TDFA 2.3 | Investing - Investing Strategies: Copying the Greats

Explore investing strategies by learning from legendary billionaires, focusing on diversification, dollar cost averaging, index investing, and copy trading.

Key Takeaways

Diversification is crucial to manage risk and capitalize on multiple markets.
Dollar cost averaging helps reduce timing risk by investing steadily over time.
Index investing offers a simple, low-effort way to gain broad market exposure.
Copy trading and professional management can diversify strategies but come with fees.
Leveraging AI and studying legendary investors can enhance investment decision-making.

What the video covers

Introduction to investing strategies inspired by successful billionaires and legendary investors.
Importance of diversification to spread risk across multiple sectors and markets.
Explanation of dollar cost averaging as a method to gradually build investment positions.
Overview of index investing by buying ETFs or indexes like the S&P or AEX for long-term growth.
Discussion on delegating investment management to professionals for a fee and its pros and cons.
Introduction to copy trading and social investing platforms like eToro for mimicking proven investors.
Using AI tools like ChatGPT to gather investing insights and advice without direct financial advising.
Emphasis on learning from the greatest investors to improve personal investment strategies.
Mention of macroeconomic perspectives and risk management approaches by notable investors.
Acknowledgment that outperforming average market returns requires effort and continuous learning.

Chapters

What is diversification and why is it important?

Diversification means spreading your investments across different sectors or assets to reduce risk and increase opportunities to capitalize on various markets.

How does dollar cost averaging work?

Dollar cost averaging involves investing a fixed amount regularly regardless of price, which helps average out the purchase price over time and reduces the risk of investing a lump sum at the wrong time.

What are the benefits of index investing?

Index investing allows you to invest in a broad market through ETFs or index funds, providing diversification and typically lower fees, making it a simple and effective long-term strategy.

Full Transcript — Download SRT & Markdown

Speaker A

All right, final part for this week: investing. I think we've covered quite a bit. This chapter is really cool because I'm going to introduce yet another list of names to add to the people that you know you could be following to learn a thing or two besides us, obviously. Just kidding.

Speaker A

following to learn a thing or two besides us obviously um just kidding um and yeah so about strategies I talked about it a little bit already in the previous video I'm Gonna Keep It uh really I promise I'm Gonna Keep it a bit

Speaker A

And yeah, so about strategies, I talked about it a little bit already in the previous video. I'm going to keep it really, I promise, I'm going to keep it a bit shorter this one because we've got a little bit less to cover.

Speaker A

the billionaires the most successful the legendaries why not look at how they operated what they were seeing and try to learn from them but before we get to some of examples some investing strategies or at least I've made a small list of some

Speaker A

Bear with me. There we are. So investing strategies: copying the greats. Why not look at the people that are actually really, really good at this game? The billionaires, the most successful, the legendaries. Why not look at how they operated, what they were seeing, and try to learn from them?

Speaker A

spread your risk but also try to capitalize on multiple markets right this doesn't so all your eggs in one basket could be that's you know like in a very like few opportunities probably relatively speaking uh and just you know

Speaker A

But before we get to some examples, some investing strategies, or at least I've made a small list of some terminology that you come across when we talk about investing. So diversification: spreading your assets, right? That means taking multiple sectors or multiple assets or multiple assets within an industry. You can diversify your portfolio in that sense and in that way spread your risk but also try to capitalize on multiple markets.

Speaker A

should be something you know that you know to whatever degree is your preference you should be doing in our opinion humble opinion dollar cost averaging another term so that's working your way into an investment step by step so you could for example take

Speaker A

Right, this doesn't put all your eggs in one basket. That could be, you know, like in very few opportunities, probably relatively speaking, and just, you know, only moments in time. But like a broader allocation makes much more sense sometimes or probably more often when you capitalize on emerging markets, as I mentioned before, or autonomous vehicles, AI, etc.

