10 Of The World’s Greatest Investors, 10 Great Pieces Of Investing Advice
Every successful investor, from Warren Buffett all the way down to Robinhood day traders, have rules, and it’s these successful investors’ guiding principles that keep them grounded no matter the state of the global economy.
Common rules like “buy low, sell high” and “diversify your holdings” are important to follow, but being a successful investor is about utilizing an effective strategy, and sticking with it no matter what.
Even investors with loads of experience will often try and mimic a successful investor’s specific portfolio, but learning from the greats isn’t simply about copying their individual investments, but copying their techniques and learning how to implement them towards your own investing goals.
It’s time to transform the way you approach investing by getting into the heads of some of history’s greatest investors. Here’s a look at each of the world’s top 10 investors’ (and 1 bonus) best piece of advice that you can apply to your own investment strategy right now.
What’s your most valuable investing advice? Share it in the comments section, as we can all learn from each other as well. Now, let’s dive right in.
1. Warren Buffett
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
Arguably the most successful investor of all time and one of the richest men in history, when Warren Buffett talks, global markets and political leaders listen.
Buffett’s investment strategy is centered around buying into undervalued companies, holding on to their shares for an extended period of time, and making a ton of money in the process. While many see value as simply buying something for a low price, Buffett says the quality of a company is more important than the price of its stock, and won’t even look at the price until he is confident in the organization itself.
Buffett stresses the importance of researching companies in which you are looking to invest in order to determine the structural strength of the organization and the value of the product in relation to the market. This goes further than a quick Google search, as Buffett and his team will conduct a comprehensive dive into a company’s financial statements, management personnel, and organizational culture, all before looking at the price of its stock.
The “value trap” principle tells us not to simply buy a stock because the price is low, as it’s low for a reason, and you’ll probably get the results you pay for if you’re not investing in quality companies.
2. Charlie Munger
“The big money is not in the buying and selling. But in the waiting.”
As Warren Buffett’s right-hand man and vice chairman of Berkshire Hathaway, Charlie Munger is famous for always keeping a level head, as Buffett often credits him for crushing the billionaire’s less favorable investment ideas.
Munger’s best advice, and the philosophy behind his fortune, is that money in the stock market is made over the long run rather than in the short term. Patience is key in the investment game, and if you want to be truly successful in this field you must be disciplined and understand the gravity of delayed gratification.
It’s important to have strong convictions about your portfolio, as there will be inevitable declines in both your individual holdings and the market as a whole. This means holding onto your valuable assets through rocky stretches of the economy and not pulling out at the first sign of market panic, as America has always come out of the other side of economic recession. Just think about last year’s coronavirus crash, if you sold your assets immediately after witnessing a sharp market decline and didn’t wait to see the light at the end of the tunnel, you’d be down a lot of money right now.
Your conviction to sell shares of a company shouldn’t solely be based on the state of markets or the economy. If you continue to believe in the company itself, it’s worth staying invested.
3. Benjamin Graham
“The investor’s chief problem—and his worst enemy—is likely to be himself. In the end, how your investments behave is much less important than how you behave.”
Known as the “father of value investing,” Ben Graham was one of the most successful investors of the 20th century, as well as a professor and mentor to Warren Buffett.
Graham understood that human emotion can often interfere with the logical thinking one must employ to master the stock market, and that if you’re not disciplined you will end up making irrational decisions, ultimately costing yourself money.
This means having a set-in-stone strategy that you apply to any investment opportunity you assess, and not just making decisions based on emotions or opinions. Staying disciplined to your strategy is important, but coming up with an effective one is just as crucial.
Every investor’s strategy looks different based upon their individual investment goals, economic situation, and risk tolerance, but no matter your approach to investing, it’s important that it be grounded in research and fact as it’s easy to be swayed by something that has little substance.
For the final decision, you’re the one pulling the trigger, but you need to ensure that you are doing so with a sound mind and a well-thought-out philosophy.
4. Jack Bogle
“Your success in investing will depend in part on your character and guts and in part on your ability to realize, at the height of ebullience and the depth of despair alike, that this too, shall pass.”
Jack Bogle created the first index fund as founder and CEO of The Vanguard Group.
His advice combines the key elements from our last two quotes, emphasizing the importance of keeping your emotions in check and also being able to ride out rocky stretches of the economy. These beliefs go hand in hand, as it’s easy to let panic overtake you when the economy declines rather than waiting for the light of day.
