The elite money managers such as Ray Dalio, Warren Buffett and Howard Marks have been commenting on our current investing situation. We are in an odd place where the markets for now remain high while unemployment reaches crazy highs and many businesses are at their lowest earnings ever. In this post I reduce my conversations with hedge fund managers, and listening to the best investors to themes that have come up over and over again.

Risk

Define risk as how much of your investment you could lose long term rather than the volatility or the ups and downs of the market. A share of Walmart bouncing up and down with the market is a lot less risky over the long-term than an investment where you could double your money by tonight but might also get $0 back.

Luck

There is an element of luck to fund managers who are successful. Don’t count on people being lucky again. Skill is what counts in the long term, but it’s hard to tell skill from luck in the short term.

Go long term

Think about your investments for the long term. Investing over many years will give you an advantage over most investors who think about it in terms of a day to a few months out.

Fees

Ask about fees upfront — these will eat into your overall returns.

Nobody knows anything in a moment of crisis

In the heat of a crisis (9/11, Brexit, coronavirus) even the best managers don’t know what’s going on. They position themselves beforehand to react to market upsets and do their best to make sense of things as the situation evolves.

Mallika Paulraj is an investment specialist, equipping investors with essential knowledge to make confident, life changing decisions. You can download your own copy of Ten Timeless Principles From The World’s Greatest Investors here. Her book, How The Best Invest is on Amazon.

Keep up to date with current investment hacks with a subscription to her newsletter via her website.