Speaker A

asset and you just periodically buy that asset irregardless of price right so your dollar cost average and by the time that you're done you have an average price and hopefully you know you're right with your thesis and that thing

Speaker A

So diversification is a huge thing and it should be something, you know, to whatever degree is your preference, you should be doing, in our opinion, humble opinion. Dollar cost averaging, another term, so that's working your way into an investment step by step. So you could, for example, take your monthly salary, five percent goes to investing, and every month you allocate something to an asset that you slowly just want to have a position in, like I don't know, Amazon, again there it is, or just any other asset, and you just periodically buy that asset regardless of price.

Speaker A

somewhere but you just simply buy yeah I did mention this buy the s p by the aex buy an ETF or you know that follows an index um that way you just are in the stock market but you are not necessarily doing

Speaker A

Right, so you dollar cost average, and by the time that you're done, you have an average price, and hopefully, you know, you're right with your thesis and that thing that your boss sees some more value in the future and your capital actually grows that way.

Speaker A

least that's his perspective right that that's we all have our perspective I guess his perspective was that for the vast majority and this is a general perspective invest in investing that for the vast majority that makes the most

Speaker A

Now, index investing. So we can also just simply buy the index. I'm not sure, I don't think I've mentioned that, but I think it's mentioned somewhere. But you just simply buy—yeah, I did mention this—buy the S&P, buy the AEX, buy an ETF or, you know, that follows an index.

Speaker A

will grow but I am of the opinion that if you spend just a tiny bit more time than the average person you can do better than that but that's me and you can just take that or leave that for me

Speaker A

That way you just are in the stock market, but you are not necessarily doing all the work of picking individual stocks. So that's obviously a strategy you can go for. And as Chris, our student assistant, really hammered on this, like we need to give the perspective that that's for the, or at least that's his perspective, right? That we all have our perspective. I guess his perspective was that for the vast majority, and this is a general perspective in investing, for the vast majority, that makes the most sense to just buy the index, have exposure to stock markets, and for example, with 25 percent of your capital, you do that in an index and you just wait it out for 30 years because over time the probability is that that will grow.

Speaker A

comes at a cost so uh but that can be an idea that you put some of your portfolio right you can also put just 20 of your portfolio you give to somebody else like and they may end up buying the same

Speaker A

But I am of the opinion that if you spend just a tiny bit more time than the average person, you can do better than that. But that's me, and you can just take that or leave that for me.

Speaker A

least right now where you have it's sort of like social investing etoro is also big with that where you can actually copy people that have a proven track record on the platform that you're working on and you give them some of

Speaker A

Now, other ways of going about this: you can give somebody else your money, right? Generally for a fee. So take that into account. You will buy some experience probably from somebody who can manage your money better than you can, but you know that comes at a cost.

Speaker A

um to give somebody I don't know like one two three percent of your capital and that way again you Diversified different strategy uh and in that way you can have your Capital work for you as well and the same copy trading is kind of the

Speaker A

So that can be an idea that you put some of your portfolio, right? You can also put just 20 percent of your portfolio you give to somebody else, and they may end up buying the same stuff as you, but they may have a different strategy, may have more experience. So that's something you can also do.

Speaker A

using AI so something like chat gbt or the newest iterations of what is coming you can use that as a not as an advisor necessarily but you could obviously ask that AI tool like hey you know how did

Speaker A

Co-vesting or copy trading is how co-vesting is. There are platforms being built within the world of blockchain at least right now where you have, it's sort of like social investing. eToro is also big with that, where you can actually copy people that have a proven track record on the platform that you're working on, and you give them some of your money, also again for a fee obviously.

Speaker A

but I I would be a big uh big proponent of um you know learning trying to learn from the greatest uh in the game at least that's how you know at least partially how I go about it as well is

Speaker A

But if you've seen that they have a proven track record, then why not? You know, for example, I'm not doing it personally, but I could see that as a possibility to give somebody, I don't know, like one, two, three percent of your capital, and that way again you diversify different strategy.

Speaker A

tremendous Financial Freedom or such a huge company or whatever and you just like you know like look at how they did it right and nowadays obviously it's more and more transparent and that's why again have a Twitter account because a

Speaker A

And in that way, you can have your capital work for you as well. And the same copy trading is kind of the same thing, but then you copy traders. They make trades, you provide them with capital. Lots of cool stuff happening in that space, by the way, which we'll come back at a later point.

