“I’m the Richest Guy in the World”
When I think about what constitutes a successful and abundant life, the investor who embodies it best for me is Arnold Van Den Berg. He’s not a billionaire or a genius. He doesn’t own a yacht or a plane. Yet there’s nobody in the investment world whom I admire more. If I had to choose just one role model from all of the remarkable investors I’ve interviewed over the last quarter of a century, it would be him. He was dealt a terrible hand, but has defied overwhelming odds to achieve a life of prosperity that goes far beyond money.
Born into a Jewish family in 1939, Van Den Berg lived on the same street in Amsterdam as Anne Frank. The following year, Germany invaded the Netherlands and set about annihilating its population of 140,000 Jews. By 1945, only 38,000 had survived. Van Den Berg’s parents hid for almost two years in the home of non-Jewish friends, Hank and Marie Bunt, who built a secret closet for them behind a double wall. But there was a terrifying risk that Arnold or his older brother, Sigmund, would make a noise if the Nazis came to search the house. If discovered, they would all be deported to concentration camps, where children were often the first to be killed. So Van Den Berg’s parents took a desperate gamble. They arranged for their sons to be smuggled out of Amsterdam by the Dutch underground, using fake identity papers.
The rescue network involved three courageous families named Tjaden, Glasz, and Crommelin, who risked their own lives to protect the two boys, shuffling them secretly from one hiding place to the next. Half a century later, a Dutch woman named Olga Crommelin would write a letter recounting how she took Arnold by train and foot to a rural village where he would be hidden in a Christian orphanage along with several other Jewish children. At the time, she was about seventeen, and he was two. “I shall never forget that when the train pulled in at that station where we had to get off, there was a small group of SS men on the platform and it gave me quite a shock,” recalled Crommelin. Immersed in conversation, these members of Hitler’s murderous security force took no notice of the Jewish toddler and the teenage girl who dared to save his life.
Van Den Berg lived in the orphanage until he was six. For many years, he believed that he’d been sent away because his mother didn’t want him. He also suffered the trauma of separation from his brother, who was given refuge by a childless couple who lived on a farm. Conditions in the orphanage were dire, with so little food and water that Van Den Berg sometimes resorted to eating plants that he found in the fields. “I almost died of malnutrition,” he says. “At age six, I could barely walk. I used to crawl most of the time.… Truly, it’s a miracle that I made it.”
One day in 1944, Van Den Berg’s parents ventured out of their hiding place to visit a woman from the resistance movement who could tell them how Arnold and Sigmund were faring in the countryside. An air raid siren sounded while they were on the street, and they took cover inside a butcher’s shop. A Nazi collaborator working there realized that Van Den Berg’s parents were Jewish and betrayed them to the police. They were arrested, interrogated, and sent to Auschwitz.
Thirty-nine members of Van Den Berg’s family perished in the Holocaust. But both of his parents survived.III After the war, they reunited at the Bunts’ home and traveled to the orphanage to retrieve their son. “I didn’t remember that they were my parents. I didn’t recognize them, and I really didn’t care. I just wanted to get out of there,” says Van Den Berg. “My dad said that, in another few months, I would probably have died. He was afraid to pick me up because my bones stuck through my skin so much that he was afraid he’d break them.”
A few years later, the family emigrated to a poor and threatening neighborhood in East Los Angeles. “I was a very weak, skinny kid,” says Van Den Berg. “There’s a lot of bullying that goes on if you’re the weak one. You’re the prey.” When he started at his new school, his mother dressed him impeccably in lederhosen and long socks, landing him in several fights on his first day. Another formative experience came when he was shoved into a young thug who demanded that they fight in the bicycle yard at their high school. “I wouldn’t have been any more scared if they’d put me in front of a firing squad,” says Van Den Berg. “He beat the hell out of me till he got tired of hitting me. I literally didn’t offer any resistance.”
Back home, he washed the blood off his face and appraised the damage. “I had an epiphany. I thought, ‘My God! I’ve been so afraid of this, and this is not that bad. Just think if I would have fought back. It couldn’t have got any worse.… Immediately, I got rid of all my fears of fighting. It was just gone. It was an amazing transformation.”
Determined to stand up for himself, he learned to box and soon discovered the benefits of throwing the first punch. He had so much rage in him—against the Nazis, against the bullies at school, against the anti-Semites who targeted him as he walked home, and against his parents—that he became a fearsome fighter. His three best friends were tough kids from violent homes, who leaped to each other’s defense in countless battles. His mother yelled at them and sprayed them with a hose. But they would all soften with age, and they remain close in their eighties.
