Well, when you are a billionaire you can invest like one. Exhortations to do so when you are not a billionaire whilst headline grabbing and good for a few seconds of day dreaming are childish and have no basis in reality. The hyper wealthy do things that others cant and whilst it is a good catchcry it is rather like saying to some fat bastard who can’t get their arse off the couch run like Usain Bolt. Here is a tip only Usain Bolt can run like Usain Bolt.
Consider this non piece of critical thinking and investment advice I spotted on Yahoo Finance. The point to note is that these people did not make their fortunes with traditional investment techniques. They founded businesses and generated their wealth that way. You would be better off working out what top performing hedge funds were doing on a global scale and the trying to copy that. However, that would also be a pretty dim idea because you would have no idea when they were getting out unless they were actually telling you.
Consider the constant missive to invest like Warren Buffet – well if you can take over companies and milk them for cash go ahead. As a case in point of the preferential deals that the wealthy can generate. Take a look at his bailout deal for Goldman Sachs when they were about to go tits up. Buffett was able to extract a 10% dividend for purchasing preferred stock. If Goldman wants to call this stock back it can but at a 10% premium. In addition to this he pocketed $5 billion worth of warrants that have a five year time horizon. Buffett could walk away from the deal in today’s prices with about a 40% return.
The issue here is not the return since Goldmans is up around 220% from its low but rather that any other individual could not have received such preferential treatment. The notion of investing like a billionaire is crap – try all you want but you could not have gotten such a deal.
However, this preferential treatment does not only extend to the sorts of deals they receive but also the handouts they get. Consider the table below and look at the size of the bailouts that Berkshire Hathaway has been the recipient of the sums of money are staggering. So whilst most Americans were pocketing a few hundred in stimulus cheques Buffett pocketed a vast fortune.
Show me a billionaire and I will show you someone with their hand out.