World’s Top Investors And Their Investment Strategies
- 4 min•
- 2,603•
- 16 Oct 2023
Most of us might wonder what would be the secret strategy of the investors who have earned millions from their investments? Well, the fact is that most successful investors in the world use common sense approaches to create huge wealth from their investments. Each successful investor follows a systematic approach and remains committed towards it for years. Let’s quickly look at some of the top investors and their investment philosophies that could help you to strategize your investments as well!
Know the top 5 things from Warren Buffett’s investment ideas. Read here.
World’s Top 5 Investors:
1. Benjamin Graham
He is known as the ‘father of value investing’. He inspired many great investors like Warren Buffett. Also, his peers and those within the investment industry called him as ‘the father of security analysis and value investing’.
Benjamin Graham’s investment philosophy was all about a common sense approach. He focused on the principle that investments should only be made if they are worth substantially more than their cost. And, this strategy is known as “margin of safety.”
The margin of safety signifies buying of the asset at a discount to its intrinsic value. This investment strategy not only acts as a shield for the investor, but it also offers high return opportunities.
He focused on companies that had above-average profit margins, low debt, and sustainable cash flows. Benjamin would use volatility to earn profits. He knew that fluctuations are a part of the market and they can be advantageous if traded well. He would buy assets when there was a bargain (i.e., when a strong company did not perform well) and would sell when the holdings were overvalued.
Benjamin Graham’s decisions used to be based on hard facts and proper evaluation of market trends. So, his investment strategy shows that investors need to buy low and sell high. Also, volatility is the inherent nature of the financial market.
So, under such market situations, if you are able to strategize your investments well, you might make a good gain.
Some Famous Investment Quotes by Benjamin Graham
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In the short run, the market is a voting machine but in the long run, it is a weighing machine.
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But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.
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People who invest make money for themselves; people who speculate make money for their brokers.
2. Peter Lynch
One of the world’s most successful business investors, Peter Lynch, was born in the year 1944, and by the age of 46, he decided to retire. Over the course of 13 years, Peter managed the Fidelity Magellan fund whose assets grew from $20 million to $14 billion. He picked up an investment strategy that suited the nature of the asset.
His most famous quote, “Only invest in what you understand”, has urged many investors to follow this as their own investment strategy. Peter Lynch believed that the average investor should stick with companies that they understand well. As an investor, he knew about the market and its volatility. Peter was always able to quote the reasons behind his purchase. So, as an investor, you should never invest in something that you don’t understand. For instance, if you don’t understand the workings of media companies, don’t invest in them. If you understand pharma companies and the pharmaceutical market, then prefer investing in them. In short, your portfolio should have those assets that you understand completely.
Some other Investment Mantras by Peter Lynch
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Owning stocks is like having children -- don't get involved with more than you can handle.
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Know what you own, and know why you own it.
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The simpler it is, the better I like it.
3. Warren Buffett
Most investors want to be like Warren Buffett! He is known as ‘world’s greatest investor’ because of his investing principles. His investing strategies, values, and principles have helped many investors to make good investment decisions.
Warren Buffett's approach of "long-term value investing" comes from the old-school investment principles described by Benjamin Graham. Graham taught the long-term value investing strategy of purchasing stocks at a price below their intrinsic value, and holding them until their price reflects the real value of the company.
When we talk about value trading, an investor buys an asset at a low price and sells it at a high price. For example, if an investor is buying IT stocks from a technology company, he would keep them in his portfolio and sell them only when the IT markets are expected to grow. Value investing as a strategy is very important, and as you learn more about the particular sector, you are able to determine the real value (or intrinsic value) of an asset.
Famous Investment Quotes by Warren Buffett
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Invest Like You Are Buying the Entire Company
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Compounding and Patience
4. Philip Fisher
The widely acclaimed investor, Philip Fisher was born in the year 1907 and was known for his famous book “Common Stocks and Uncommon Profits.”
His investment strategy was to buy stocks of companies with strong management teams and strong growth prospects. In 1955, Philip purchased shares of Motorola, which he saw as a company with a high potential of growth. He continued to own the shares of this company until his death in 2004. This is a classic example of an investor’s commitment towards long-term investing! He believed in the strength of high-quality growth stocks stayed invested for a long-term.
Philip Fisher highly focused on the growth stocks of large and small companies. According to his strategy, the growth stocks of young companies offer the greatest possibility of gain. Also, it is possible that the gains can mount up to several thousand percent in a decade.
To understand the potential of such companies, he would do high-end research and then invest. He also relied on his personal connections, which he called the “business grapevine.”
Some Investment Mantras by Philip Fisher
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I don't want a lot of good investments; I want a few outstanding ones.
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If the job has been correctly done when a common stock is purchased, the time to sell it is – almost never.
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Practical investors usually learn their problem is finding enough outstanding investments, rather than choosing among too many
5. George Soros
George Soros is considered to be one of the most successful investors of all time. In 1973, he formed the hedge fund company Soros Fund Management, which later evolved into the well-known Quantum Fund.
Well, he is a short-term speculator. George specialises in bonds and currencies. In the past, he has turned broad economic trends into highly leveraged plays.
One of his most famous investment strategies says is “Look Forward.” He believes that instead of looking at the past, explore the future. Most investors look at the present. But, they need to visualise 18 to 24 months from now and how the securities might trade at that time. He advises investors to look at the company’s future earnings. Understand if the company can deliver good returns in the future, and then take decisions accordingly.
Some of the other strategies quoted by George Soros
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If investing is entertaining, if you're having fun, you're probably not making any money. Good investing is boring.
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The financial markets generally are unpredictable. So that one has to have different scenarios... The idea that you can actually predict what's going to happen contradicts my way of looking at the market.
Conclusion
Well, by now, you might have gotten a clue that there are no secret mantras to invest. It’s all about strategizing well, sticking to your strategy, and being invested for a long-term view. So, decide your strategy and choose well! Happy investing!
