In the Financial world of celebrities, there were those who left their marks and have been remembered and idolized by fans, as though they were gods in their own ways. It is actually the same in the world of investment.
One who wants to enter the world of investment will surely learn a thing or two by reading the following list of investors and the philosophies they used in order to beat the market.
1. Warren Buffett
Warren Buffett’s name is one that immediately pops up whenever someone mentions the word “investment,” and it is not surprising. As of March this year, he is the second wealthiest person in the world.
His approach is simple. He buys companies that he understands how to manage, and improves them through his skills in management. Although he has been criticized by some because of his avoidance of certain industries, he continuously gives critics bloody noses by realizing amazing returns for decades.
His example reminds us one thing: never invest in something without enough knowledge of it.
2. Peter Lynch
Peter Lynch became infamous when he brought back the then obscure Magellan Fund to life by managing to accumulate a fund that grew to more than $14 billion in assets—a figure which started with only $18 million when he was named as its head.
He co-authored three texts with John Rothchild: One Up on Wall Street, Beating the Street, and Learn to Earn. Each of the books has a specific purpose and helps investors in different ways.
Just like Warren Buffett, Lynch emphasizes that you should “invest in what you know.” By following this simple mantra, investors find hidden treasures in undervalued stocks. However, one of his tricks is to be somewhat like a chameleon. He is said to adapt whatever investment style worked at a given time.
3. John Templeton
If Hollywood has John Lennon as one of its biggest icons, the financial world has its John Templeton. In 1999, Money magazine labeled him “arguably the greatest global stock picker of the century.”
He created the modern mutual fund based on his own experiences during the Great Depression and the internet boom. He also made several good investments between those two periods. His philosophy was labeled in two ways: “avoiding the herd”, and “buy when there’s blood in the streets.”
Being described as the ultimate bargain hunter, Mr Templeton believed that the best value stocks were those that were completely neglected.
In short, always keep your eyes open for potentials in different markets.
4. Benjamin Graham
Considered as the father of value investing, Benjamin Graham was an excellent investment manager and financial educator. He published a book, The Intelligent Investor, that articulated his principles in investing.
According to him, one should first find out the intrinsic value of a stock separate from its market price using a company’s factors (assets, dividend payouts, etc.) If the intrinsic value is worth higher than the current price, one should buy it and hold it until the stock price equates with its true value.
In simple words, a wise investor chooses a stock that is priced lower than its true value. That way, one is paying less for something worth substantially more.
5. Carl Icahn
Carl Icahn is an American investor and a business magnate, and is considered as the 26th wealthiest person on the Forbes 400 with a net worth of $16.6 billion USD.
He also doesn’t seem to mind his reputation as a “corporate raider.” This reputation began after the hostile takeover of TWA, an American airline. Known as a pugnacious investor, one cannot disregard his skills in investing as evident in his famous “Icahn Lift”–a catchphrase pertaining to the rise of a company’s stock price after Carl Icahn buys it.
His tactic is clear: choose an undervalued company due to mismanagement, and change it once in-charge.
The lessons are simple. Stick with what you know just like Buffett and Lynch, but don’t be afraid to adapt and try out new potentials just like Templeton. Know the true value of your investments, like Graham. Last but not the least, be persistent like Icahn, for you may be able to give another company your own kind of “lift.”
There are still many other legends in the financial world, and one finds that the more we learn from these iconic investors, the more we can manage our own investments.
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