07 Apr 07 Investment lessons from the worlds greatest investors
An elite group of great professional investors (world’s greatest investors) have shown time and again that it is certainly possible to beat the market continuously and consistently over long periods of time. These people act as an inspiration and as an example to less experienced investors. The methods they followed have become legendary and these can act as a starting point for beginners looking to familiarise themselves with the basics of investing and trading in the financial markets (stock markets, forex markets and so on)
Becoming a successful investor needs patience, learning and sometimes even a bit of luck. But investing other people’s money is entirely a different ball game. Fund managers rely on hard work, intelligence and financial discipline to find opportunities that other professionals might have missed.
Given below is a list of 7 people who excelled in this and managed to beat the markets continuously over long periods of time.
Warren Buffett
Peter Lynch
John Bogle
George Soros
John Templeton
Julian Robertson
Michael Steinhardt
Warren Buffett
Born: Omaha, Nebraska in 1930
Employer: Berkshire Hathaway Chairman
Most Known For: A $10,000 investment into Berkshire Hathaway when Buffett took control in 1965 would be worth over $50 million today. By comparison, $10,000 in the S&P 500 would have grown to only $500,000.
Less Known For: Buffett is considered by many to be a real Scrooge (in fact his personalized license plate reads, “Thrifty”). Reportedly he is only going to bequeath around $3 to $4 million to each of his children, despite his $40+ billion net worth. However, he does so with good intentions and plans on leaving the vast majority of his fortune to charitable causes.
Quotes: “If past history was all there was to the game, the richest people would be librarians.”
“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.”
“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
“Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.”
“Risk comes from not knowing what you’re doing.”
Peter Lynch
Born: United States in 1944
Employer: Former Fidelity fund manager, today he is the vice-chairman of Fidelity
Most Famous For: When he started managing the Fidelity Magellan Fund in 1978, it had assets of $20 million. When he retired in 1990, it had assets of $14 billion.
Less Celebrated For: Some people were not too pleased when Lynch, one of the greatest, retired at the tender age of 46.
Quote: “Go for a business that any idiot can run – because sooner or later, any idiot probably is going to run it.”
John (Jack) Bogle:
Born: Montclair, New Jersey in 1929
Employer: Founder and Chairman of The Vanguard Group
Most Famous For: Often referred to as the father of index fund investing, he’s the creator of the first S&P 500 index fund.
Less Celebrated For: Admits that mutual funds “haven’t been up front with investors – top fund performance has always been followed by mediocre returns”.
Quote: “If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.”
George Soros
Born: Budapest in 1930
Employer: Founder of Soros Fund Management
Most Famous For: A highly respected currency speculator, he once shorted the British Pound for a one day gain in excess of $1 billion.
Less Celebrated For: Although not entirely responsible, Soros’ comments on the Russian economy contributed to its stocks plunging 12% in the first hour of trading. Five days later, the currency had devalued 25%.
Quote: “It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.”
John Templeton
Born: Winchester, Tennessee in 1912
Employer: Founder of the Templeton Group
Most Famous For: Created some of the world’s largest and most successful global investment funds using his independent investment strategy.
Less Celebrated For: More recently, his funds have failed to provide the astounding gains his followers were used to, partly due to the recent Asian recession.
Quote: “The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell.”
Julian Robertson
Born: Salisbury, NC in 1933
Employer: Founder/Chairman, Tiger Management Corp.
Most Famous For: A titan of hedge fund investing, his funds today require a minimum investment of $5 million per person. He turned $8 million in 1980 into over $8 billion in the late 1990s.
Less Celebrated For: Remembered for losing $200 million in 1996 when a “bet” on U.S. Treasuries went wrong.
Quote: “[O]ur mandate is to find the 200 best companies in the world and invest in them, and find the 200 worst companies in the world and go short on them. If the 200 best don’t do better than the 200 worst, you probably should get in another business.”
Michael Steinhardt
Born: 1941
Employer: Founder, Steinhardt Partners
Most Famous For: $1 invested with Steinhardt when he founded his firm in 1967 would be worth $462 today.
Less Celebrated For: Steinhardt didn’t exactly go out with a bang. He ended his illustrious hedge fund career in 1995, a year after suffering big losses.
Quote: “In the 1950s and 1960s, the heroes were the long-term investors; today the heroes are the wise guys.”
Do feel free to add other great investors whom I might have missed out.
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“If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.†This quote was by John Bogle, Who started Vangaurd and not by Warren Buffet.
Born: Montclair, New Jersey, in 1929
Affiliations:
* Wellington Management Company
* Vanguard Group, Inc.
* Vanguard Group’s Bogle Financial Markets
Research Center.
Most Famous For: Bogle founded the Vanguard Group mutual fund company in 1974 and made it into one of the world’s largest and most respected fund sponsors. Bogle pioneered the no-load mutual fund and championed low-cost index investing for millions of investors. He created and introduced the first index fund, Vanguard 500, in 1976. In 1999, Fortune Magazine named Bogle one of the four “investment giants” of the twentieth century. (For related reading, see Index Investing and The Lowdown On Index Funds.)
John (Jack) Bogle
Born: Montclair, New Jersey, in 1929
Affiliations:
* Wellington Management Company
* Vanguard Group, Inc.
* Vanguard Group’s Bogle Financial Markets
Research Center.
Most Famous For: Bogle founded the Vanguard Group mutual fund company in 1974 and made it into one of the world’s largest and most respected fund sponsors. Bogle pioneered the no-load mutual fund and championed low-cost index investing for millions of investors. He created and introduced the first index fund, Vanguard 500, in 1976. In 1999, Fortune Magazine named Bogle one of the four “investment giants†of the twentieth century. (For related reading, see Index Investing and The Lowdown On Index Funds.)