Van Den Berg gradually built his strength by climbing ropes, which was an Olympic sport in those days. After six months of practicing for two hours a day, he raced against a nemesis who had never climbed, hoping to demonstrate his new power. “He beat me so bad that I almost cried right there on the spot,” says Van Den Berg. “I was so embarrassed.… Then something flashed in my mind: You wanted to get stronger and you are getting stronger. So why would you quit?”
His coach sent him to observe a champion from another school who had developed an innovative climbing technique. Van Den Berg was mesmerized. For months, he rose in the middle of the night and mimicked those movements compulsively in front of a mirror until they became embedded in his mind and body. He kept repeating to himself, “I am the number one man in the league.” In the years that followed, he transformed himself into a star athlete, breaking school records by scaling a twenty-foot rope in 3.5 seconds, becoming the league champion three times, and competing nationally against climbers who were already in college. It was his first taste of success, his first hint of what he could achieve with relentless work and single-minded belief.
Academically, he was still a disaster. He was emotionally troubled, couldn’t concentrate in class, and found it difficult to learn. “I was showing signs of not being too bright, I guess, so my mom hired one of the top psychologists because she thought maybe something happened because of the war,” says Van Den Berg. He overheard the psychologist speculating that all those years of malnutrition may have damaged Van Den Berg’s brain during a critical stage in his early development.
“So I always had this image of myself as not very smart,” says Van Den Berg. “Look, if I was to send you my high school report card, you would have a big laugh. I had two periods of auto shop my last year. Two periods of gymnastics. A study hall. For what? I used to do my isometrics exercises in my study hall. Then I had a cappella, and I have such a bad aptitude for singing that my a cappella teacher would make me just move my mouth during performances because he didn’t want me to throw the whole team off.… I don’t have any innate talents for anything. No. Everything I’ve ever accomplished has taken more effort than anybody else.”
Van Den Berg’s father, a scrupulously honest but hard man who hit him until he finally hit back, made his sons pay for their own food, clothes, and entertainment once they turned thirteen. Van Den Berg mowed lawns, washed cars, delivered newspapers, pumped gas, worked in a garbage truck, then landed a job in a wood factory for four hours a day after class.
At sixteen, while saving for a car, he sold flowers with such success that he earned the right to hawk them on the most prized street corner. That day, it poured torrentially. Drenched, miserable, and stunned by his bad luck, he still refused to stop selling. A stranger who was driving past bought all of his flowers, so he would get out of the rain before catching a cold. She drove him to her home, gave him a dry shirt, and made soup to warm him up. “I’ve never forgotten her,” says Van Den Berg. “That woman touched my heart.… When someone touches your heart, you’re never going to be the same.”
Having barely scraped through high school, Van Den Berg didn’t bother with college. He worked in a printing store, where he was promoted to supervisor, joined an insurance company, where he peddled policies door-to-door, and later sold mutual funds for a financial services firm. Along the way, he married his high school girlfriend, but she left him for another man. During a period of deep depression that lasted for several years, Van Den Berg began to see a psychiatrist. He knew that he was lucky to be alive, since so few Jewish children from Holland had survived the war. But he was trapped inside his own head. “I was the personification of anger,” he says. He was furious at his ex-wife and tormented by the Holocaust.
For years, he had struggled to understand why that teenage girl in Amsterdam had saved him. How could she have been “willing to sacrifice her life” for “somebody she didn’t even know?” And how could her parents have allowed her to embark on such a “suicide mission?” Van Den Berg’s psychiatrist told him, “It’s simple. If your life is more important than your principles, you sacrifice your principles. If your principles are more important than your life, you sacrifice your life.” That insight “had a profound effect on me,” says Van Den Berg. He developed an intense desire “to do something with my life” and to live it by principles that were worthy of his saviors.
During the years when he was selling funds, Van Den Berg became captivated by the stock market and began to explore why some investors performed better than others. That led him to study Ben Graham’s books. The concept of buying assets at a steep discount resonated instantly. Van Den Berg’s mother, a shrewd businesswoman who had survived in Auschwitz by trading goods and paying guards to provide her and her husband with extra bread, had always stressed that it was dumb to buy anything for the full retail price. It seemed natural to apply her rule to stocks. After a dishonest colleague was honored as Man of the Month, Van Den Berg quit his job and decided to launch his own investment firm. It was 1974. He was thirty-five years old. He had no college degree, no relevant experience, no business plan, no office, no clients.
