Money Rehab with Nicole Lapin - Invest Like the Best: Three Pro Tips from Famed Investors Ray Dalio, Warren Buffett, and Michael Burry

Episode Date: July 9, 2024

Want to invest like the best? Today, Nicole shares tips from three of the greatest investors of our time: Ray Dalio, Warren Buffett, and Michael Burry. All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Public Investing offers a High-Yield Cash Account where funds from this account are automatically deposited into partner banks where they earn interest and are eligible for FDIC insurance; Public Investing is not a bank. Brokerage services for alternative assets are offered by Dalmore Group, LLC, member FINRA & SIPC. Brokerage services for treasury accounts offering 6-month T-Bills are offered by Jiko Securities, Inc., member FINRA & SIPC. Banking services are offered by Jiko Bank, a division of Mid-Central National Bank. Securities investments: Not FDIC Insured; No Bank Guarantee; May Lose Value.  Brokerage services for Regulation A securities are offered through Dalmore Group, LLC, member FINRA & SIPC. Risks at public.com/disclosures/alts-risk-and-conflict-of-interest-disclosure See public.com/#disclosures-main for more information.

Money rehabbers, you get it. When you're trying to have it all, you end up doing a lot of juggling. You have to balance your work, your friends, and everything in between. So when it comes to your finances, the last thing you need is more juggling. That's where Bank of America steps in. With Bank of America, you can manage your banking, borrowing, and even investing all in one place. Their digital tools bring everything together under one roof, giving you a clear view of your finances whenever you need it. Plus, with Bank of America's wealth of expert guidance available at any time, you can feel confident that your

money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. Are you sick of hearing my voice yet? Never, right? Well, I thought just in case I'd switch it up a little. And instead of hearing my favorite financial tips and tricks, I'd bring you some faves from three of the greatest investors of our time, Ray Dalio, Warren Buffett, and Michael Burry. For each of these MVPs,

I'm going to share one of their famous pieces of financial advice that has stood the test of time. Number one, the all-weather portfolio by Ray Dalio. Ray Dalio is the founder of Bridgewater Associates, one of the largest and most successful hedge funds in the world. He's a highly influential figure in finance, but his thing is a talent for analyzing economic cycles and creating investment strategies around that analysis. One of his most famous strategies is called the all-weather portfolio. Think of this as a recipe for an investing portfolio. Dalio has analyzed historic stock market data so that he could put together the most promising ingredients in a recipe at

the ratios that make the most sense. But instead of flour and sugar, Dalio's recipe calls for 40% long-term U.S. bonds, so those are bonds that mature in 20-plus years, 15% intermediate-term U.S. bonds, so those are bonds with a maturity of 7 to 10 years, 30% in stocks, 7.5% in gold, and 7.5% in commodities. He calls it the all-weather portfolio because it's designed to perform relatively well under all economic conditions, including recessions. So when listeners ask me about diversification, especially if they have some 2008 financial crisis trauma and they're skittish around financial markets, I tell them about this portfolio. Number two, invest like Warren Buffett

and pick low-cost S&P 500 index funds. Warren Buffett is the CEO of Berkshire Hathaway and one of the most successful investors of our time. He's nicknamed the Oracle of Omaha, which is a hilarious visual and kind of a weird flex, but he is renowned for his value investing strategy, which focuses on buying undervalued companies with strong fundamentals and holding them for a long time. His disciplined approach and impressive track record have made him a revered figure in the investing world, with many looking to him for wisdom and guidance. One of Buffett's most famous pieces of advice for individual investors is to invest in low-cost S&P 500 index funds. If you've been on your money rehab game for a while

now, you know that this is my investing jam too. In case you need a little refresher though, an index fund is a type of mutual fund or exchange-traded fund designed to replicate the performance of a specific index. The S&P 500 is an index that aims to mirror the movements of the market as a whole. By investing in an index fund, you're essentially buying a little piece of every one of those companies in that index. This diversifies your investment across many companies and sectors, reducing your risk. Buffett's endorsement of index funds is rooted in the idea that most investors, even the pros, struggle to consistently outperform the market. Index funds offer broad market exposure low operating expenses

and low portfolio turnover which translates into lower costs for you over time these funds can provide solid returns with less effort and lower risk compared to trying to pick individual winners buffett himself has instructed the trustee of his estate to invest 90% of his wife's inheritance in low-cost S&P 500 index funds. So if that isn't a ringing endorsement, I'm not sure what is. Number three, look for the bigger upside like Michael Burry. With this one, we're diving into the mind of one of the most intriguing and sometimes controversial figures in the financial world, Michael Burry. If you haven't heard of him, I got you. If you have, you'll know why we're paying attention to his advice. Michael Burry is the investor who famously predicted the 2008

housing market crash and was portrayed by Christian Bale in The Big Short. He is known for his deep analysis and often contrarian views. So when Burry speaks, it is wise to listen. Michael Burry has a knack for spotting asymmetrical risk-reward scenarios, situations where the potential upside far outweighs the downside. In finance speak, this means finding investments where the potential gains are significantly higher than the potential losses. Burry's famous bet against the housing market was precisely this. He realized that the downside was limited, while the upside was massive if the housing bubble burst. To apply this advice, look for investments where the risk is minimized but the reward potential

is high. For example, undervalued stocks can offer big returns if you've done your homework and understand why they're mispriced. The key is thorough research and a clear understanding of the risk involved. This approach isn't about playing it safe. It's about making calculated calculated strategic moves where the odds are in your favor. For today's tip, you can take straight to the bank. Dalio, Buffett, and Burry all write with some frequency about their takes on the stock market. These are some of the brightest minds in investing right now, so when they talk, we should definitely listen. I subscribe to updates from all of their websites so I can incorporate their latest thinking into my investing moves and advice for this show. If you're looking for some reading, I honestly can't call it light reading, but it is reading, check out their

writing or set a Google alert for their names. A Google alert won't turn up every new piece of writing Buffett does, but it will tell you when CNBC, let's say, picks up one of his investing hot takes in an article. And if that's more your jam, that's valuable too. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Levoy. Our researcher is Emily Holmes.

Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at moneynews and TikTok at moneynewsnetwork for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.