In the stock market, it is inevitable that you will sometimes lose, but it's about how you handle loss and rebound from it that defines you as an investor. This takes fortitude and being able to stomach short-term loss for long-term gain.
As Bogle emphasizes, every market from bull to bear to everything in between will change in time, but what must remain the same is your rationale and strength of character.
5. Carl Icahn
"You learn in this business… If you want a friend, get a dog."
Founder and controlling shareholder of Icahn Enterprises, Carl Icahn is an activist investor who buys large stakes of companies in an attempt to obtain voting rights to increase shareholder value. He also briefly served as a financial advisor under President Trump before stepping down from the role.
Icahn’s message is about the ultra-competitive nature of the investment industry. There have to be losers in order for there to be winners, and it’s hard to trust people when you don’t know if they’re competing for your best interest or their own.
It’s important to be wary of the industry and those in it just as much as it is to be confident in your own strategy. Of course you should listen to the advice of others, but make sure to verify the information you take in and never act solely based on the opinion of someone else.
It’s crucial that you seek knowledge from a variety of sources and trust your researched facts over someone else’s misinformed opinion. Even the most successful investors are constantly learning and adapting, and you must do the same.
6. Peter Lynch
"You want to buy in the second or third inning and get out in the seventh or eighth."
Peter Lynch is considered one of the greatest mutual fund managers ever, averaging a 29.2% annual return as manager of Fidelity’s Magellan Fund from 1977-1990.
Lynch says that the best time to buy a stock is early on in the company’s development, before it becomes mainstream but after it has gotten off the ground, and to sell at its peak before the company’s industry changes faster than it can keep up. Of course knowing which inning a company is in can be hard to determine, but that’s where your research comes in!
As tempting as it is to invest in the Apples and Amazons of the market for their consistent returns, these companies already have sky-high prices, and don’t have the same growth potential as a smaller company. It’s certainly easier to be confident in a blue-chip company, and you should definitely hold some of these less volatile assets in your portfolio, but finding a diamond in the rough is where the best investors make their money.
As Lynch also says, “big companies have small moves, small companies have big moves.”
7. 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."
Founder of PIMCO and manager of their Total Return Fund until 2014, Bill Gross is known to many as the “king of bonds.”
Gross’s advice is about trusting your process, your research, and most importantly your gut. If you’re confident you have a good idea, backed by knowledge and fortified with conviction, don’t be afraid to act on it.
Diversification is always a good rule to follow, but it can diminish the profits from a big winner in your portfolio. Of course finding these big winners isn’t easy, but anchoring your portfolio with solid companies that have long track records of growth gives you a cushion to fall back on if your great idea turns out to not be so great.
Finding the balance between diversification and putting all of your eggs in one basket has to do with your individual risk tolerance and confidence as an investor, but don’t bury the potential of your best ideas.
8. Dennis Gartman
"Be patient with winning trades; be enormously impatient with losing trades. Remember it is quite possible to make large sums trading/investing if we are 'right' only 30% of the time, as long as our losses are small and our profits are large."
An accomplished trader, Dennis Gartman is famous for his publication of The Gartman Letter from 1987-2019.
Gartman’s key to success is all about timing. For your winning trades, let them run, don’t just sell at the first sign of profit. If you start to see an asset declining in value, don’t wait too long to pull the trigger and sell.
Gartman reminds everyone that you don’t need to be right all the time, not even most of the time, to make out handsomely in the stock market, but it’s all about timing. At the end of the day, it’s about the quality of your winners and not letting your losers drag you down.
Remember, it’s ok to lose a little money, this is inevitable, but it’s not ok to lose a lot.
9. Sir John Templeton
“The four most dangerous words in investing are: ‘This time it’s different.’”
The day World War II began, John Templeton told his broker to buy every stock trading for less than $1 ($18 today), and made a fortune as the war revitalized American industry. He later founded the Templeton Growth Fund, which averaged 15% annual growth over a 38 year period.
As someone who was born during World War I and lived through World War II, Templeton’s advice is to understand history, learn from it, and not repeat the mistakes of the past. The world and its markets are continuingly changing, but there are some basic truths that stand the test of time, and it’s essential to understand the reactions of yourself and others when investing.
Every situation, from terrorist attacks to global pandemics, sets a different economic landscape, but the market will usually adapt to shocks quickly and reorganize itself around preexisting principles. Don’t abandon your past guidelines when approaching a recognizable situation, rather look to the past and compare it to the present and the future.
“The definition of stupidity is doing the same thing over and over again and expecting different results. Awareness is the answer.” Don’t be stupid!
10. