1 Billionaire Reveals 5 Simple Ways to Make Money From Stocks

Some billionaires grab headline attention, but one is happy to share how he has made money from stocks for decades and decades.

Aug 9, 2014 at 7:45AM

Some  billionaires hold onto the secrets to their money-making success with a tight fist. But Ray Dalio is worth $14 billion and is more than happy to share.

His tips are helpful, successful, and best of all, easy to understand.

Ray Dalio Insider Monkey

Ray Dalio. Source: www.insidermonkey.com

At last count Ray Dalio -- the man atop Bridgewater Associates that manages $150 billion -- was worth $14.3 billion, which made him the 76th richest person on the planet. This placed him ahead of Rupert Murdoch ($12.1 billion), Elon Musk of Tesla ($11.1 billion), and Eric Schmidt at Google ($8.9 billion).

In 2010, his firm made $15 billion -- which was more than the combined profits of Google, Amazon, Yahoo, and eBay -- and Dalio himself made $3 billion.  

Although he isn't a household name, he should be, as he's revealed the secrets to his success in a 123 page paper simply entitled Principles, that is chalked full of great investment advice. And there are five things we should remember when making our own investment decisions. 

Find what you enjoy

I worked for what I wanted, not for what others wanted me to do.

Like fellow-billionaire Warren Buffett, Dalio began investing at a young age, and while his first investment tripled in value, he notes, "I made the money because I was lucky."

From there his passion for investing began, and although he made his fair share of mistakes, he developed the early understanding of the intersection between his gifts and passions, which were clearly in investing.

For good reason Warren Buffett has continually highlighted the value of passive index funds for the purpose comfortably saving for retirement, but Dalio's first point is a helpful reminder that investing in specific companies should be something individuals seek because they enjoy it, not because they feel required to do it.

Stick to what you know

I came up with the best independent opinions I could muster to get what I wanted.

If the first piece of advice holds and investing is something you're passionate for, then Dalio suggests the next step is to sit down and figure out where your understanding is, and the industries and companies you'd be best suited to invest in. For some, it's energy, others financials, or maybe technology.

But regardless of where that may be -- Dalio believes it's critical to sit down and use your own time, energy, and effort, to do the research to learn and gauge an opinion about what you think of the companies and what their relative values should be.

Seek out advice from others

I stress-tested my opinions by having the smartest people I could find challenge them so I could find out where I was wrong.

After determining an opinion on the companies, it's then helpful to see someone who has the opposite opinion. Dalio noted "bad opinions can be very costly," so investing must not be sticking to personal conclusions about specific companies.

Even if you continue to disagree with their stance after carefully hearing their reason, it's important to hear their reasoning to better shape your opinion on the company.

You'll never know everything

I remained wary about being overconfident, and I figured out how to effectively deal with my not knowing.

Even after opinions are formed about specific stocks, it's always important to continue to gather information and sharpen an understanding. But remember that we'll never know everything about a company, an industry, or the broader market.

Although Dalio says he does his best to continually "gather information" about an investment, he notes he tries to limit them "to the limited number of things I am confident in."

Learning never stops

I wrestled with my realities, reflected on the consequences of my decisions, and learned and improved from this process.

Warren Buffett once said, "I insist on a lot of time being spent, almost every day, to just sit and think."

In the same way, we must see investing isn't something which is learned in a day or a week or a month. Instead, it is continually learned year after year, and so very rarely mastered.

Take time to revisit past successes and failures as it can be a helpful way to learn.

Dalio isn't perfect, and has made his own set of mistakes, but his advice on investing is sound, and things we must all remember when making our own investment decisions.

Billionaire Warren Buffett is terrified of your next investment
At the recent Berkshire Hathaway annual meeting, Warren Buffett admitted this emerging technology is threatening his biggest cash-cow. While Buffett shakes in his billionaire-boots, only a few investors are embracing this new market which experts say will be worth over $2 trillion. Find out how you can cash in on this technology before the crowd catches on, by jumping onto one company that could get you the biggest piece of the action. Click here to access a FREE investor alert on the company we're calling the "brains behind" the technology.

Patrick Morris owns shares of Amazon.com and Google (C shares). The Motley Fool recommends Amazon.com, eBay, Google (A shares), Google (C shares), Tesla Motors, and Yahoo. The Motley Fool owns shares of Amazon.com, eBay, Google (A shares), Google (C shares), Tesla Motors, and Yahoo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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