The whaling heiress turned investing legend Hetty Green, born in 1834, earned her title as the \u201cWitch of Wall Street\u201d later in life by parading around in this unusual style\u2014and media portrayals of her \u201cmiserliness\u201d and bad temper only bolstered the narrative. But Green was much more than just Wall Street\u2019s witch. She was a savvy, disciplined investor who stepped in to save dozens of American traders and businesses when times were tough, even helping to rescue New York City after the panic of 1907, a financial crisis that ultimately led to the creation of the Federal Reserve System<\/a>.<\/p>\n Green pioneered what many today might see as a precursor to \u201cvalue investing.\u201d Decades before Warren Buffett\u2019s hero Benjamin Graham formally detailed the tenets of value investing in his 1949 book, Intelligent Investor<\/em>, the Witch of Wall Street was espousing many of the same ideas. Do your research, avoid overvalued stocks, know the difference between speculating and investing; these were all Hetty Green principles that Graham only described decades later.<\/p>\n The media in Green\u2019s time focused mainly on her eccentric and often unappetizing behaviors, including her testy feud with the city of Hoboken over a $2 dog license<\/a>, but the whaling heiress\u2019 transformation into a Wall Street value investing powerhouse in an age when women couldn\u2019t even vote is the more interesting\u2014and lesser known\u2014tale.<\/p>\n By the peak of her investing prowess in the early 1900s, Green was seen as a leading voice on Wall Street and had the respect of the likes of John Pierpont Morgan, the American financier who founded what is now JPMorgan Chase<\/a>. But although her life was undeniably complex and fascinating, Green\u2019s simple, but potent investing advice is her lasting legacy.<\/p>\n Knowing the difference between speculating and investing is one of the key principles of many of the world\u2019s greatest investors today. It\u2019s certainly a main tenet of Warren Buffett\u2019s disciplined investing philosophy. As the billionaire Berkshire Hathaway<\/a> CEO explained in his annual letter <\/a>to shareholders in 2000, speculators tend to focus \u201cnot on what an asset will produce but rather on what the next fellow will pay for it.\u201d\u00a0 That is to say, while investors buy assets based on the prospects of the underlying operations only after thorough research, speculators merely buy trendy assets hoping someone else will pay more for them at some point down the line.<\/p>\n About a century before Buffett explained this concept, and more than 50 years before \u201cthe father of value investing\u201d Graham did in his own works, Hetty Green detailed how she always avoided speculation. Green preferred to do her homework to truly understand the businesses she bought. \u201cBefore deciding on an investment, I seek out every kind of information about it,\u201d she said.<\/p>\n She also never chased popular trends or high-valued stocks, instead preferring to find a steady, predictable return on her investment.\u00a0 That\u2019s investing, not speculating\u2014and Green wanted everyone to know that.<\/p>\n \u201cOne thing, however, has been wrongly attributed to me, and that is speculating. I never speculate. Such stocks as belong to me were purchased simply as an investment, never on a margin,\u201d she once told reporters, according to a 2022 paper<\/a> by historian Mark Higgins.<\/p>\n For Green, the holy grail of investing was to find a company that was unloved, but still had steady earnings and the potential to recover. Just like Graham preached during his time, Green looked for assets that were trading at a discount to their intrinsic value\u2014much like what we would call \u201cvalue investing\u201d today. She also often pounced during times of economic stress when assets were selling at their cheapest.<\/p>\n \u201cI buy when things are low and no one wants them. I keep them, just as I keep a considerable number of diamonds on hand, until they go up and people are anxious to buy,\u201d Green was quoted saying in the 1905 book The Queen of Wall Street<\/em>.<\/p>\n Green used her decades of experience in industries from railroads to mining to decide which companies were apt to survive and which were likely to die when times were tough. But in general, her philosophy was to stick with what we would call \u201chigh quality\u201d companies today, or those that have strong earnings and reliable business models.<\/p>\n That\u2019s a tactic that is a little bit different than Graham\u2019s value investing approach. But it\u2019s right in line with what Warren Buffett\u2019s late right-hand man, Charlie Munger, helped bring to Berkshire Hathaway during his tenure. As Buffett now often says, Munger helped him discover that the best option for investors is often to look for \u201cwonderful companies at fair prices\u201d rather than fair companies at wonderful prices.<\/p>\n For Green, who learned this lesson on her own, there was still \u201cno secret to great fortune making.\u201d It was, and is, all about doing your research, trusting your strategy, and avoiding expensive mistakes. \u201cAll you have to do is buy cheap and sell dear, act with thrift and shrewdness and be persistent,\u201d she once said<\/a>.<\/p>\n Finally, Green was known as a great cheapskate for a reason: she believed saving was the only way to get ahead, a philosophy at odds with the way other wealthy New Yorkers behaved during the Gilded Age. \u201cNo person can invest unless he has the wherewithal. Most great fortunes have been started by men who saved and saved and saved, and finally had a few hundred or a few thousand dollars to invest whenever the opportunity should come,\u201d Green said<\/a> in a 1903 newspaper article.<\/p>\n Saving, looking for value, avoiding speculation; these principles might not sound profound, but that\u2019s only because many have become fundamental rules that today\u2019s investors live by.<\/p>\n Due to the often misogynistic coverage Green received during her life, along with a few aggravating eccentricities, she\u2019s remembered as the \u201cwitch\u201d of Wall Street. But this witch\u2019s pioneering investing strategies and willingness to stick to her investment\u2014and life\u2014philosophy even during the most trying of times are perhaps a more fitting lasting legacy.\u00a0As Charles Slack, the author of Green\u2019s biography, Hetty: The Genius and Madness of America\u2019s First Female Tycoon,<\/em> told Fortune<\/em>, what Green did so well was stick to her guns and use common sense, both in how she lived her life and in how she invested.<\/p>\n \u201cSimple ideas are very hard to stick to. And what a lot of the world does is to make things incredibly complex to give ourselves an easy way out,\u201d he said. \u201cShe, and I think this is what she shared with Warren Buffett and investors like him, she had a few steadfast principles and she stuck by them no matter what.\u201d<\/p>\n3 Buffett-like lessons from decades before he was born<\/h2>\n
Lesson #1: Don\u2019t speculate, invest<\/h3>\n
Lesson #2: Look for value and quality<\/h3>\n
Lesson #3: You can\u2019t invest\u2014or prepare for the worst\u2014if you don\u2019t save<\/h3>\n
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