Investing can be a lucrative way to grow wealth over time, but it requires knowledge, experience and a solid investment strategy. Here are five of the world’s most successful investors, their stories, and their strategies.
Warren Buffett is widely considered one of the most successful investors of all time. He is the CEO of Berkshire Hathaway, a conglomerate that owns numerous well-known companies, including The Coca-Cola Company and Apple Inc. Buffett’s investment strategy focuses on buying undervalued companies and holding them for the long term. He is quoted as saying that “Our favourite holding period is forever”. He looks for companies with strong fundamentals, such as solid earnings and low debt. Buffett also emphasises the importance of having a margin of safety in your investments, meaning that the purchase price of a stock should be significantly lower than its intrinsic value.
The patience and long-term approach that Buffet is fond of has definitely paid off as Berkshire Hathaway’s stock price has increased by more than 2 700% over the past 20 years. An incredible feat!
Peter Lynch is a former fund manager for the Fidelity Magellan Fund, which he grew from $20 million to $14 billion in assets under management during his tenure. Lynch’s investment strategy focuses on identifying growth opportunities in companies that he understands. He believes that investors should do their own research and invest in what they know, saying “Know what you own, and know why you own it.”. Most people are experts in various specific fields and so by applying the principle of “invest in what you know” individual investors are able to find good undervalued stocks. Lynch also emphasizes the importance of investing in companies with strong earnings, growth and a competitive advantage.
Lynch’s approaches have proven to be very successful with the Fidelity Magellan Fund achieving an annual return rate of 29% during his 13-year tenure.
Ray Dalio is the founder of Bridgewater Associates, one of the world’s largest hedge funds. Dalio’s investment strategy focuses on using a systematic approach to investing, including extensive research and analysis. He stated that Bridgewater Associates is a “macro-firm”, as it invests around economic trends such as changes in exchange rates and inflation. One keeps up with these economic trends through extensive research and analysis. He further emphasises the importance of diversification, both in terms of asset classes and geographies. Dalio also believes that investors should be open-minded and willing to challenge their own assumptions.
Once again the approach has been proven successful as Bridgewater Associates has achieved, over the past 20 years, an average annual return of 11.5%.
George Soros is a billionaire investor and philanthropist. His investment strategy focuses on identifying macroeconomic trends and using them to make large bets on currency and stock markets. Soros is known for his ability to profit from major global events, such as the $1 billion in profit he gained from the collapse of the British pound in 1992 with his short sale of US$ 10 billion worth of pound sterling. He emphasises the importance of having a deep understanding of economic and political trends, as well as being able to recognize when market conditions are favourable for making big bets. This knowledge will allow you to take the risks that lead to major profits.
Benjamin Graham has been coined as the ‘father of value investing’ and authored the classic book “The Intelligent Investor”. His approach has inspired many successful investors, including Warren Buffet, who was a student of Graham at Columbia University in the US.
Graham’s investment strategy involved buying stocks at a discount to their inherent value, which he determined by analysing a company’s financial statements. He emphasised how important it is to have a margin of safety when buying stocks and this often comes with buying stocks at a significant discount in order to protect against downside risks.
He advised investors to focus on companies with a strong balance sheet and stable earnings.
Long term successful investment strategies require research, patience and thought. Always be curious and be open to new ideas and new opportunities. Talk to us. At Austen Morris Associates, our advisors are passionate about getting to know our clients – so we can find a tailored solution for you.