But he approached his new vocation with the same all-consuming commitment that he’d applied to rope climbing. His psychiatrist told him that he had triumphed back then by adopting mental strategies that professional athletes used routinely—setting clearly defined goals, visualizing themselves performing flawlessly, and repeating affirmations that crowded out all doubts and fears until they were replaced with unshakable self-belief. Van Den Berg became obsessed with such techniques for harnessing the power of the subconscious mind, making himself a human guinea pig in an experiment that has never stopped. He learned to hypnotize himself every day as a way of focusing his scattered thoughts. He flooded his mind with uplifting affirmations, gradually ridding himself of the debilitating belief that he was incapable and unworthy. And he devoured inspirational works by authors such as James Allen, returning again and again to a 1901 book that he came to regard as his bible: From Poverty to Power.
Allen, a freethinker steeped in Christianity and Buddhism, convinced Van Den Berg to take responsibility for his own mental state; to forgive everyone who had hurt him, including the Nazis, thereby liberating himself from his own anger; and to reform the world by focusing first on reforming himself. “By your own thoughts you make or mar your life, your world, your universe,” Allen preached. “As you build within by the power of thought, so will your outward life and circumstances shape themselves accordingly.… The soul that is impure, sordid, and selfish is gravitating with unerring precision toward misfortune and catastrophe; the soul that is pure, unselfish, and noble is gravitating with equal precision toward happiness and prosperity.”
Desperate to improve his circumstances, Van Den Berg made a total commitment to improve his character. He became a lifelong explorer of wisdom from many spiritual paths, vowing to pursue the truth wherever it led him. Honesty and integrity became guiding principles, and he took to heart Allen’s assertion that “the rich man who is barren of virtue is, in reality, poor.” Van Den Berg no longer allowed negative thoughts about himself or others to linger in his mind and drain his energy. Where once he’d been consumed by resentment and hostility, he now rebuilt himself from the inside by constantly repeating positive phrases such as “I am a loving person.”
He had none of the skepticism or cynicism of a college-educated intellectual snob. He believed absolutely that he could create a golden future by consciously reprogramming his mind. What set him apart was his unflagging persistence and his insatiable desire to make himself a better man. “I always want to be working on self-improvement until the day I die,” he says. “After it’s all said and done, these are the three most important things to me. Never compromise what you believe in. Never be satisfied with what you are, only with what you can be. And never give up.”
Van Den Berg cut out a photograph from Barron’s of an eminent investor standing confidently beside his desk while dressed immaculately in a three-piece suit. He gazed at that image every day, using it to help visualize himself as a successful money manager. He set himself a target of averaging 15 percent a year without losing more than 15 percent in any year—a goal that he actually achieved over the next three decades. He removed the clutter from his studio apartment, placed a desk in the middle, and surrounded himself with investment books. He gave up chess, which he loved, because it divided his attention. He played golf just once and concluded, “This is a game I won’t get into because it will shackle my mind.” When a girlfriend asked if she could cook him dinner, he informed her that he had to study. She accused him of behaving like a monk.
Van Den Berg developed a consistent investment methodology that was infused with common sense. Among other things, he analyzed hundreds of acquisitions to construct a record of what sophisticated private buyers would pay for various types of business. He then formulated a few practical rules of thumb that he refused to violate. For example, he wouldn’t invest in any stock unless it traded for at least 50 percent less than its private market value. And whenever a stock rose to 80 percent of its private market value, he insisted on selling.
His unswerving discipline and rigorous focus on valuations kept him on the right track. Most investors shunned stocks in the aftermath of the 1974 crash. But prices were so low that he didn’t hesitate to buy, enabling him to generate powerful returns during his first decade in the business. Then, when prices surged in the bubble of 1987, he could find nothing cheap enough to replace the stocks that his ironclad rules required him to sell. Before long, his growing roster of clients had half of their assets in cash. Many were livid. Still, he never flinched, telling himself, “You’re doing the right thing to stick to your discipline.… Now, you may go out of business, but you’re doing the right thing. And that immediately brought me comfort.” Soon afterward, the market crashed 22.6 percent in one day. “Everyone was panicking, and I was like a kid in a candy store.”
It took more than a decade for Van Den Berg’s firm, Century Management, to become solidly profitable. During those lean years, he fell in love and remarried. At the time, he was $20,000 in debt and could hardly support himself, let alone his new wife, Eileen, and her two young kids. Before long, they had a third child. They crammed into a fifteen-hundred-square-foot house in LA, using the garage as an extra bedroom. Then they bought a modest home in Austin, Texas, for about $350,000 and have lived there ever since. “I wouldn’t sell it,” says Van Den Berg. “We love it.”