Speaker A

in the stock I mentioned before Nvidia and this is just a a nice interview he gives some macro perspectives uh perspective uh he has a good book recommendation I haven't read it yet but I will uh and it's just an overall cool

Speaker A

ETFs I've mentioned can be part of a strategy. Using AI, so something like ChatGPT or the newest iterations of what is coming, you can use that as not as an advisor necessarily, but you could obviously ask that AI tool, like, hey, you know, how did the greats do this? Or what is generally good practice? What should I avoid? Etc. How do fees work? Etc.

Speaker A

asset is going to go up and everything aligns then why not own you know as much as you can and that's a perspective that we generally you know do not get but he's obviously extremely successful and has made some brilliant trades over the

Speaker A

You can find stuff on Investopedia, but maybe you could get a little bit more creative in that sense. But I would be a big proponent of, you know, learning, trying to learn from the greatest in the game. At least that's how, you know, at least partially how I go about it as well, is like, okay, there are tons of people that are way smarter than I am, way more experienced, and I want to know how they did it.

Speaker A

research uh growing your uh the amount of knowledge that you have and bringing their perspectives into your own into your own thinking um and yeah Howard Marx I I really love this podcast so it's also on Spotify a

Speaker A

Like, you know, how can you get to a level where you have tremendous financial freedom or such a huge company or whatever, and you just like, you know, look at how they did it, right? And nowadays obviously it's more and more transparent, and that's why again have a Twitter account because a lot of them are on Twitter sharing their thought processes, etc.

Speaker A

of people look at macro circumstances Howard Marx isn't necessarily a fan of that so what goes on globally with the currency markets like politically this whole macro Global thing he's not such a big fan of that and he explains why uh and it's really

Speaker A

You will learn so, so much. Investing strategies, just read through the Investopedia article. I'm going to keep this short, as I said. Drunken Miller recently took a big position in the stock I mentioned before, Nvidia, and this is just a nice interview. He gives some macro perspectives, perspective. He has a good book recommendation. I haven't read it yet, but I will.

Speaker A

people that just don't really believe in trading in that sense like very like large successful investors again make up our own minds about uh what works and what doesn't work next up we have Melody Hobson I hadn't heard of her before uh

Speaker A

And it's just an overall cool figure, and he's the guy that said, you know, if everything aligns and you know what you're doing, then at a certain point in time, you know, you cannot own enough of an asset if you are convinced that this asset is going to go up and everything aligns. Then why not own as much as you can?

Speaker A

Warren Buffett has often said that people will be better off just put their money in stock index funds rather than people who are picking stocks as your firm often does you pick stocks so what do you say to Warren about that well

Speaker A

And that's a perspective that we generally, you know, do not get, but he's obviously extremely successful and has made some brilliant trades over the years. So it's a good figure to be watching.

Speaker A

inefficiency is in areas that are the that are overlooked misunderstood people don't follow it very well and so that's smaller companies they tend to be less widely followed you also see that inefficiency in international markets that's where we work and live at Ariel

Speaker A

Howard Marks next up, so different format, podcast, 53 minutes. Don't like, well, if you're discouraged by 53 minutes of podcast, then, well, you know, like really, this is what this game is about: research, growing your amount of knowledge that you have, and bringing their perspectives into your own thinking.

Speaker A

would say um so what she said is like exploiting inefficiencies and that's where we want to look at uh as Traders as well but as investors as well and it simply means that finding the opportunities not entirely it means more than that but

Speaker A

And yeah, Howard Marks, I really love this podcast. So it's also on Spotify, a whole selection of his memos. So he writes his stuff, his experience to his investors, etc., or just in general about investing.

