor, much like Buffett, but with a different approach. “I try to buy shares of unpopular companies when they look like road kill, and sell them when they’ve been polished up a bit.”
In our personal investing journey, we should also develop our own style of investing, and finetune it as we expand our circle of competence.
KOH SOO BOON
Koh Soo Boon is Singapore’s first female Venture Capitalist and has decades of industry experience in Silicon Valley. Koh led Vertex Ventures, previously ST Engineering’s venture capital arm before starting iGlobe Partners. iGlobe has funded multiple successful startups including Unity Software Inc and Twist Bioscience.
In the world of start-ups and venture capitalism, the lines between personal and professional are blurred, with the start-up’s founders’ personal lives heavily involved in the business. As a venture capitalist, Koh is very involved in the start-ups that she invests in and looks for founders that are “coachable”. Her hands-on approach is definitely a no-nonsense one as she has parted ways with founders she describe as “arrogant and lacking common sense”.
A co-founder of Swat Mobility recalls that Koh often calls after midnight to chat about the business and once called to ask why he had not replied an email sent earlier, only for him to respond that he was about to get married.
Her hands-on approach to business is one that we can learn in our personal investment journey. To gain returns that beat the market requires hands-on effort. We cannot take a back seat if we wish to gain superior returns.
After analysing the habits of investing legends, there are a couple of common denominators:
- Have a Routine to achieve Clarity of Mind
Whether it is meditation, Tai Chi or yoga, many of the investing legends find methods to clear their head, away from the many distractions and stresses of life.
They often have a very early morning routine as well.
Having a defined time and space to think clearly, seems to help their process, and contribute to their success. This is often how their best decisions are made, and best ideas materialize.
Indeed, we can learn from these investing legends, by carving out time to sit down, be quiet, and focus, in order to get clarity of thought.
- Keeping it Simple
Many of the best investors stick to key principles that they hold as core to their strategy.
Most of them do not advocate for overly complex investment strategies or trying to emulate others.
They keep it simple and stay true to themselves.
- Hard Work and Dedication
This is probably the most important habit that the investing legends have in common.
All of them spend a lot of time reading and researching, doing hands-on research and due diligence.
There is simply no shortcut to success, and hard work and determination will get you far. Your only limit is you.