More Financial Lessons from Famous Dads

Dads take care of their kids in so many ways, and passing along financial wisdom is just one. As a follow-up to one of our previous blogs, and in honor of Father's Day, we wanted to share more financial lessons from famous dads.

Famous or not, dads are full of great advice, so there's no better time to share some of their greatest tidbits. Have you followed any of the advice offered by these celebrity dads?

Make Sense of Things for Yourself

Ray Dalio is an American billionaire, investor, and hedge fund manager and has served as co-chief investment officer of the world's largest hedge fund, Bridgewater Associates, since 1985. Throughout his career, he has dispensed lots of great career and investment advice and has even published a book on the topic called Principles: Life and Work, in which he "shares the unconventional principles that he's developed, refined, and used over the past forty years to create unique results in both life and business."¹

Dalio has so much great advice, but one great piece is to watch out for "fast talkers," or people who can assertively say things faster than you can assess them yourself. Dalio warns not to be intimidated by these people, both in life and in finance, and that you have the responsibility to make sense of things for yourself, rather than pretend you know what someone is saying just because they seem articulate and knowledgeable. This was an important lesson for his son, Paul Dalio, as he grew up with such an intelligent and business-savvy father.^2,3

Don't Follow the Crowd

The apple doesn't fall far from the Simons tree when it comes to being an intelligent investor. Jim Simons is another billionaire hedge fund manager and philanthropist. He is also the founder of Renaissance Technologies, a quantitative hedge fund based in New York. Jim has five children, including his son Nat Simons, who is also an American billionaire hedge fund manager and philanthropist and the founder of Meritage Group, an investment management firm managing over $12 billion in assets.^4,5

Nat and his siblings undoubtedly received a lot of great financial advice from their father. As a mathematician, Jim has always been interested in pattern recognition and quantitative models (he is known as the "Quant King"). Because of this, his most resounding financial advice is to not follow the crowd. Avoid the emotional rollercoaster and instead use mathematical and statistical modeling, measurement, and research to understand behavior (the basis behind quantitative analysis).^6,7

Have Alternate Investment Scenarios

George Soros is a Hungarian-American billionaire and the founder of the Open Society Foundations, a grantmaking network that financially supports civil society groups around the world, with a stated aim of advancing justice, education, public health, and independent media. George has five children, including Jonathan Soros, founder and chief executive officer of JS Capital Management LLC, a private investment firm, and Alexander Soros, chair of the Open Society Foundations.^8,9

Soros is known as being one of the most unconventional investors, and one piece of financial advice that he shares is to always come up with alternate scenarios for your investments because the financial markets are unpredictable. Rather than get attached to one scenario, have options, and shift your views as market conditions change.¹⁰

Save Like a Pessimist, Invest Like an Optimist

We couldn't have an article about famous dads without including the world's most famous tech pioneer, Bill Gates. Bill and Melinda French Gates have three children, and they have shared financial and life lessons with their children throughout their whole lives.

The famous inventor and businessman has shared many pieces of great advice over his career, but one that he continues to echo is, "Save like a pessimist, invest like an optimist." Put another way, Gates believes that you can be an optimist in the long run only if you're pessimistic enough to survive the short run. For example, since the day he started Microsoft, he has always insisted on having enough cash in the bank to keep the company alive for 12 months with no revenue coming in, and he has always been careful about growing the company too quickly.

Statistics show us that things are bound to go wrong, but in the long term, the market generally shifts toward progress, despite frequent setbacks. Gates understood that if he had his immediate bases covered, he could then think of long-term growth.¹¹

These are just some of the many great financial tidbits fathers have passed down to their children. We're lucky to have so much great advice from our fathers, famous or not.

As always, let us know if you have any questions.

Best,

CRA Investment Committee

Matt Reynolds CPA, CFP®

Tom Reynolds, CPA

Robert T. Martin, CFA, CFP®

Gordon Shearer Jr., CFP®

Jeff Hilliard, CFP®, CRPC®

Joe McCaffrey, CFP®

Phillip Tompkins

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