Sometimes my friends who haven’t started to invest their own money yet ask me where to begin. I often say I just follow great investors.
Now this may seem obvious, but it’s rather not. People are quick to ask what stock they should invest in but don’t realize its the wrong question…
You should ask, which stocks are “X” investing in?
Who is “X?
X = the best investors by annual rate of return
This is objective fact. You can look up the best investors that have returned the most capital (based on percentage) and see what stocks have allowed them to grow so fast. You evaluate the stocks they selected, choose a few for yourself to invest in, and then go to another fund manager.
After you review the top fund managers and select the top stocks you like from their investments, you now have developed your portfolio.
I wish more people understood that just like there are super star athletes among professional athletes (i.e. Lebron James), there are super star investors among professional investors (see below).
As retail investors, we need to find the super star investors and follow their lead. Now, this doesn’t mean don’t think for yourself. It means that these people are good at their jobs and you should consider it when developing your own portfolio.
A few of my favorite investors include:
Chamath Palihapitiya : He was head of growth at $FB during its rise to 1B users, invested in companies like Slack, and is creating an IPO renaissance with his work in SPACs (Special Purpose Acquisition Companies). He has brought over three companies public via SPAC: IPOA, IPOB, and IPOC. He’s the Chairman of Virgin Galatic (formerly IPOA) and owns part of the Warriors. If that’s not enough, his aim is to create the Berkshire Hathaway of our generation with companies that have social impact. One example is his rare earth metal mining company to support critical raw materials for the green technologies (i.e. windmills, batteries, solar panels). Another is a 3D printing company used for manufacturing which ends up being more green than traditional approaches because it uses electricity vs. coal/gas.
Cathie Wood: Founder, CEO and CIO of ARK Invest which takes a thematic portfolio approach with a focus on disruptive innovation. Cathie provides a unique overview of economics and how technological innovation will be key stocks for the 21st century. She was a big believer on $TSLA before the recent rise and is now touting $BTC. She will be one to continue to follow.
The reason I say to my friends to follow first, is that sometimes you need to learn the path from the best before you’re ready to lead.