I am not a journalist. I have over 15 years of experience in the hedge fund industry working for a $1.5 billion hedge fund run by a former Goldman Sachs Partner/Harvard MBA and for an $11 billion hedge fund of funds.
Simply stated I have spent my entire career around the best investors and hedge funds on the planet. I know who they are and how they make money.
These top hedge funds and investors do not day trade, swing trade or stare at computer screens. That is an urban legend perpetuated by the brokerage houses to get you to trade as much as possible so they can get your commissions.
What the top investors and hedge funds do, is bet on sure things! They take controlling positions (5% or more) in undervalued companies and then push on these companies with all their force to create instant shareholder value. They do not throw darts or guess, they control their own destiny by putting their own people on the boards of these companies and then forcing these companies to produce positive returns in their stock.
So to become a millionaire or billionaire, you have to follow these rules:
1) Piggyback the best ideas of the worlds best billionaire investors and hedge funds! Why? Its simple, they have proven track records of making money and they already have researched the ideas for you. Before a top billionaire investor or fund takes a position they spend an average of $200,000 on research, consulting and legal fees!
2) Only piggyback funds and investors that have a proven track record of creating value in any market condition or economy. These Investors are called Activist, Event Driven or Private Equity investors.
3) Don’t blindly follow or copy the stock picks or ideas of any hedge fund or investor. I only piggyback the ideas/stocks of billionaire investors/hedge funds that have low portfolio turnover who hold their positions for at least a year and a half, so I know I am buying a stock they still own. It takes experience but I know which funds hold them and which funds fold them.
4) Keep your overhead low. Get an online broker with low commission rates, and do not trade actively. Not one billionaire investor or hedge fund I have ever worked with or met trades actively.
5) Never ever put your money with a stock broker or financial advisor. Simply put I have lived in 3 major cities during my career: Chicago, Washington DC and London and I have never met a wealthy person who follows or puts their money with a stock broker/financial advisor or mutual fund, those are rigged games(they win, you lose 100% of the time.)
What do the wealthy do?, if their rich enough they invest directly in hedge funds or private equity funds, if their smart and rich they do what I do, keep your overhead low, get an online broker and piggyback the best ideas of the world’s greatest billionaire hedge funds and investors.
6) Enjoy life, have hobbies, enjoy your time with friends and family but do not look at computer screens, CNBC or your portfolio every day. Trust me the wealthiest and best performing billionaire investors barely look at their trading accounts and positions once a day let alone once a week. Short term traders and day traders die early and broke. I promise you on this one, there is not one billionaire stock investor or hedge fund on the planet who stares at a computer screen all day.
7) Invest all your money in stocks, but keep a reserve in cash to add to positions. The stock market has averaged 9% a year since 1920, no other asset class in the world has averaged close to 9% annualized over the last 100 years.
Buy on dips and average down on your stock positions, that is the most common rule that the world’s greatest billionaire investors follow. Buffett, Icahn etc. all buy more of a stock when it goes down, its that simple. So keep cash and when the odds are in your favor and a stock drops add to your positions.
President of The Billionaires Portfolio