Investing is a lot like dating. Low confidence can keep you out of the market. A good way to gain confidence is to learn from those with experience. 🙂
When you do an internet search for “famous investors” you might see a list of highly experienced individuals. Some are dead. Most are alive. But despite being from different backgrounds, all the investors from the search result appear to have one thing in common.
None of them are wearing hats. A piece of headwear can tell a lot about someone’s personality. However, there is one famous investor that didn’t come up in my search results but does like to wear hats: and that’s Hetty Green. There aren’t a lot of photos of her because she died in 1916, but she had an incredible investment career. Here are five lessons we can learn from Hetty.
1. Start early
Wearing hats wasn’t the only trait that differentiated Hetty from other world class investors. With her grandfather’s encouragement Hetty had learned to manage her family’s financial accounts when she was just 13 years old. Born into the Quaker family (yes, the cereal name) Hetty was raised with conservative financial principles that would stay with her for life. The world was much simpler back in the days before Instagram and electric scooters. But while other kids were playing hopscotch outside, Hetty was busy reading financial papers and stock reports. 🙂
2. Practice delayed gratification
When her father bought her brand new clothes, Ms. Green sold her new wardrobe and purchased government bonds with the money instead. She eventually turned an inherited sum of $6 million into $100 million by 1916, which is the equivalent of $2.3 billion in today’s climate thanks to inflation.
3. Have an independent mindset and don’t follow the crowd
Hetty followed a contrarian investing strategy where she bought stocks and bonds when the market was full of pessimistic sentiment. She also had a knack for snapping up cheap real estate deals and trading railroad companies. In her own words she told the New York Times in 1905, “I believe in getting in at the bottom and out at the top. I like to buy railroad stocks or mortgage bonds. When I see a good thing going cheap because nobody wants it, I buy a lot of it and tuck it away. I keep them until they go up and people are anxious to buy. That is, I believe, the secret of all successful business.” She showed off this strategy a couple years later in 1907. After deciding that the market was overvalued, Hetty called in all her loans. Then, when the market crashed, she swooped in and bought them again at the lows. This line of thinking is very similar to Warren Buffett’s investment advice about being “fearful when others are greedy and greedy when others are fearful.”