Does Following the Careers of Stock Market Legends Help Average Investors?

How does watching stock market legends help you.

In the past four articles I have given a brief bio and overview of the investing strategies of various investors who fall into the category of legends. Every one of them is a billionaire — some many times over — and most have come to their expertise and wealth through the most traditional of Wall Street institutions.

As average retail investors it is tremendously entertaining to follow the exploits of these men, seeing what deals and intrigues they are involved in, but a serious question has to be asked, Can studying their careers and investing strategies help us with our investing?

The short answer to that question is No, and the long answer is, Well, possibly, but probably not, but maybe!

The fact of the matter is, there is very little that these legends do in their investing process that the average investor can replicate. The hedge funds that they run have huge staffs full of analysts, statisticians, strategic planners, math quants, and brokers. And all of them are the best of the best in their profession.

With that much infrastructure in place they can comb through investing opportunities in all corners of the stock market and then analyze them top-down, bottom-up, technically, fundamentally, in relation to the economy, market, and their individual sector. They just have the analytical fire power us mere mortals don’t.

In addition, someone like Carl Icahn, George Soros, or Steve Cohen can call up the CEO of a company they are thinking of investing in and have a sit down just to see how things are going. It may not be insider info — or it may be — but either way it is access that is not available to the general investing public.

So other than for entertainment value — which arguably might be reason enough — what does following the exploits of market legends teach us about investing?

One important lesson we can learn is that everyone is fallible and has their setbacks in the market. Each of the legends I profiled have had deals go wrong, issues with regulators, or losing streaks. But in all cases they persevered and ended up coming back stronger than ever. That is a trait that every retail investor can learn from.

But perhaps the best lesson we can learn from them is that no matter what size portfolio you are working with in the market you always have to focus on risk first. You can’t make a billion dollars unless you first make a hundred, then a thousand, then a million, and the way you make progressively bigger profits is to stay in the game and get better at it.

And if you don’t have the funds to stay in the game, you are out. These market legends know that, and that is why they always focus first on what they can lose, not what they can win. That is a key trait in their success and something that every investor, no matter what skill level or account size, can learn from.

Check out the whole Legends series;

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