you were to look at the richest people in the world, there tends to be a few women, in the early 1900’s one woman’s name would have stood out – Hetty Green. Over the years, she increased her wealth to today’s equivalent of over $ 2 billion. Hetty in business was a titan, but in personal life lived in modest surroundings and dressed in black. Her story in the book The Richest Woman in America – Hetty Green in the Gilded Age by Janet Wallach, Doubleday, 2012 is an interesting read on a number of accounts. Hetty was an interesting person, she lived and prospered as the US turned  into an industrial power which the book describes. Hetty also learned early about the power of compound interest and receiving dividends – her largest investments were the railroads and mortgages and/or real estate.

The growth of railroads was an interesting time in the US from little to crossing the US.  To build the railroads – governments gave free land, which the railroads sold bonds at high interest rates – European money bought the bonds due to the high interest rates being offered and railroads were built. After a few years, too many railroads were built, some went bankrupt which threw financial markets around the world in a decline, then reorganizations happened and the process was repeated. The events of the past few years are remarkably similar to what happen in the 1870s. In this landscape, Hetty managed to buy the good railroads when the prices were down and sell when the prices were up.  How did she do this on a regular basis?

Some of her wisdom is

Before deciding on an investment, seek out every kind of information about it. (investigate and do your homework)

In business, generally do not close a bargain until you have reflected on it overnight or Never be in a Hurry to get rich.(if it is great deal today, it will be a great deal tomorrow – take your time)

Before making a deal, if anyone is fool enough to offer you the full amount, take it. If you are offered less, tell the person you will give an answer in the morning. Think about the matter over carefully in the evening. If you decide that it will be to your advantage to accept the offer, say so the next day.  (what is your best interest? remember it is easier to lose money than make it)

Common sense is the secret of making money.

When good things are so low that no one wants them, I buy them and lay them away; when owing to some new development, they go up and my shares are needed that others will pay dearly for them, I am ready to sell. (if you buy quality, you can be patient and collect the dividends as time goes on)

I also buy when everyone wants to sell, and selling when everyone wants to buy.

If one can buy a good thing at a lower cost than it has ever sold for before, he may be fairly sure of getting it cheap.

(the above three imply some basic rules: being in cash is a good option; you must have regular income stream be it from dividends or interest payments as markets will go up and down – buying profitable companies when prices fall is a great buying opportunity; try to stay out of debt of keep it very manageable).

There are more questions than answers, till the next time – to raising questions.