Self-Made Millionaires: Investor Edition

All of us have nurtured the dream of enjoying unimaginable wealth but there are a select few individuals who have turned their visions into a reality. What have been the secrets to their success and what skills have set them apart from the masses? We look at four personalities known for their independent wealth and for their unique investment strategies. Appreciating these traits is one of the best ways to leverage our skills in the most effective manners possible.

James Harris Simons

Mr. Simons is currently the retired non-executive chairman of Renaissance Technologies; a New York-based hedge fund. His total net worth is estimated to be in excess of $15.5 billion dollars. James Simons received a doctoral degree in mathematics from the University of California (Berkeley) before entering into the world of investments.

One of the interesting traits of this financial magnate is that as opposed to many other investors, he found success using pattern recognition. A further background in areas such as quantum mechanics certainly contributed to his insight within this field, when he began Renaissance Technologies in 1982 after committing no less than $25 billion dollars towards its creation. He created the Simons Foundation in 1994 and this charitable organization raises money for causes such as education, health and scientific research.

Ray Dalio

Mr. Dalio is estimated to be worth approximately $15.9 billion dollars. He is the founder of Bridgewater Associates; one of the largest hedge funds in the world today. He was named as one of the 50 Most Influential People by Bloomberg and he is estimated to be the 30th richest person in the United States.

Mr. Dalio began his investment career at the ripe age of 12 when he purchased stock in Northwest Airlines. Whether due to luck or research, his investment soon tripled when it emerged that Northwest had merged with another firm. After finishing his education, Mr. Dalio would go on to cut his teeth on the floor of the New York Stock Exchange before becoming a full-time trader at Shearson Hayden Stone. He founded Bridgewater Associates in 1975 and the rest is history. Mr. Dalio claims that one of the secrets to his success is to solidify investment lessons into what he terms as “recurring principles”.

George Soros

With a net worth of a massive $24.9 billion dollars, George Soros tends to be a household name. His background is indeed as diverse as his investments over the years. After surviving Nazi-occupied Hungary, he emigrated to London and earned a degree in philosophy. He would eventually work his way up the ladder after landing positions in various merchant banks. He started his first hedge fund (Quantum Fund) in 1970 and during the same year he founded Soros Fund Management. 

Although it can be claimed that a background in philosophy certainly helped Mr. Soros understand the human elements associated with investing, he is also famous for espousing a theory put forth by economist Karl Popper. Known as the General Theory of Reflexivity, Soros claims that he can correctly predict major market changes such as asset bubbles and the “fundamental value of securities”. He would then use these principles to short and swap stocks; accruing massive amounts of wealth over time.

Warren Buffett

With a net worth of $73.3 billion dollars, it only makes sense that Warren Buffett has made the top of this list. Due to his sheer wealth, Mr. Buffett is known far outside of investing circles. His principles and strategies now feature prominently in even the most basic economic classes and his philanthropy has provided billions of dollars to charitable organizations. Although his roots can be traced back to 1951 when he worked for the investment firm Buffett-Falk & Co, he is best known for founding Berkshire Hathaway (originally a textile manufacturing company). He is still actively involved in many financial operations and he is known for leading a rather unassuming financial life; only allotting himself a stipend of $100,000 dollars per year.

Buffett is known for his conservative investment strategies; stating that low-cost index funds tend to produce better results. He also believes that purchasing undervalued and underperforming stocks is worthwhile from a long-term point of view. Above all, Buffett is a proponent of distributing wealth equally within a society so that no one “gets left too far behind”. This is one of the reasons that he is famous for his charitable contributions.

Investments require tactical maneuvering, an often-daring game can become a career if you follow the correct principals. What these individuals have in common is that they are all calm-natured, they are calculated risk takers not ‘all in’ type investors – that’s the key to making a career in the path, Michael McCarthy, market analyst at CMC Markets says it best “Pre-planning contributes to investing success is that decisions are made in a calm and considered manner, away from market pressure. The reality of investing is that no one knows the future. All any of us can do is identify and apply investment approaches and plans that best match our individual investment goals. For many, this means getting expert help. However, there are various ways investors can increase the chances of higher returns; some structural, and others personal. Bringing a “cool” head to investment decision making is an important part of a smarter approach.”

Photo: Business Insider