Speaker A

example there that there's really structurally undervalued and in that sense you can you know obviously make more returns than the average of nine to eleven percent uh that the s p has historically given um about the s p 9 to 11 metric I have

Speaker A

And this just really explains a very solid view of how to look at markets, and especially, for example, a lot of people look at macro circumstances. Howard Marks isn't necessarily a fan of that, so what goes on globally wi—

Speaker A

are actually going to be a dead market right so that we either stay ranging So within a certain price level for the next 10 years and that there's not that much growth and if you combine it with the high inflation that we have it's

Speaker A

like okay you know index investing has always been a thing to do but it's become so popular that um you know everybody knows about this is is is is everybody already invested like are the men are the majority of

Speaker A

people that are basically investing already doing that like these are questions that we need to ask and when we get to technical analysis I can show you some price charts that actually show like hey stock markets could be in not

Speaker A

trouble but like it could be that we are not going to make that 90 to 10 9 to 11 uh return on a yearly basis in the next 10 years so uh and yeah this is why important to

Speaker A

you know do your own research and if somebody like Stanley druckenmiller says that then well it's really something to pay attention to and not just blindly buy the s p and think like I'm going to buy stocks because stocks are going to

Speaker A

invest for are good Investments uh and it's going to go up always right who says that that is true tomorrow let's go back before I go on another lengthy rent again um okay so yeah cool interview uh lots

Speaker A

to learn again in the workplace a year we have uh Ray dalio again so yeah it's another conversation and again to get to form your own perspective it just really helps to get other people's perspective from different uh from different angles

Speaker A

and that's why we have these conversations and then why not listen to how the grades do it what they think about how they think um is probably the most important like how do they look at this game how do they play this game

Speaker A

what is their decision making or what is their risk management right their risk tolerance um fascinating stuff then Source somebody uh Balaji was a super famous guy by the way uh very well respected so if you think that this is a

Speaker A

totally ridiculous claim well they're you know um a kind of yes but kind of there's a deeper message uh behind this and so this has everything to do with you know the way or the direction that the economy is heading into Kathy Wood from

Speaker A

arkhenfest she is also really legendary I know she's gotten some Heath recently but she's like an absolute you know independent thinker and she was one of the first watch I think she was the first person besides probably Elon Musk who really valued

Speaker A

Tesla uh at what it's you know like at a proper value for for the future because she saw where the company was going and rather than it being an electric car company she saw that it was uh autonomous vehicles it was uh you know

Speaker A

as a software company it's it's just completely different so she had a different way of looking at Tesla and they made a lot of money on on Tesla for that reason Balaji is very well respected as I said huge amount of

Speaker A

following on Twitter and he um you know claimed that Bitcoin would reach a million dollars in 90 days this is more than 90 days ago um obviously it didn't do that but that was not the point of the thing what the

Speaker A

point was well if you're into that you can listen to this conversation but it is it does go in a little bit more deeper um so it's not mandatory but if you you know wanted extra uh that extra punch uh

Speaker A

you know that one another punch for me obviously but uh you know this the extra juice let's use that word then this is your source okay so I think that is uh it for investing I think we've uh you know supplied like a

Speaker A

ton of material to read and to listen to and I think you've got a ton to think about as well and again I mentioned it creativity that's really what this is all about and the more you have learned

Speaker A

about the game the more creative you can get right the more tools that you're disposal you'll have and the result of that is that you're just going to be a better Market participant you are going to outperform this 9 to 11 on a yearly

Speaker A

basis and there's an absolutely no reason why you cannot really structurally outperform that but actually reach uh you know very very decent uh levels of return on a yearly basis but it does require hard work all these people they didn't get there by uh

Speaker A

you know sitting on their hands or or just you know uh throwing money at the next meme coin um you know it does require higher work dedication but it's also much fun and it's really uh it it helps you think and look at the

Speaker A

way at the world in a certain way and it makes you just All the Wiser so hopefully this week was interesting we'll see each other next week and we're going to jump into analysis like I said deeper and deeper uh it's gonna be

Speaker A

heavier um but yeah we're actually going to make some practical steps at okay how do we actually look at markets how do we identify if something is uh properly valued undervalued overvalued what can we do with that information super

Speaker A

awesome I will see you in the next video

Topics:investing strategiesdiversificationdollar cost averagingindex investingcopy tradingsocial investingAI in investingETFsbillionaire investorsrisk management

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