The world often wants top investors and economists and strategists to give advice. But what’s the best financial advice that those great minds have received?
The Wall Street Journal posed that question to a number of top thinkers recently. The respondents include Nobel laureates Robert Shiller and William Sharpe, as well as investment gurus Carl Icahn and Seth Klarman. A few of the responses dealt specifically with not falling prey to short term thinking. “An investor should think like a business owner, not a renter,” said Morningstar CEO Joe Mansueto. “Most businesspeople don’t get up in the morning and ask whether they should sell their business that day. … They show patience and persistence and try to understand their underlying business better so they can earn the greatest return for the longest period of time.” Investors, he says, “are in many ways misled by stock-market volatility. The values of the underlying businesses just don’t change as quickly as stock prices do. You really don’t have to watch those changes hawklike day after day.”
Jane Mendillo, who heads up Harvard’s endowment, said “Take the long-term view”‘ was the best advice she ever received. “If you take the long-term view, you will see things others miss,” she said. “Nearly everyone thinks about next month, next quarter. Jack Meyer, who ran [the] Harvard endowment for 15 years, taught me that when you think about multiple years or even decades you see opportunities to create value others might not see, and you make different judgments today as a result.”