Money advice from the world’s most successful investors

Billionaires often think differently about investing. Here’s what three decades of research by one man has found.

When it comes to wealthy people, there’s rich, there’s really rich, and then there’s really, really rich.

It’s this top tier of rich people – the billionaires and multibillionaires who run investment funds – whose money minds were studied and shared with more than 1200 financial planners last week.

You may not know their names, but their lessons are valuable. Author William Green, who for three decades has been interviewing the world’s greatest investors, shared their wisdom at the Financial Advice Association Australia annual conference, asking “is it possible for us to replicate their winning ways?”

“What are the principles, insights, the traits, characteristics and habits that this tiny group of extraordinary investors exhibits that enables them to achieve long-term success?” Green asked.

Here are some of their answers.

Investor and philanthropist Sir John Templeton, who used poker winnings to help pay his way through university, left billions when he died in 1998, and Green says he had a “willingness to be lonely”, to go against the tide and not care if people judged him.

Howard Marks made a $9 billion profit for his business Oaktree Capital during the global financial crisis by betting against the crowd on toxic assets. He told Green that during the GFC everyone was behaving like the world was going to end, but “most of the time it does not end”.

Ninety-nine year old billionaire Charlie Munger says be less stupid. Picture: Michael Lewis

Bill Miller bought 15 per cent of Amazon after the stock tumbled from $90 to $6 and looked headed for the scrap heap. He has studied philosophy and reasoned that there was a 50-50 chance Amazon would go to zero, but if he was right it would make 50 times his money. He made the money.

An investment giant that more people may know is Charlie Munger, Warren Buffett’s business partner who is set to celebrate his 100th birthday in January and is worth a lazy $4bn.

Not being a fool is one of Munger’s key philosophies. “It is about the fact that it is much easier to succeed in life by being less stupid … rather than by actually trying to be smarter,” Green said.

“Focus on becoming a terrible investors. It’s much easier to identify what not to do rather than what to do.

“Build a ‘do not do list’ as an investor.” Avoid things that terrible investors do, such as chasing into the latest fad or buying overpriced assets.

Green said investors should make sure that all of their errors were not fatal, then shared more Munger wisdom: “envy is the dumbest of the seven deadly sins because it’s not even fun.”

Keeping it simple pays off. Green says hedge fund billionaire Joel Greenblatt distilled his decades of success into one simple rule: “figure out what something is worth and buy it for much less”.

Adopt and handful small habits. They may not be too taxing or extreme, but when combined over time they can deliver a huge advantage.

One successful investor focused on four key habits: good sleep, exercise, good nutrition and meditation.

Another says the most important thing in life is who you spend your time with, rather than chasing an ever-bigger pile of assets that doesn’t really make you happy. Relationships are key – if you want to have a good partner, be a good partner.

“Great investors all have some noble purpose beyond themselves – the ones who are happiest are using their talent, time and money in some way to lift up other people,” Green said.