The Holy Grail of Investing: The World’s Greatest Investors Reveal Their Ultimate Strategies

Over the past ten years, I have had the privilege of authoring two #1 New York Times bestsellers on the topic of personal finance (Money: Master the Game and Unshakeable). They succeeded not because I am an expert in the field, but because I have one important thing… access!

Over four decades of work as a life and business strategist have earned me personal access to many of the world’s most brilliant financial minds, many of whom happen to also be fans of my work. From Alan Greenspan to Ray Dalio to the late Jack Bogle to Paul Tudor Jones and countless others, I’ve had the pleasure of sitting down with titans of investing to extract the tools, tactics, and mindset that anyone, at any stage of life, can—and should—apply in the quest for financial freedom. Their generosity of time and principles helped me form a trio of “playbooks,” and I encourage you to read the others if you have not already.

I began my deep dive into money mastery after the 2008 financial crisis when the world’s economy was on the brink of collapse due to the reckless behavior and greed of a relative few. Nobody escaped the economic pain, myself included. My phone rang off the hook as I tried to coach friends and family through job loss, home loss, and obliterated retirement plans. From the barber to the billionaire, the storm tore through everyone’s life with varying degrees of devastation.

Never one to be a victim of circumstance, I decided to take immediate action to become part of the solution. With a healthy dose of cynicism, I set out to answer the most important question facing a financially illiterate society…. Is the game still winnable? In the post–financial crisis world, could the typical investor win the game of investing? Could the average person become financially free even if they never sell a business, inherit a nest egg, or scratch a winning lottery ticket? After interviewing over fifty of the world’s most brilliant financial minds and boiling down hundreds of hours of interview recordings, the answer to the question was a resounding YES! Although the titans I interviewed shared very different approaches, they all agreed on certain immutable laws and steps the investor needs to take (and avoid) to win the game.

Although there are many, the four of the most common principles among these greats were as follows:

1. First, don’t lose. As Warren Buffett succinctly says, “Rule #1, don’t lose money. Rule #2, see rule #1.” If you lose 50 percent in a bad investment, you will need 100 percent return just to get back to even. One thing that all the most successful investors have in common is they know that they will indeed lose at times (yes, even Buffett). To mitigate this, they never get too far over their skis and risk too much on any one investment, which leads to the second principle…
2. Second is the core principle of asset allocation—i.e., spreading your assets among different types of investments with varying risk-reward ratios. When I sat down with the late David Swensen, the man who took over Yale’s hundred-year-old endowment and grew it from $1 billion to $31 billion, he explained that your asset allocation accounts for 90 percent of your investment returns! As you will learn, the ultra-high-net-worth and biggest institutional investors have a drastically different approach to asset allocation than the typical investor.
3. Third, wherever possible, look for opportunities with “asymmetric” risk reward. Simply put, these investors look for investments where the potential reward far exceeds the downside risk. My good friend, and legendary trader, Paul Tudor Jones will only place trades where he believes the risk/reward ratio is 5 to 1. He will risk $1 to make $5. This way he can be wrong more times than right and still succeed.
4. Fourth and final is the principle of diversification. You want to own a wide variety of investment types (stocks, bonds, real estate, private equity, private credit, etc.) across various asset classes, geographies, time frames, etc….

My guess is, if you are reading this book, you are NOT the average investor. You (or your clients) have likely accumulated enough of a financial foundation to move beyond these core tenets and add some additional fuel to your investing fire. As you will see in the pages ahead, alternative investments have generated outsized returns for the world’s most astute investors. For example, between 1986 and 2022, private equity as a whole has outperformed the S&P 500 by over five percentage points annually (9.2% compared to 14.28%). That’s a 50 percent plus greater return. Private credit, an alternative to bonds, has generated two to three times the income/yield.^I

It is undeniable that the smart money uses high-quality alternative investments as the engine for greater diversification and accelerated growth. This is what the titans of finance do with their own personal capital. I know because they’ve told me. Over decades, I have fostered ongoing relationships with these “masters of the financial universe.” For this book, we have interviewed a baker’s dozen, thirteen of the most successful alternative investment managers that have generated extraordinary, compounded returns rarely seen by the general public. Folks like…

• Robert F. Smith—Founder of Vista Equity Partners, Smith is considered the most successful enterprise software investor of all time, managing over $100 billion and generating outstanding returns relative to the company’s peers (over the past twenty-plus years). Vista’s portfolio spans more than eighty companies, with ninety thousand employees. As of March 2023, the portfolio companies that Vista owns generate over $25 billion in annual revenue!
• Bill Ford—A pioneer in the world of private equity, Ford has grown General Atlantic’s assets under management from $12 billion to more than $80 billion and expanded the firm’s global presence. Over its history, General Atlantic has invested more than $55 billion in over five hundred companies within technology, financial services, healthcare, and life sciences.
• Vinod Khosla—Founder of Khosla Ventures, Vinod Khosla is a legend in venture capital. His early stage investments in disruptive technology companies propelled him from an immigrant with little means to a self-made multibillionaire. He is famous for turning a $4 million investment in Juniper Networks into a $7 billion windfall for his investors.
• Michael B. Kim—The “Godfather of Asian Private Equity,” Kim has created the largest independent private equity firm in Asia, with a focus on China, Japan, and Korea. His astounding success for investors has also made him South Korea’s wealthiest man.
• David Sacks—Founder of Craft Ventures, cohost of the All In podcast and original member of the PayPal “mafia” with Elon Musk and Peter Thiel. Sacks has invested in over twenty unicorns, including Affirm, Airbnb, Eventbrite, Facebook, Houzz, Lyft, Palantir, Postmates, Slack, SpaceX, Twitter, and Uber.