The "Witch of Wall Street's" Timeless Investment Wisdom

In the late 19th and early 20th centuries, Hetty Green, known as the "Witch of Wall Street," amassed a fortune that would make her one of the richest women in the world. Her investment philosophy, based on simple yet powerful principles, remains relevant and timeless in today's market. By understanding and applying her wisdom, investors can navigate today's high valuation ratios and make informed decisions.



Green's investment philosophy can be summarized in two golden rules: "I buy when things are low and no one wants them. I keep them until they go up and people are crazy to get them," and "There is no great secret in fortune making. All you do is buy cheap and sell dear, act with thrift and shrewdness, and be persistent." These principles emphasize the importance of buying undervalued assets and maintaining a long-term perspective.

In today's market, characterized by high valuation ratios such as 30 times trailing earnings, 21 to 22 times projected earnings, a CAPE ratio of 38, and a market cap to GDP ratio of 200%, investors can still apply Green's philosophy by focusing on undervalued assets. Despite the overall market's high valuation, there are opportunities to find individual stocks or sectors trading at discounted prices.

Green's approach to risk management, such as insisting on tangible collateral and maintaining substantial liquid reserves, is also relevant today. By securing loans with tangible assets and keeping a portion of their portfolio in cash or cash equivalents, investors can mitigate risk and take advantage of opportunities that arise during market downturns or periods of uncertainty.



Moreover, Green's ability to remain rational during market panics can be cultivated by today's investors. By maintaining a long-term perspective, staying informed, practicing emotional detachment, developing a clear investment strategy, and learning from history, investors can remain calm and make more rational decisions during market downturns.

In conclusion, the "Witch of Wall Street's" timeless investment wisdom offers valuable insights for today's investors. By applying her principles of buying low and selling high, managing risk, and maintaining emotional discipline, investors can navigate today's high valuation ratios and make informed decisions. As Green herself said, "There is no great secret in fortune making. All you do is buy cheap and sell dear, act with thrift and shrewdness, and be persistent."