Billionaire investor David Rubenstein’s investment principles
David M. Rubenstein is the billionaire co-founder of The Carlyle Group, a private equity firm with $373 billion in assets under management.
Formerly a lawyer, Rubenstein co-founded The Carlyle Group in 1987, at the age of 38, along with William Conway Jr. and Daniel D’Aniello. All three went on to become billionaires.
Rubenstein is worth $3.2 billion and holds many prominent positions, including the chairman of the Council of Foreign Relations and the Economic Club of Washington D.C.
Part of the reason why Carlyle was founded in Washington D.C. was to be close to the government. Rubenstein served in Jimmy Carter’s Administration and advised George H.W. Bush.
He remains involved in politics and hosts a monthly dinner for Members of Congress to promote bi-partisan solutions to America’s problems.
Aside from private equity, Rubenstein is known for his philanthropy with large donations to museums, including $15 million to the United States Holocaust Memorial Museum and a multi-million dollar donation to the Museum of African American History and Culture.
Along with Bill Gates and Warren Buffett, Rubenstein is a signatory of The Giving Pledge – thereby committing the majority of his wealth to charity.
Famously, Rubenstein owns one of the last surviving original copies of the Magna Carta from 1215, which he has loaned to the National Archives permanently for display.
Rubenstein is perhaps most famous for being a host on Bloomberg TV, where he interviews influential investors such as Warren Buffett and Ray Dalio.
Recently, Rubenstein has collated what he has learned from interviewing the world’s best investors into a book called How To Invest: Masters on the Craft, where he outlines what the best investors have in common.
Below are Rubenstein’s investing principles which he has followed in building Carlyle into one of the largest and most successful private equity firms.
- Invest wisely and create value
Rubenstein is an active investor, meaning that he invests with the intention to unlock or create value in a company through changes to management, governance, or the business model.
This is similar to the approach of some other active investors, such as Bill Ackman.
Rubenstein and Carlyle are explicit in their intention to leverage their global reach, their unique expertise, and their diverse team to create value over the long term.
- Invest for the long term
Rubenstein reminds investors not to panic and sell when share prices fluctuate, either up or down. Investors should always focus on the business behind the share price.
“The most common mistake investors make is that they get out the market at the wrong time,” says Rubenstein. Market declines are the best time to invest and lock in long-term gains.
- Invest in people
A central principle of Rubenstein’s investment strategy is that you are investing in the people who operate the company you own shares of.
Rubenstein says that employees, particularly managers and executives, should have a stake in the business. Their personal success must be linked to the success of the business.
Investors should also look closely at whether a company can keep people working for them over a long time. If there is a high turnover of staff, it is unlikely that the business will generate stable and predictable returns.
- Study the track record of the company
A company’s track record is not a perfect indicator of future performance, Rubenstein says, but it is the best indicator available.
Importantly, Rubenstein advises investors to look if the people who achieved that track record are still at the company. If they aren’t, it’s unlikely that the track record will continue into the future.
- Look at who the other investors are
Smart money finds good deals. It is rare to find a good investment where no one of stature is investing in it as well.
Rubenstein also urges investors to do their own research and come to their own conclusions about an investment opportunity.
David Rubenstein’s investment principles, according to ChatGPT
The principles above are from what Rubenstein has written or said over his long career.
When we asked the artificial intelligence (AI) chatbot ChatGPT about Rubenstein’s investment principles, it provided this answer:
David Rubenstein is an American businessman, investor, and philanthropist who co-founded The Carlyle Group, a global private equity firm. He has a reputation as a savvy investor and is known for his ability to identify opportunities and make strategic investments. Here are some of David Rubenstein’s key investment principles:
- Look for undervalued assets: Rubenstein believes in finding assets that are undervalued or mispriced, and then buying them at a discount. He has a reputation for being able to identify assets that have the potential to appreciate in value over time.
- Focus on long-term value creation: Rubenstein believes in taking a long-term perspective on investments. He is not afraid to hold on to investments for a long time, as he believes that the creation of long-term value is more important than short-term gains.
- Diversify investments: Rubenstein believes in diversifying his investment portfolio across multiple asset classes, industries, and geographies. He believes that diversification helps to reduce the overall risk of his portfolio.
- Make informed decisions: Rubenstein is known for his due diligence and research-driven approach to investing. He believes in taking the time to understand a company and its market before making an investment.
- Partner with the best: Rubenstein believes in partnering with the best people in order to maximize returns on his investments. He has a reputation for being able to identify and work with talented individuals who have the skills and expertise to help create value.
These are some of the key principles that David Rubenstein follows in his investing approach, and they have contributed to his success as a private equity investor.