Here's a piece of investment advice your parents aren't likely to give you:
“I’d buy cocaine rather than buy that s---”
That was billionaire lawyer Joe Jamail talking about investing in hedge funds. You'll find wisdom from him, and nine other billionaires, in a Bloomberg Markets magazine in a piece called Advice From Billionaires by Matthew G. Miller and Peter Newcomb. We have the highlights for you right here.
While no investor likes to run with the herd, you may want to take their insights seriously, because 2012 doesn't look like its going to be any easier for investing than 2011 has been.
In a nutshell, these billionaires are thinking that Europe's going down, hedge funds can be very dangerous, and the dollar is still the safest bet in the world.
But their advice isn't just for navigating bad times. If you do happen to make a million, one billionaire, Mikhail Prokhorov, has an idea on what you should do with it: "spend it with pleasure."
For more you'll have to read on below :
Eli Broad
Broad started out building houses and ended up buying and selling insurance companies. Most notably, he founded Sun Life Insurance Co. of America Inc to AIG in 1999 for $18 billion. Now he's a Los Angeles society figure with an impressive modern art collection and a charitable foundation (The Broad Foundation) that handles assets of $2.1 billion.
What's the best advice he ever got? Don't bet the farm.
Where would he invest a million dollars? "High-quality multinational consumer companies such as Procter & Gamble co., Coca-Cola co., Kraft Foods inc. and Johnson & Johnson."
Tidbit: He thinks the dollar will remain strong but the euro will tank in 2012. As for hedge funds, he likes funds and managers with good long term track records like Seth Klarman Baupost Group LLC.
Patrick Soon-Shiong
Soon-Shiong was the first person to perform a full pancreas transplant at the UCLA medical school in 1991. After that he left and co-founded Vivo RX Pharmaceuticals and co-created breast cancer treatment Abraxane. He now has a stake in over 30 companies and a minority share in the LA Lakers—an investment he says is better than gold.
What's the best advice he ever got? "Invest in yourself and the people you believe in."
Where would he invest a million dollars? "The most important thing is not to lose money right now."
Tidbit: Gold is an "both a bubble and an enigma" but not an opportunity.
Peter Hargreaves
Hargreaves has a 32.2% stake in the biggest retail broker in the UK, Hargreaves Landsown Plc, he co-founded the company in 1981. Now he has 388,000 clients and $35.7 billion under management.
What would you do with $1 million? Half in Norwegian krone, half in Singapore dollars.
In terms of fixed income investments? Hargreaves likes German bonds for the currency play when the euro tanks.
Tidbit: Hargreaves is an avid gardener.
Randall J. Kirk
Kirk's venture fund, Third Security LLC, has made major money on biotech firms. In 2007 he score his biggest deal when he sold New River Pharmaceuticals for $2.6 billion— out of that deal, he got $1.2 billion for himself. He's been doing well ever since. Now he lives in California, Connecticut, Virginia and Florida. When he's not making deals, he's laying down electronic music tracks in his recording studio.
What's the best advice he ever got? "Good deals are like bus stops, there's one of every corner." Told to me by Red Robertson of Grundy, Virginia, who invested in my first deal. The advice illustrated not so interested in my deal as in my dedication to it. One invests in the guy behind the deal, above all else."
Tidbit: Would he buy a hot-shot tech IPO on the secondary market before it went public? "Only if they would participate as a judge in a Keynsian beauty contest. I am not one of those people."
Mikhail Prokhorov
Prokhorov is known for owning the New Jersey Nets and leading a decadent lifestyle. He started out by selling his 25% stake in OAO GMK Norilsk Nickel, the world's biggest nickel producer. That netted him $5 billion and 17% of aluminum maker United Co. Russia.
What's the best advice he ever got? Keep your back straight and don't fidget — a Russia proverb.
Three economic indicators that influence your investments? "German IFO data on business business
expectations are best on global manufacturing. U.S. conference board data are the top measure of American consumer confidence. Chinese PMI manufacturing data are good for china’s growth and
exports. in emerging markets, inflation, budget deficit, production growth index and retail sales are key."
Tidbit: A money manager Prokhorov would trust with his entire portfolio? "Mikhail Prokhorov...I sign every check myself."
Menin Teixeira de Souza
Teixeira de Souza made his money building homes for low-income Brazilians, founding MRV Engenharia &
Participacoes SA, Brazil’s fifth-largest home builder by revenue, in the 1970s. He still owns 32% of the company and lives in Belo Horizonte, Brazil.
What's the best advice he ever got? The best was buying Brazilian C bonds when they were trading at 40 cents on the dollar. The securities, issued in the 1990s, traded at par in 2005 when the government bought back the last of them.
Where would he invest a million dollars? Brazilian investment-grade bonds.
Tidbit: The economic indicators that influence him the most are the S&P 500 and the US dollar versus the real exchange rate.
John Paul DeJoria
In 1980 DeJoria invest in a friends hair care company, Paul Mitchell. Now it's generates $1 billion of revenue annually. DeJoria wisely took his earning from that investment and co-founded Patron tequila.
What's the best advice he ever got? How to buy a put, told to DeJoria by a woman named Rebecca.
Where would he invest a million dollars? "25% percent in gold, 25 percent in silver, 25 percent in NYSE blue-chip stocks that pay a dividend and 25 percent between Asian and European blue chips that pay a dividend."
Tidbit: Beauty salons are the best economic indicator. Typically, customers will visit every 6 weeks; in downturns that drops to every 8 weeks. When it goes up again, things are on the mend.
Donald Trump
Everyone knows "The Donald." From real estate to television, he's managed to turn his last name into a brand synonymous with business. He also claims to have a 3 handicap.
Best advice? "My father, Fred C. Trump, told me to know everything you can about what you’re doing. He believed in being thorough and was wary of blind spots."
Where would he invest a million dollars? "Equities, corporate bonds and, if you know what you’re doing, purchasing foreclosed houses from banks and demanding long-term financing at favorable interest rate."
Tidbit: Trump's best investment was buying 40 Wall Street. His worst was buying a yacht.
Alisher Usmanov
Usmanov is the oligarch of Russia's oligarchs. He runs Gazprom invest holding, the investment arm of Russia's state gas monopoly. His primary asset is a 45% stake Mettalloinvest, Russia's largest iron ore producer.
When buying stocks: "First of all I trust my own instinct, experience that I gained over years and feeling when the moment is right for buying shares. That is what one calls intuition."
On Currencies: "If EU leaders don’t make a clear decision on how to exit the crisis, then it’s likely we will see bankruptcies by some member states. The euro will suffer the most. This in itself wouldn’t be all bad for the European economy, as pillars such as Germany will get support for exports."
Tidbit: He's an investor in Groupon and Facebook. He also owns a 29% stake in the English Premier League's Arsenal with a partner.
Joe Jamail
They call Jamail "the King of Torts." He got the name by representing Penzoil in a lawsuit against Texaco in 1985. That trial alone earned him $335 million. Now, at age 86, he's into personal injury and malfeasance cases. In his career, he's made about $13 billion.
Best investing advice? "My dad told me. 'Don't buy any g_dd_mn stocks, OK?' He had a chain of grocery stores. He liked the cash coming in."
If he does buy stocks though..."I usually don't invest much in the market directly. I always look for price returns rather than income because I make enough f__king money out of this sue shop, my law office. Most of my stuff is in bonds."
Tidbit: His best investment was a law degree, and his worst was in airline stocks. Now, he suggests, if you have $1 million, hide it under your mattress.
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