As his business expanded, Van Den Berg became wealthier and more renowned than he’d ever envisioned. He was featured in a book titled The World’s 99 Greatest Investors, which hailed him for the rare feat of averaging 14.2 percent annually over thirty-eight years. A string of major asset managers sought to buy his company. He could probably have cashed out for more than $100 million. But how could he trust these smooth-talking corporate suitors to act in his clients’ best interests, instead of their own? When four emissaries from a bank tried to convince him to sell his firm, he told them, “I’m not selling at any price. I’d close it down before I’d sell it.”
In truth, he had never yearned to become seriously rich. Starting out, his aim was to build a nest egg of $250,000—enough to support himself for ten years. “I didn’t care if I made millions,” he says. “I just wanted to be financially independent and not take any shit off anybody.… The luxury is not having to worry about money or a bill or a financial setback.”
For a person in his position, his lifestyle is decidedly understated. “I’ve never had any need for material things,” he says. “I have no interest in anything like a big home.… That turns me off.” A vegetarian teetotaler with a passion for yoga, he prefers to sip beetroot smoothies in his book-filled office than to feast in elegant restaurants. “I’m really not into clothes,” he adds. “I have three suits.” For many years, he drove a Nissan Maxima because “it was the best value you could get in a car.” When one of his children asked why he didn’t buy a Mercedes, he explained that he didn’t want to “make a statement” by driving a flashy car: “I wouldn’t want to be associated with people who think that way.” A few years ago, his wife finally persuaded him to part with his ten-year-old Acura and upgrade to a Lexus. “She was so thrilled to get it for me that I didn’t want to say no because she got all excited,” he recalls. “I was almost embarrassed to drive it at first.”
Once he felt “completely secure” about his financial future, no amount of money he could earn would make any difference to him. “I’m the richest guy in the world because I’m content with what I have,” says Van Den Berg. “I feel wealthier not because I have more money but because I’ve got health, good friendships, I’ve got a great family. Prosperity takes all of these things into consideration: health, wealth, happiness, peace of mind. That’s what a prosperous person is, not just a lot of money. That doesn’t mean anything.” He recalls a former client with $10 million “who was so eager for the money that he would call me collect” to save a few cents.
“The most important thing people need is love—and the less love they have, the more they need these material things,” says Van Den Berg. “They look for money, for some accomplishment, or something external to validate them. But all they need to do is be loved and to give love. You know, my wife never knows how much money we have. She never cares and she never thinks about it other than how she could use it to spend it on somebody.”
One of their favorite causes is a residential treatment center for abused and neglected children. Van Den Berg and his wife have bought books and toys for hundreds of these kids, and she worked closely with them for twenty years. He has also quietly helped many people with financial difficulties, typically assisting in small but significant ways—paying for a class that enabled them to earn a better living or footing a medical bill for a sick child. Being able to help others, says Van Den Berg, is “the greatest blessing the money has given me.”
Having observed over several years how he interacts with other people, what impresses me most is the sheer joy that he takes in trying to guide, support, and inspire them. He delights in hypnotizing people (including me) and seeking to instill positive suggestions in the subconscious mind while they lie on his office floor in a state of deep relaxation. He becomes irrepressibly excited as he recalls various highlights of his adventures in hypnotism, including a time when his son, Scott, won a shot-put championship under hypnosis, despite having a sprained ankle in a cast. Van Den Berg loves giving talks to disadvantaged kids, college students, and prison inmates about the lessons he’s learned from the Holocaust and his own struggles. And he is constantly gifting books that have helped him on his journey, including a special edition of From Poverty to Power that he paid to reprint. “I feel that the best gift I could give anybody, whether they’re poor or rich, is to give them a book that could change their life,” he says. “And so my hobby is giving out books.”
Van Den Berg often wonders why he survived the Holocaust. “Was it just luck?” he asks. “You could say, yeah, because I’m just one of the statistics. But somehow, I’ve always had this feeling that there was a purpose to my life, that I was spared. And so I want to change people’s lives. Not to my way of thinking. Just to make it better.”
Tucked away inside the filing cabinets in his office, he keeps what might just be his most valuable possession: a copious collection of heartfelt letters from many of the people he has helped, including countless friends, clients, random strangers, and his own children. “The pleasure you get out of knowing you’ve made a difference in people’s lives—that’s something that nobody can take away from you,” he says. “I could lose all my money, and I could still go to these files and say, ‘Well, it’s not like I lived my life for nothing. Look at the people whose lives I’ve changed.’ ” Van Den Berg points to his trove of letters and says, “That’s my bank account.”