5 Well-Known Investors & What They Can Teach Us

Halloween is this weekend, and some of you have probably had a costume planned for months, perhaps inspired by the live-action Cruella DeVille or throwing it back to Joe Exotic and Carole Baskin of “Tiger King” pandemic lore. We want everyone to grace the Austin parties and Hill Country neighborhoods with their Halloween best, so for those of you who still haven’t decided who to dress up as, we’re here to help. 

If you don’t have time to get together a teal sweatsuit a la the contestants in “Squid Game”, consider dressing up as one of these five well-known investors. And even if their personal clothing style doesn’t speak to you or you’re already set in the costume department, read more to get insight into their investing strategy and learn how they earned their reputation. 

Warren Buffet

Of course Warren Buffet makes an appearance on this list, considering he is one of the most well-known and successful investors in the world. Beloved for his philanthropy, Buffet is the CEO and Chairman of Berkshire Hathaway. He is generous with his money and his insight, and many great minds all over the world follow Buffet closely to heed his thoughts about the markets. 

Buffet is considered a “value investor”, meaning he looks for securities with prices that are very low compared to what he believes they are worth. He determines the “worth” of a company by examining financial statements, understanding their debt-to-equity ratio and profit margins, listening to conference calls, and vetting management, among other things. Buffet is essentially searching for stocks that are undervalued by the market rather than valuable stocks that have already been noticed by the majority of other buyers.

This means that Buffet believes that the stock market will eventually favor quality stocks – in other words, the cream will rise to the top. Investing is not gambling, and the investment vehicles in portfolios represent real things in the real world – companies, commodities, etc. Buffett’s strategy reminds us of that, and reveals the opportunities that open up when an investor is willing to put in the work and do their own due diligence. 

Carl Icahn

Carl Icahn is considered an “activist investor.” He started out as a “vulture capitalist,” taking positions in public companies that weren’t doing the best, and demanding extreme changes in corporate leadership and management to turn them around and make a profit. Now, he is considered a “shareholder activist,” using his position as a shareholder to make big changes in the corporations he invests in. In both of these categories the philosophy is the same, which is that when a company’s stock is low, Icahn purchases a significant portion and leverages his position to change the company so that it becomes more valuable for shareholders.

One strategy that Icahn is vocal about is that you should not take anything personally in investing. Rather than viewing things through an emotional or interpersonal lense, Icahn emphasizes the importance of using your own research and basing investment decisions on facts, not opinions. He also stresses the importance of getting your information from reputable, trusted sources. That’s a solid reminder regardless of strategy.

Carlos Slim

One of the richest men in the world, Carlos Slim is a Mexican businessman and investor who owns hundreds of companies. He has built his fortune by developing a large market share through acquisitions. He dominates the telecommunications sphere in Mexico which has received criticism from economists and pushback from the government. Recently Slim has diversified into other areas of the market such as real estate. 

Despite the criticisms of his monopoly, Slim’s investing strategy reveals an interesting point: that it’s important to study the momentum of an industry and how the company will move within that industry and the economy as a whole. Looking forward and investing with future behaviors in mind, rather than basing decisions entirely on what’s happening now or what has happened in the past, is a good way to generate steady, consistent, long-term growth. If you’re hopping on a bandwagon once it’s already left the station, chances are you’ve already missed the big opportunity, so looking ahead will also give investors the chance to strike while the iron is hot and take full advantage of up-and-coming investment opportunities. 

Jack Bogle 

Bogle is known as the founder of the Vanguard Group and creator of index investing, which allows retail investors to buy mutual funds that track the larger market. This utilizes a passive investment strategy that mirrors the holdings of the benchmark index. The idea behind index investing is that while this minimizes potential gains, it also reduces risk, is tax-efficient, and is a viable option for someone with no knowledge of investing since these funds kind of manage themselves without any need for the investor to change anything. 

While this strategy is very different from NEST’s actively managed portfolios that strive to hit a return rate goal no matter what the benchmarks are doing, Jack Bogle’s contributions to the world of investing enforce the idea that the stock market is a game that everyone can play – and that’s something that we can definitely get behind. 

Cathie Wood

Cathie Wood is the founder and CEO of ARK Invest, which launched the first actively managed ETF, or exchange traded fund. In 2018 they crossed $5 billion in assets and in 2020 they reportedly managed nearly $19 billion, posting a 94% return for the year. ARK Invest looks for big stock successes in cutting-edge tech such as AI, blockchain technology, and robotics. Wood’s disruptive move was proving that ETFs can be active, when they are typically known for being passively managed. In addition to generating better returns, Wood’s investment choices support a better future as well. 

“Make sure you’re on the right side of change,” Wood advises, and her investing strategy reflects this. One thing that Wood is a big proponent for is innovation. She focuses on the future and innovative technologies that will not only bolster your returns but also improve the lives of people in the future. She also innovates the finance industry, as seen in her fresh approach on ETFs. Another innovative, forward-thinking technique that Wood espouses is that she is very collaborative. She recognizes that the future is a sharing economy where “if you don’t give, you don’t get,” and she works to uplift tech companies and also makes sure that her team management style at ARK reflects this philosophy. 

Keep Austin Spooky

If these five individuals didn’t give you costume inspiration, we hope that they at least provided some food for thought as you consider your investing strategy. Help keep Austin spooky this weekend and make sure to dress up, eat a lot of candy, and have a safe and fun Halloween! 

Someone who isn’t on this list but that we respect just as much is our own Sean McDougle, CFP and Chief Investment Officer for NEST. Sean actively manages all of our portfolios in-house with his own unique, data-based process. He gives our clients and audience insight into this process and current market events every month on the NEST Edge, where he and our founder Dan tackle relevant topics and answer all of your questions. Check out these past conversations and if you like what you see, reach out at info@nestfinancial.net to see how NEST can help you with your investments and wealth management just as we have helped so many of Austin’s families and individuals. 

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DISCLAIMER: We are legally obligated to remind you that the information and opinions shared in this article are for educational purposes only and are not financial planning or investment advice. For guidance about your unique goals, drop us a line at info@nestfinancial.net.