How to be a great investor by David Rubenstein
David Rubenstein, one of the biggest names in finance, has rendered years interviewing famous leaders and investors to pen down vital tools and hard-earned wisdom in his recent book, "How to invest".
He is one of three mega-rich founders of private equity firm Carlyle Group, which is proceeding towards $400 billion in assets under management.
The American billionaire believes that successful investors share unique traits that set them apart. They have investing strategies, unlike others.
But what are these best-kept secrets that can help ace you with your investments? What is the secret sauce of all these great investors?
Let's get straight into it!
1.Do well in school
Oops! That isn't something we are ready to talk about.
Well. Yes. Doing well in school indeed has got alot with how you are going to do in life.
Obviously, it doesn't mean to limit yourself to a particular curriculum for a particular period of time. It's way beyond that. It's the habits, the intellect, the self-awareness and the eagerness to do big in life that schools bless you with.
One of the most crucial skills you need to be a great investor - is to have financial literacy. The investments you will carry on with the know-how of finance outweigh the investments that you make without proper knowledge. So, studying diligently in your school years is a key step here.
Successful investors keep generating money from their assets for long periods of time because they know where to invest exactly. They are sure of how they will get their investment returns. That's a skill your school incorporates in you!
We come across a number of posts on social media showing that most successful investors have a consistent reading habit. There must be something about reading that has got all smart people into it!
Good investors always adhere to books and journals and try to learn everyday.
Great businessmen devote their time to gain knowledge on investment and finance. They have a willingness to learn and they believe that they can never be a master of investing as it is a never-ending process.
While giving an instance of Warren buffet, David said that he is a bibliophile and gives 14 hours to reading. He gets help from a variety of books, science journals, research papers and much more. He added that reading not only adds to your information but it helps sharpen your mind.
You never know when a piece of information you once read can help you in solving a real life investment problem. So having a learning attitude always helps in investing.
3. Own your mistakes
A quick flashback of past can easily tell you how many times in life you openly admitted your mistakes?
Admitting your mistakes and making yourself accountable takes strength of character. And it's exactly an attribute that makes you a great investor.
Successful people never regret their wrong decisions, rather they accept them confidently. They are always ready to learn from their mistakes. They see opportunity in adversity.
Rubenstein says those who embrace their mistakes are willing to learn from them. They see blessings in disguise. They don’t play blame-games but always try to reach constructive conclusions.
He mentions that most of the investors he has interviewed are quite humble people and they all admitted their mistakes. He called down-to-earthness a characteristic of great leaders.
4. Maintain humility
Another characteristic of a successful investor is humility.
Being humble is recognizing that you are not controlling anything. No doubt, there are always ups and downs in the finance industry. Sometimes you outperform the people around you, sometimes you underperform them. Also, the luck factor matters a lot as well.
Humility means understanding that there are people who are way smarter than you. You are satisfied with this thinking because you have your own investment strategy and you know your targets.
David says that most of the great investors he came across are genuine and humble. They are not arrogant and don't brag about their achievements. They speak the truth and accept all their wrong doings. He says that an investor is really not a good investor if he always brags about his accomplishments.
5. Share the credit
Investing your money and energies the right way makes you a good investor. But making sure to give your team the due credit makes you a great investor!
It truly helps you in acing your business. Ronald Reagan famously said,'' There are no limits that human beings can't achieve if they are willing to share the credit. David has praised several leaders like Indranui and Phil knight.
When Indranui was the Ceo of pepsi, she used to send letters to her staff's parents saying that the staff is doing great. This thing assisted her to become more connected to the staff and their parents.
Phil Knight, the co-founder of Nike about whom people say that all the credits go to him, infact, considers his employees the reason for his success. Phil never hesitates to give them the due credit. He has talked very less about his own work and achievements. So, according to David's opinion, sharing the credit is what makes you a great investor.
6. Go against conventional wisdom
This is one of the most commonly shared attributes of all great investors.
Conventional wisdom is what we all do. We follow the thinking patterns of people around us. As a result we make beliefs and perceptions in our minds that are false and self-limiting. Rubenstein says that the current conventional wisdom is "The economy is heading towards a decline, the federal reserve will raise interest rates and the stock exchange progress would be diminished" .
These negative thoughts hold us back and prevent us from doing the real thing. While giving an interview, David mentioned, "People said to John Paulsen that your great shot in the mortgage industry will not work. And people told Jim Simon, that you will not be successful in a quantitative investment" People just never say that you should do things differently.
To go against conventional wisdom means to come out of your comfort zone. And if you have enough courage to do so, you can probably make a lot of money as an investor.
7. Be philanthropic
You must be thinking what philanthropy has got to do with being a great investor?
An annual report of 2022 in Forbes news shows that Warren Buffet has given away the most money upto $46.1 billion, over his 92 years of life. It is evident that all the great leaders and businessmen are involved in some kind of welfare service.
We have several examples in front of us such as Oprah Winfrey, Paul Allen, Jay Alix, Mark Zuckerberg and Steve Ballmer who give a large share of their money to charity.
David himself has donated $10 billion for upgrades to Jefforson memorial. Over the last decades, he has given hundreds of millions to restore monuments and historic sites. He emphasizes giving to people who are in need. This act helps them in many ways.
A philanthropist employee gets off hours for these volunteering activities. In addition to these benefits, mental peace and inner happiness are a beautiful plus.
8. Surround yourself with smart people
Yes. We all have grown up hearing that a man is known by his circle.
And there's absolutely no doubt about that. You are what you surround yourself with. If you live around positive and smart people who have constructive ideas, you will eventually have their characteristics after some time.
In contrast, if your circle includes people who are unmotivated, who go by conventional beliefs, you will gradually become like them.
In finance, it's really important to take advice from experienced people before making your first investment. Spending your time in their company would definitely help you in the long-run. You will eventually notice their habits getting incorporated within you. And that's the whole idea!
9. Be willing to take the blame
Investment is a big decision. It requires a lot of forethought and planning to make a single investment.
But unfortunately, most people don't put in the effort and hardwork that is needed in investing and when they don't get the desired results, they start to blame the system.
Most of the time people pick up investment ideas from social media. It may or may not suit them. They are happy if their investment works and if it doesn't, they blame the people on social media.
Rubenstein while giving an interview said, "Great capitalists like to have their own final decision. They don't ask their subordinates to do it themselves and work things out. Instead they confidently say that this is my judgment and final decision. I take full responsibility for my decision no matter what the results would be.
So guys that was it. Hope you enjoyed the article. If that's so, make sure to give a big thumbs up. Also, what strategy sounds the most promising to you? Tell us below in the comments.