The 7 Habits Of Highly Successful Investors: A Hedge Fund Tribute

When I tried to secure a deal for my book, Damsel in Distressed, I faced innumerable rejections from agents who insisted it should be a self-help guide. “Write something useful already!” they admonished me. But all I was after were some cheap laughs, and that did not land me on the New York Bestsellers’ List, did it? So it is with sincere contrition and unwavering hope that I offer these 7 powerful habits from highly successful investors. You know who you are.

1- They Speak Catchy

Guilelessness and poor rhyming are the philological cornerstones of this language. Examples: Cash is trash. Focus on focus. Anticipate and precipitate. It’s the dialect of gravitas yet laconism, at once catch-all and limited, obscure to all but the chosen ones on Wall Street. The soundbites are recognizable, shareable, unifying like a secret handshake. Ah, you are one of us who are not a hero and don’t have an ego? Who are radically open-minded, bite the ass off a bear, don’t fight the Fed, put it to Powell?

Welcome to the tribe.

Some successful investors become so appallingly fluent in this mode of communication that it turns into a speech impediment. It sounds like they’re answering their physician with a jingle when asked about their bladder. Every now and then these soundbites do make sense, but that’s purely accidental. They’re primarily supposed to get stuck in your head, the way a catchy commercial slogan is. Which, of course, is not completely devoid of logic, seeing that an insurance salesman and a hedge fund manager have a lot in common. You’re in good hands.

2- They Hang On

And on. And on, and on, and then some. Their career is, in fact, interminable. Examples: Steve Schwarzman is still chairman and CEO of Blackstone at 75 years old. Ray Dalio, 73, stepped down as co-CIO of Bridgewater only days ago. Henry Kravis, 78, and George Roberts, 79, are still co-chairmen of KKR. Leon Cooperman, head of Omega Advisors, retired at 75. “I don't want to spend the rest of my life chasing the S&P 500,” he declared, I “know when to fold ‘em.” Really? He was half a year older than the average life expectancy for men in the U.S.

Successful investors reign for so long that they give Queen Elizabeth II a run for her money. To be fair though, Her Majesty had a mostly representational role. Perhaps they could do the same. Practice gyrating your right hand with a stationary forearm! Make small talk! Kiss babies! Throw a jubilee!

3- They Are Sportsmen

I am not suggesting that they play a sport. I mean that they own a team. Having a team is the financial equivalent of a nobiliary particle. One is necessarily of a higher extraction with a team attached to one’s name. Sound it out: William DeWitt-Cardinals of Saint Louis. David Tepper de la Panthers-Carolina. Steve Cohen Von Mets.

Yet these teams are not of the aristocratic kinds. Not for the successful investors, the sponsorship of polo, croquet, or sailing. They favor the blue-collar games, the common folks’ pastimes, the kind of spectacles that entice the adoring mass to buy tickets, cheap swag, and junk food. Successful investors enjoy entertaining plebeians with games that celebrate their victory over the market, mark the completion of a hostile merger, sanctify their leadership, and incidentally flaunt their money. They’re not just your run-of-the-mill patricians. They are kings, they are tsars, they are emperors! The team is their Roman triumphus.

4- They Pen A Bible

I know, it is an exaggeration to claim that they wrote the Bible. Only Ray Dalio did. His Principles are to investing what Moses’s ten commandments are to western religion. Steve Schwartzman actually wrote the Tripitaka. He is the Buddha of private equity, leading you down the enlightened path in Pursuit of Excellence (and What It Takes).

When they don’t write themselves, successful investors have apostles to proselytize their message far and wide. Like Jack Schwager, the prolific author of Market Wizards: five books over thirty years of publication extolling seventy-one traders! Even one woman!

Successful investors are the archetype of humanity. “What makes a man?” muses Jay Smith in the foreword of his biography of Bill Ackman: The Life of a Giant. I hesitate to publicize this book to my readers, but then again who isn't unsettled by this essential metaphysical question? Who hasn't secretly wondered about the mythological life of a giant? And who truly thinks Bill Ackman is the answer to either question?

5- They Think Big

The beauty of being a highly successful investor is that there is no constraint on your ideas. Most of us have dumb ideas on a regular basis but either we don’t have the means to implement them, or someone tells us they are stupid. Or both. Maybe you thought that it would be neat to, say, accumulate mega-mansions on a man-made atoll certain to be submerged within decades, or buy an original copy of the Constitution at twice the auction estimate because your son wanted it. Then you remembered you should first pay the kid’s school tuition, or a friend pronounced you a raving lunatic, and it all stayed at a rather exploratory stage.

When the mega-rich have mega-dumb ideas, they go through, unbridled. The check and balance system of absurdity no longer applies. Examples: a 20,000 square foot house with ten bedrooms and seventeen bathrooms. Yes, I too raised an eyebrow at the ratio: is this a home or a geriatric center? Or a 6,000-acre estate in Maryland that includes three islands shaped into the initials PTJ, for Paul Tudor Jones because, well, he owns them. All capital ideas.

6- Their Name is Warren

Business Week’s cover featured Eddie Lampert in 2004 as “The next Warren Buffet?”. In 2015, Forbes splashed a cute-as-a-button Bill Ackman with the tender heading “Baby Buffet”. In 2021, Chamath Palihapitiya (who? you rightly ask) took over the Buffett nomenclature. In fact, I believe there was a guy who thought of himself as the new Warren Buffett before Buffett was born. It is hard to figure out if it’s a tedious media routine or a public relations stunt. That is, except for Chamath Palihapitiya (Google him already) who is a self-proclaimed new Buffett.

Existentially, one is never anyone else, nor should they want to be when that someone lives in Nebraska and dines on hamburgers and Coca-Cola. That is not a marketing strategy, but a psychotic disorder wrapped in a poor diet. Then there is the small detail of needing a stellar performance track record. In the end, Eddie Lampert presided over the merger of Kmart and Sears, the biggest retail failures of all time. Palihapitiya’s six SPACs took public a variety of businesses of which stocks are down, on average, over 60% from IPO prices. As to Bill Ackman, well, let me just quote Magritte: Ceci n’est pas un Buffett.

7- They Are Male.

That one doesn’t need an explanation. You simply must get into the habit of being a man.