David M. Rubenstein, the billionaire philanthropist and author of a guide to investing, has simple advice for would-be investors: Don’t fear failure.
“One of the most important things about learning to be a good leader is to learn how to fail. … It helps you,” he said in a telephone interview. “It’s a willingness to fight, persevere against the odds and take a punch in the face and get back on your feet and into the fray.”
Rubenstein, 73, will discuss his book “How to Invest: Masters on the Craft” Thursday at noon at the New Orleans Book Festival in an interview with lawyer Gary Ginsberg, author of “First Friends,” about presidential pals.
On the topic of money management, Rubenstein speaks from experience. After serving as a deputy domestic-policy adviser to President Jimmy Carter, “we got clobbered in the 1980 election,” Rubenstein said. “I could have sat and not done much in the next 30 years.”
Instead, Rubenstein went back to practicing law and, in 1987, co-founded the Carlyle Group, an investment firm that has 2,100 employees in 29 offices on five continents. According to Forbes.com, it manages about $400 billion in assets. Forbes.com estimates Rubenstein’s wealth at $3.3 billion.
'A painful gift'
For his book, Rubenstein interviewed 22 successful men and women about their business strategies. One was Ray Dalio, the founder of the investment-management firm Bridgewater Associates, who discussed his own failure when he hit rock bottom in 1982.
“Do I regret that in 1982 I went broke, essentially?” he asks Rubenstein in the book. “No, because it gave me a painful gift that changed my perspective. I like the learning process, which is that painful mistakes lead to reflections that produce progress. So I don’t have any regrets. I’m just so very grateful for the life that I’ve had, including the painful mistakes.”
“The good leaders, the good investors know how to make a good future,” Rubenstein says in the interview.
But for people who want to invest but might not have boatloads of cash, Rubenstein has this bit of advice: Give your money to people you trust who know what they’re doing.
“The most important thing is trust,” he said. “When you’re managing other people’s money, you have to be very, very careful.”
And good luck helps
This echoes a statement in the book from Mary Callahan Erdoes, CEO of J.P. Morgan Asset & Wealth Management.
“This business is based on trust,” she said. “You don’t wake up one morning and find yourself with a great sum of wealth and then just go trust someone you haven’t known for years.”
But, Rubenstein said, investors should never overlook the role that luck can play.
“Luck is something you make,” he said in the interview. “If you sit in your office or your home, you’re not likely to meet a lot of people and have a lot of luck. … You just never know who’s going to make that connection.”
In reviewing his wide-ranging career, Rubenstein added, “I’ve had a lot of luck in my own life.”
A political-science major at Duke University, he graduated magna cum laude and was elected to Phi Beta Kappa. He earned a law degree at the University of Chicago, where he was an editor of the Law Review.
What's your major?
“You adjust as you go along,” Rubenstein said, adding that success doesn’t require a degree in business, science, mathematics or engineering.
“If you look at the CEOs (in the book), a lot of them have backgrounds in social sciences or liberal arts,” he said. “The liberal arts give you the ability to think. They give you questioning abilities.”
That ability, combined with years of experience, made Rubenstein skeptical about the world of cryptocurrency, especially when he interviewed Samuel Bankman-Fried, the founder of the cryptocurrency exchange FTX, who is facing 12 federal charges, including wire fraud and money laundering.
Bankman-Fried's company has collapsed, and he is free on $250 million bond. He faces more than a century in prison if he is convicted on all counts.
When Rubenstein talked with Bankman-Fried, he said he couldn’t help noticing the man's carefully disheveled image and the fact that his legs were shaking.
“I was wondering, what image is he trying to convey?” Rubenstein said.
'Racing to the finish line'
“How to Invest” is Rubenstein’s fourth book. He also is host of two programs on Bloomberg TV and PBS, and he chairs the boards of the John F. Kennedy Center for the Performing Arts, the Council on Foreign Relations, the National Gallery of Art, the Economic Club of Washington and the University of Chicago. He is a director of Lincoln Center for the Performing Arts and the American Academy of Arts and Sciences.
Rubenstein has used his wealth to help underwrite the restoration or repair of the Washington Monument, the Lincoln Memorial, the Jefferson Memorial, Mount Vernon and Monticello, and he has helped pay for panda procreation at the National Zoo.
He also has bought – and loaned to the national government on a long-term basis – copies of Magna Carta, the Declaration of Independence, the Bill of Rights and the Emancipation Proclamation.
In explaining his high level of activity and generosity, Rubenstein said:
“I’m propelled by the fact that my body is going to collapse and my brain is going to collapse at some time. I’m racing to the finish line to get things done before my brain collapses or my body collapses.
“When you love something, it’s not work, it’s pleasure.”
Email John Pope at pinckelopes@gmail.com.