Speaker 1: The very first thing that you probably think of when it comes to Bill Gates is nerdy businessman, you don’t necessarily think extremely smart investor yet. He is actually both. He amassed a big fortune by creating Microsoft, but he turned this big fortune into a massive fortune through extremely smart investing, obviously alongside his lead investor, Michael Larson. So in this video, we’re going to go over the tips and tricks that Bill Gates used to amass this fortune. If we look back over the past seven years, he achieved an annual average return of sixteen point five percent. Here’s how.
Speaker 2: You know, you you are an investor who is active in a lot of different arenas, how have you changed the way you look at the markets or changed anything you’re doing as an investor based on what we’ve seen with the Trump rally or based on what we’ve seen with interest rates to this point?
Speaker 3: No, I think the philosophy that Warren Buffet has put forward that if you can find great companies and invest in them, then the macroeconomics can go up and down. And the basic value of what you’re holding on to there will be maintained throughout that. And I have a team of people who manages that for me. They’ve done a really great job as we were in a long term oriented. And and don’t think that we understand the macro economics enough that we’re making bets that are specific to that piece. My best business decisions really have to do with picking people. You know, deciding to go into partnership with Paul Allen is is probably at the top of the list and then subsequently hiring a friend, Steve Ballmer, and having somebody who you totally trust, who’s totally committed, who shares your vision. And he has a little bit different set of skills and also acts as a check on you. You know, some of the ideas you come up with, you run by him because, you know, they’re going to say, hey, wait a minute. Have you thought about this and that? And just, you know, the benefit of sparking off of somebody who’s who’s got that kind of brilliance? It’s not only made it fun, but it’s really led to a lot of success of picking picking of partners is crucial.
Speaker 1: To win big, you sometimes need to take big risks. This is a direct quote from Bill Gates, and what he’s trying to say is that sometimes if you’re overly conservative with your investing style, you’re going to miss out on those high returns. Best example that I can give to you with this is OK, what are the companies that have done the best? Over the past decade? There have been those highly innovative technology companies, the likes of Netflix, which has gone up over 6500 percent over the past 10 years. The likes of Amazon, that’s gone up over 2000 percent or Apple over 1100 percent. A lot of people, if you invested in these stocks back in the day, they would say, oh, you’re taking a major risk. And yes, that’s true. You are taking a major risk. But you know what else? You’re taking on a massive opportunity, an opportunity to make extremely high profits and the thousands of percentage points. This is what Bill Gates is getting. That’s when he’s saying to one big you sometimes need to take big risks if you apply this to investing, don’t be too afraid to invest early and the likes of Tesla, Amazon, Netflix, etc. if you see tremendous upside in your stock. The thing you need to realize about a lot of investments is that inevitably you’re going to see a lot of ups and downs, you know, for all of those Tesla investors, they know exactly what I’m talking about. There’s been many times when everyone thought the stock was going to hell in a handbasket. When Elon Musk started tweeting about Tesla being taken private for 20, when he went on the Joe Rogan podcast and did some, hmm, subjectively naughty things, people were saying, Tesla, this electric car company, they’ve got no chance of making it. But those who stayed patient and saw the value of the company, wow, they made a great amount of profits. It doesn’t matter what type of investor you are. If you can’t handle the ups and the downs of the stock market, the vicissitudes, you should not be playing the game at all. But, you know, it’s the age old story. If you can handle those ups and downs over time, you will make a lot of money. Warren Buffett, he made ninety nine point seven per cent of his wealth after the age of 52. This was all due to patience and compound interest with time and smart investing in his portfolio just grew on itself like a snowball. But once it’s rolling, there’s no stopping getting bigger. However, you do need the patience to build that snowball in the first place. And that’s what Gates is getting at with this rule. One of the smartest investing decisions Bill Gates ever made was choosing to diversify and not have all of his wealth in Microsoft, you see before the huge technology bubble crash in the year 2000. He sold a deep amount of his Microsoft shares and he used that money to invest in other companies, the likes of Warren Buffett’s Berkshire Hathaway, Canadian National Railway Waste Management, and a bunch more stocks. This ensured that when the crash did occur, he was not entirely reliant on one technology stock for his entire net worth. He was diversified and did not get hit as badly. You see, right now, Bill Gates only has about 15 percent of his portfolio in Microsoft. Then he’s got 47 percent in Berkshire Hathaway, which in itself is extremely well diversified because it’s an investing company that buys a whole range of different stocks because of his diversification. Gates knows that even if one of US stocks fails and goes bust, his net worth is safe.
Speaker 3: In my view, global health, you know, you save lives for less than two thousand dollars per life saved, I think it’s a bargain. I’d like to buy more. And, you know, we’re making really good progress. And somebody has something that’s that’s more effective than that. Great. You have to be excited about this stuff. And I do think part of this fun is to draw people into the world of developing tools for Africa. And if you can get, you know, something that instead of lasting a shot that last three months goes to six months or instead of something that a doctor has to give a intramuscular injection, that it’s something they can just keep at home and apply themselves. These are actually concrete things that that may get considered. If you can get to that, then it’s so empowering to the woman. And so we have the the notion of investing in these kinds of products on the table, then some of these product profiles will appeal to particular investors. We have to help make sure this is a particularly good portfolio. And so if we just put one drug in this thing and put all the money on that, you know, then it might have a 50 50 chance and did it early stage. It might have a 50 50 chance of failure. Fortunately, you know, the pharmaceutical industry is also getting smarter about trying to move the risk down to the early stages. And so we’re this portfolio will pick things where the phase one type work has got us. So there’s a very high probability when this money comes in for the phase two or phase three work of very high probability of this thing succeeding.
Speaker 1: Another thing that you’re going to notice when you look at Gates’s portfolio, his investment strategy is that he invests in companies that he feels are going to make a difference. Waste management has second largest position. That’s a company that helps the world’s problem with waste, Wal-Mart. It serves Americans with food and goods, Canadian National Railway, a transport goods around North America. The companies that Gates invest in generally are having a big impact on society and thus long term, they grow as companies. Gates writes under his investment philosophy section for his foundation that we do guide the managers of the foundation’s endowments and voting proxies consistent with the principles of good governance and good managements. When instructing the investing managers Bill and Melinda also consider other issues beyond corporate profits, including the values that drive the foundation’s work so as not just purely profit investing. It’s also about companies that are adding positive value to the world. And guess what? Over the long term, that tends to pay off because as these companies end up growing big. So, you know, Gates hasn’t just grown into his wealth through luck or inheritance. He initially got it through building a massive business in Microsoft.
But then he grew it through smart investing and following these principles that have just gone over. But remember that these principles are for long term wealth and thus you have to stick to them closely. You can’t just follow one for a couple of months and then expect to become wealthy. No, it was the time and the discipline that Gates put in, which made him a great investor. And of course, a little bit of advice from the man himself, Warren Buffett, who Gates is good friends with. I do hope these principles help you with your long term investing returns.