10 Investing Lessons From Billionaires

When it comes to investing, there’s an easy way to keep score, and if you want to learn from the best, it’s worth considering some lessons from billionaires, almost all of whom have had great success either from entrepreneurship or investing.

Some investors like Warren Buffett and George Soros are household names, while others are less known, but almost all of them have useful information to offer everyday investors.

Keep reading to see 10 investing lessons from billionaires.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

This may sound simple, but it’s a difficult rule to live and invest by. In personal matters, it can mean forgoing immediate gratification to work toward a goal. That could refer to exercising to get in shape or working long hours to build a business.

In investing, it also has multiple meanings, such as investing in emerging technologies like electric vehicles, or holding a stock for the long term to take advantage of compound interest.

The point is that billionaires aren’t trying to get rich quick -- they are thinking and investing for the long term to build wealth.

ALSO READ: 5 Stocks Billionaires Couldn't Stop Buying in Q1

Most investors probably realize this on their own at some point, but in order to generate wealth in the stock market, your starting point matters. Returns get the biggest headlines, but if you invest only a small amount in a stock, it’s not going to matter if your stock jumps 1,000%. If you bet big, however, those gains could be life-changing.

Billionaire investor George Soros is known for making massive bets on the short-term direction of financial markets like when he shorted the British pound.

Stanley Druckenmiller, another billionaire investor and student of Soros, also derided the idea of diversification, saying you should “bet the ranch on it” when you see a great idea.

Of course, you don’t want to risk all your money on one stock, but it’s a smart move to bet more on your highest-conviction ideas.

In investing, a big winner will outweigh 100 losers, so if you’re right on the big winners, you only need to be right a few times. Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) CEO Warren Buffett has had plenty of misses in his career, but his company’s recent massive bet on Apple has generated more than $100 billion of gains, which easily erases his losing bets on airlines, for example. Apple now makes up close to half of Berkshire’s investing portfolio.

Similarly, ARK Invest’s Cathie Wood famously gave a presplit price target of $4,000 on Tesla back in 2018. While that call seemed far-fetched at the time, it turned out to be right, and Tesla’s gains have helped drive huge returns in her exchange-traded funds (ETFs).

This is a famous Buffett quote, but it’s also a great investing lesson. One of the best ways to outperform the market is to take advantage of opportunities when others are fearful. For instance, last March when the market was crashing because of the coronavirus pandemic, it would have been easy to sell. However, you could have made a killing buying high-growth stocks that went on sale then as some jumped more than 1,000% from their lows during the crash.

Back in 2012, Netflix was reeling from the Qwikster debacle as the company lost a chunk of its subscriber base after it briefly separated the streaming service from its DVD-by-mail business. Investor Carl Icahn announced in October of that year that he had taken a 10% stake in the company, which cost $321 million at the time. Icahn exited his investment in 2015 with a $1.9 billion profit, a huge windfall, but if he had held on to the entire stake, it would be worth more than $20 billion today.

ALSO READ: Warren Buffett Owns These 5 Dividend Aristocrats. Should You?

It’s easy to focus on numbers in investing, but the most important investments you can make are in yourself. This includes taking care of your health and well-being, improving your education, and expanding your professional network.

Most billionaires say that practicing habits like getting eight hours of sleep, reading often, and exercising regularly are key to performing at a top level.

Everyday investors would be wise to take that advice to heart as it doesn’t require large sums of money and is an easy way to realize returns.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

You might think that billionaires are billionaires because their ideas are often right, but in fact, many billionaires say that changing your mind, or having mental flexibility, is an important component to learning and making the best decisions.

Amazon CEO Jeff Bezos has said that people who are right a lot often change their minds. Doing so shows that you are open to new information, a must for any successful investor.

Similarly, Apple visionary Steve Jobs was well known for changing his mind in response to new information. For investors, this lesson often manifests itself as knowing when to cut your losers. If you’re wrong, it’s better to admit and move on than be in denial.

Building wealth is a slow process, but quitting doesn’t make it any faster. What separates many billionaires from the rest of us is their refusal to take no for an answer, or to find a new way to do something when they are initially unsuccessful. Zoom Video Communications founder Eric Yuan had his visa application to come to the U.S. from China rejected eight times before he got in finally.

Alibaba founder Jack Ma was rejected from 30 jobs after graduating college and founded Alibaba with no particular skills or money. At a Viva Tech conference, he said, “I think everybody can be successful if you really try hard.”

ALSO READ: Why Warren Buffett Picked the S&P 500 to Win the Investing Race

Everybody fails, but the most successful people learn from their mistakes and get better. Bezos is famous for embracing failure, encouraging his teams to take big risks because without those risks there wouldn’t be big successes. In Amazon’s case, that means products like Amazon Web Services and its third-party marketplace.

Fearing failure, in other words, is a recipe for paralysis, not a path to success. In Silicon Valley, the mantra “fail fast” shows that failure is part of the process to achieving big things, not something to be avoided.

Not every investing style works for every investor. Buffett has had a long career of outperformance by committing to value investing and buying and holding stocks for the long term. But he has also missed out on some of the biggest winners in recent history because he generally avoids tech stocks, saying he doesn’t know how to value them.

As an investor, you don’t have to own everything. You’re better off sticking to investments that are within your knowledge base, skill set, and comfort zone.

Most billionaires will say that in order to be successful in an investment or a new business, you have to be able to see something that others can't. You can’t follow the herd.

Walmart founder Sam Walton once said, “Ignore the conventional wisdom. If everybody else is doing it one way, there’s a good chance you can find your niche by going in exactly the opposite direction.”

Similarly, Jack Ma argued that the disagreement in the market and in business creates opportunity. If everybody thought the same way, there would be no opportunity. Therefore taking a different perspective can often be at your advantage.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Billionaires are just like you and me -- only with a lot more money.

The lessons above aren’t from superheroes or anyone with magical powers. Any investor can apply them, and with dedication, focus, and a commitment to improvement, you should hopefully be able to improve your investing performance, or at the very least better understand the mistakes you’re making.

While you’ll probably never become a billionaire, as the lessons above show, it’s not difficult to invest like one.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman owns shares of Alibaba Group Holding Ltd., Amazon, Netflix, and Zoom Video Communications. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd., Amazon, Apple, Berkshire Hathaway (B shares), Netflix, Tesla, and Zoom Video Communications. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, short January 2023 $200 puts on Berkshire Hathaway (B shares), short June 2021 $240 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.