3 buffett-esque lessons from the forgotten ‘Witch of Wall Street’

Imagine the world’s wealthiest woman strolling down Wall Street sporting an all-black outfit, including a veil, and smoking cheap cigars with a group of reporters in tow. For New Yorkers of the late 1800s and 1900s, that odd picture was actually a common sight.

The whaling heiress turned investing legend Hetty Green, born in 1834, earned her title as the “Witch of Wall Street” later in life by parading around in this unusual style—and media portrayals of her “miserliness” and bad temper only bolstered the narrative. But Green was much more than just Wall Street’s 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.

Green pioneered what many today might see as a precursor to “value investing.” Decades before Warren Buffett’s hero Benjamin Graham formally detailed the tenets of value investing in his 1949 book, Intelligent Investor, 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.

The media in Green’s time focused mainly on her eccentric and often unappetizing behaviors, including her testy feud with the city of Hoboken over a $2 dog license, but the whaling heiress’ transformation into a Wall Street value investing powerhouse in an age when women couldn’t even vote is the more interesting—and lesser known—tale.

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. But although her life was undeniably complex and fascinating, Green’s simple, but potent investing advice is her lasting legacy.

3 Buffett-like lessons from decades before he was born

Lesson #1: Don’t speculate, invest

Knowing the difference between speculating and investing is one of the key principles of many of the world’s greatest investors today. It’s certainly a main tenet of Warren Buffett’s disciplined investing philosophy. As the billionaire Berkshire Hathaway CEO explained in his annual letter to shareholders in 2000, speculators tend to focus “not on what an asset will produce but rather on what the next fellow will pay for it.”  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.

About a century before Buffett explained this concept, and more than 50 years before “the father of value investing” 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. “Before deciding on an investment, I seek out every kind of information about it,” she said.

She also never chased popular trends or high-valued stocks, instead preferring to find a steady, predictable return on her investment.  That’s investing, not speculating—and Green wanted everyone to know that.

“One 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,” she once told reporters, according to a 2022 paper by historian Mark Higgins.

Lesson #2: Look for value and quality

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—much like what we would call “value investing” today. She also often pounced during times of economic stress when assets were selling at their cheapest.

“I 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,” Green was quoted saying in the 1905 book The Queen of Wall Street.

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 “high quality” companies today, or those that have strong earnings and reliable business models.

That’s a tactic that is a little bit different than Graham’s value investing approach. But it’s right in line with what Warren Buffett’s 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 “wonderful companies at fair prices” rather than fair companies at wonderful prices.

For Green, who learned this lesson on her own, there was still “no secret to great fortune making.” It was, and is, all about doing your research, trusting your strategy, and avoiding expensive mistakes. “All you have to do is buy cheap and sell dear, act with thrift and shrewdness and be persistent,” she once said.

Lesson #3: You can’t invest—or prepare for the worst—if you don’t save

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. “No 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,” Green said in a 1903 newspaper article.

Saving, looking for value, avoiding speculation; these principles might not sound profound, but that’s only because many have become fundamental rules that today’s investors live by.

Due to the often misogynistic coverage Green received during her life, along with a few aggravating eccentricities, she’s remembered as the “witch” of Wall Street. But this witch’s pioneering investing strategies and willingness to stick to her investment—and life—philosophy even during the most trying of times are perhaps a more fitting lasting legacy. As Charles Slack, the author of Green’s biography, Hetty: The Genius and Madness of America’s First Female Tycoon, told Fortune, 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.

“Simple 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,” he said. “She, 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.”

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The very last portrait of the wealthiest woman in the world. Mrs Hetty Green, in New York on her 80th birthday.

Photo by PA Images via Getty Images

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