Expert reveals how sensible it is to emulate star investors

Zwickau (ots) –

Michael Burry has enjoyed great fame since the film “The Big Short” at the latest and is seen as a role model. This is his third portfolio redesign: from January through March, he bought Alphabet, Meta and eight other stocks for $165 million. He once predicted the financial crisis and is now even betting against Apple. Many investors place great trust in him and would like to imitate him – but how sensible is it to buy everything from big investors?

“You can be inspired by star investors, but even they can’t predict the future. Blind emulation shouldn’t be a strategy – you have to deepen your own understanding of the stock market,” explains stock market expert Jens Rabe. In this guest article, he is happy to reveal what you can learn from large investors.

The star investor – what is that actually?

Investors who have made great profits in the past usually attain some fame. They quickly start talking about star investors. Of course, the question arises as to whether the level of awareness is also accompanied by a high level of competence. An example is Michael Burry. A few years ago, he managed not to act in panic during the financial crisis – but to make the right decisions that enabled him to build up his wealth. He bet on the market collapse and made a lot of money with this strategy.

Frank Thelen had a similar experience: Through his appearance on the television show “Die Höhle der Löwen”, he was portrayed as an entrepreneur and star investor. He has also been able to invest very successfully in the start-up show. On the basis of this and other media successes, he created the 10xDNA fund on September 1, 2021 – but this has been heavily criticized. Investors pay a management fee, with which Frank Thelen makes sales. Conversely, investors expect corresponding profits – which Thelen himself promised in the media. However, promises of this kind are considered dubious and have not been able to be kept in his fund so far, because the 10XDNA course has fallen sharply.

Can successful strategies be repeated?

In addition to Burry and Thelen, there are other star investors who have also made a big splash in the course of their careers. But the number of investors who were able to repeat the success of the past in later years is negligible. Of course, such investors are always able to make good forecasts about the behavior of the markets and individual companies. They may also achieve further lucrative profits. But such extreme increases in wealth as once can hardly be repeated – at least a repetition does not seem to be planned.

Did only Michael Burry emerge from the crisis successfully?

The example of Michael Burry impressively shows that it is very difficult, even for investors with a great deal of foresight and competence, to experience a second big hit in their career. A fate that Michael Burry shares with John Paulson. He, too, is an investor who emerged from the market collapse in 2008 and 2009 with big profits – and even managed to increase his investors’ money by well over a thousand percent.

How successful was Paulson later?

Like Burry, John Paulson could not repeat the unique success. Although his fame meant that investors’ money just flowed into him. However, he could no longer build up a large fortune from this. The dream profits he had once achieved were then denied to him. Reason enough for today’s investors to think very carefully about whose advice they follow. “It is never advisable to rely on the strategy of star investors. The examples of Burry and Paulson show that great success is no guarantee of further success in the future. Thelen, on the other hand, shows that even an expert fund is no guarantee for high profits and margins. Instead, investors should decide for themselves where and how they want to invest their money and back up these decisions with knowledge and evidence,” says Jens Rabe.

About Jens Rabe:

Jens Rabe is the founder and managing director of the Rabe group of companies. Together with his team, he helps entrepreneurs, the self-employed and executives to earn a regular income from the stock market. Further information at:

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Rabe Holding GmbH & Co. KG
Represented by: Jens Rabe
Email: [email protected]

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Ruben Schaefer
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Original content by: Jens Rabe, transmitted by news aktuell
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