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At first glance, it might not seem like a rap star born in Brooklyn in 1969 would have much in common with a professional investor from Omaha born in 1930. However, Shawn Carter, better known as Jay-Z, and Warren Buffett share a surprising number of similarities, as they discovered in a joint interview with Steve Forbes, founder of Forbes magazine.
They are both billionaires, for example, and both have extensive business portfolios ranging from candy stores to expensive champagne. Another point in common is that they both attribute part of their success to luck.
This is not just humility. It’s also a key part of the calculation that many successful investors like Carter and Buffett make before investing money.
Here’s how to employ the strategies they both use to grow their enormous wealth.
Investors often lack clear information, but still have to make decisions about where to allocate capital. To manage this uncertainty, they apply probabilistic thinking.
For example, data from Wealthfront suggests that your chances of losing money in the stock market can be reduced from 25.2% to virtually 0% by extending your holding time from one year to 20 years. If you look at a stock’s performance only annually, the swings up and down may surprise you and miss the big picture.
According to Wealthfront, it is best for an investor to hold a stock or fund for as long as possible.
One of the easiest ways to invest is to open a self-directed trading account with SoFi. This DIY approach allows you to invest commission-free, plus for a limited time, you can earn up to $3,000 in stocks when you fund a new account.
SoFi is designed to help you learn how to invest on the go, with real-time investing news, curated content, and the data you need to make smart decisions about the stocks that matter most to you.
Using a deep understanding of probability as a mental framework could help investors make critical decisions even outside of the stock market. However, there are ways to turn the odds in your favor, including seeking expert advice on alternative investment types.
Professional advisors, like those you can find through Advisor.com, can help you create a money management plan for all of your financial goals.
Advisor.com connects you with professionally vetted fiduciaries, financial advisors, and financial planners. All you have to do is answer a few questions and their algorithm will find the best options for you. You can then schedule a free consultation to decide if they are best suited to help you achieve your goals.
Read more: Warren Buffett used 8 solid, repeatable money rules to turn $9,800 into a $150 billion fortune. Start using them today to get rich (and stay rich)’
As you think probabilistically, you may realize that many factors are outside of your control. You can’t control stock market volatility, but you can control how and where you invest.
For example, Carter frequently mentions his brand of champagne, Armand de Brignac, under the nickname “Ace of Spades” in his songs. This ensured that when their songs were hits, champagne sales would follow. It finally reached an agreement with luxury beverage giant LVMH to secure distribution and unlock value in this company.
Meanwhile, Buffett has often mentioned how extensive his due diligence process is and how he reads “500 pages a day” to make better stock-picking decisions.
Both men recognize that luck and probability can only take you so far, but that talent and effort can tip the odds in your favor.
You can take a shortcut on this amount of effort with Moby.
The team of former analysts and hedge fund experts spend hundreds of hours each week combing through financial news and data to provide top-notch stock and cryptocurrency reports to keep you up to date on what’s moving the markets.
Moby’s superior research can help you reduce the guesswork when selecting stocks and exchange-traded funds (ETFs). Over four years, across nearly 400 stock picks, Moby’s recommendations have outperformed the S&P 500 by nearly 12%, on average.
For regular investors, the lesson is clear: do your research and take all variables into account while investing.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
