10 LEGENDARY INVESTORS
Investing in the stock market has tremendous potential to increase your savings. Below is a list of some of the greatest and most successful investors and their individual investment strategies. Although each strategy may differ, it is important to remember that the underlying ideology remains the same: discipline and simplicity are key.
1. Warren Buffett
“If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”
CEO of Berkshire Hathaway and worth a reported $84.4 billion, Buffet is considered the most successful investor in history. His investment advice is simple: Look for high quality companies with a strong management team and a ‘large moat’ (competitive advantage) for a low price. He also suggests studying the financial and valuation metrics of a company to determine if the stock is undervalued and therefore, a worthwhile investment opportunity. By investing in companies with a long-term perspective, Buffet is happy to wait for the market to adjust accordingly over time. This investment strategy of discipline, patience and value has benefited Buffet for decades and those that invested $10,000 in Berkshire Hathaway in 1965 would now have a reported $50,000,000.
2. Bill Gross
"Do you really like a particular stock? Put 10% or so of your portfolio on it. Make the idea count … Good [investment] ideas should not be diversified away into meaningless oblivion."
Another steady investor who believes in keeping a diversified portfolio of stocks with a long- term outlook, Bill Gross is the co-founder of PIMCO and worth $2.5 billion dollars. He looks for short term mispricing that will go on to outperform the market over the next 3-5 years and insists that exhaustive research that points to a winner should be capitalised upon. Gross believes that emotional trading is one of the easiest ways to derail your investment strategy and advises ignoring irrational market reactions and sticking to your investment decisions to prevent this from happening.
3. Peter Lynch
"Absent a lot of surprises, stocks are relatively predictable over twenty years. As to whether they're going to be higher or lower in two to three years, you might as well flip a coin to decide."
Lynch is probably best known for his time as a Fund manager at Fidelity where he grew his assets under management from $20 million to $14 billion. He is currently worth $352 million and is often described as a chameleon due to his tendency to change his strategy and style depending upon the situation. Despite this flexibility, Lynch’s basic principles remain the same. He focuses on long term investments, looks for exceptional management capability and only invests in sectors and companies that he understands. As urged by Lynch, research the fundamentals of each company and consider PEG ratios, cash flows and debt-to-equity ratios.
4. Jack Bogle
"If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks."
Founder of the Vanguard group and instrumental in its growth to becoming the largest mutual fund company on the planet (worth $4.5 trillion), Bogle is an advocate for keeping your investment style simple. Like many investors, he advises only investing in what you know and recommends keeping a portfolio that is easy to track and understand to allow for greater confidence in your decisions. As suggested by Bogle, stick to your strategy and don’t rebalance to often (once per year is enough) regardless of what is happening to stay on course.
5. Philip Fisher
"I don't want a lot of good investments; I want a few outstanding ones."
In a career spanning 70 years, Fisher has been hugely successful. This is as a result of his belief in the strength of well-managed, high-quality growth stocks and a commitment to long term investing. Through comprehensive research, he chooses his stocks based on the following: excellent management (including integrity, long term outlook, financial controls and personnel policies), growth orientation, high profit margins, commitment to research & development, sales growth, leading industry position and excellent products or services. He recommends a 3-year rule for each investment decision before selling the stock and states that you should not over diversify - only invest in a few, well researched growth stocks.
6. Benjamin Graham
"Even the intelligent investor is likely to need considerable willpower to keep from following the crowd."
Considered the father of value investing and best known for his career as an author and mentor to the likes of Warren Buffett, Graham’s philosophy was based on the belief that any investment should be worth substantially more than you pay for it. Using financial analysis to determine if a stock was undervalued, Graham could ride out short term market fluctuations and ensure that his investments would carry less risk. He sought out companies with strong balance sheets, little debt, above average profit margins and strong cash flow with temporarily low stock prices and solid fundamentals.
7. Jesse Livermore
"When it comes to selling stocks, nobody can sell unless somebody wants those stocks. If you operate on a large scale, you will have to bear that in mind all the time."
With no formal education or stock trading experience, Livermore is a true self-made millionaire. He paid a lot of attention to technical analysis including stock prices and chart patterns to identify levels of support and resistance and used these levels to determine when to buy and sell his investments. He purchased stocks as they rebounded off support levels and sold them when they began to reach a resistance level. Livermore insisted that the general direction of the market is more important than any individual stock. He advocates investing in stocks that are registering new highs and selling or shorting those that are trading at all-time lows.
8. George Soros
"I rely a great deal on animal instincts."
George Soros is perhaps most famous for risking $10 billion on a single trade when he shorted the British Pound. Of course, he was right and made over $1 billion in a single day. Today he is Chairman of the Soros Fund Management and worth $8 billion dollars. Soros utilises a top down investment approach that focuses on identifying near term broad macroeconomic trends. He then makes highly leveraged trades in bonds and commodities based on speculative short-term volatility. Unlike most of the investors on this list, Soros pays very little attention to the fundamentals of a potential investment and his entire philosophy revolves around making large, one-way bets on the movements of currency rates, commodity prices, stocks or bonds.
9. John Templeton
"Invest at the point of maximum pessimism."
Templeton is a famous investor, banker and fund manager with an investment philosophy that emphasises buying low and selling high. In 1939, he took contrarian investing (going against the crowd) to the extreme when he borrowed money to invest in 100 companies that were on the brink of bankruptcy. This paid off when he sold 96/100 at a substantial profit. Templeton’s investment strategy involved determining which stocks to purchase based on valuable data that he gained from expert contacts on Wall Street, picking stocks that were out of favour and holding them for as long as necessary.
10. Carl Icahn
"I make money. Nothing wrong with that. That's what I want to do. That's what I'm here to do. That's what I enjoy."
Founder and controlling shareholder of Icahn Enterprises and worth around $17.5 billion dollars, Icahn is a private equity investor that is known to some as a ruthless capitalist and shareholder activist. The strategy that has served him well over the past 30 years however differs from most on this list and is almost impossible to emulate. Put simply, he looks to obtain voting rights in a business by buying large amounts of the company’s stock and then uses this position to make decisions that positively impact the near term share price, regardless of the long term implications. Despite his success, if you have a conscience it’s probably best to forget this strategy.
Make sure to check out the following most popular blog posts!
#tradeinplaces #trading #trade #learntotrade #tradingtips #etoro #finance #travel #travelblog #travelling #stocks #stockmarket #beststocks #stockpicks #stocks2020 #investing #investor #investment #investingtips #learntoinvest #howtotrade #howtoinvest #stockportfolio #warrenbuffet #johnbogle #carlicahn #philipfisher #benjamingraham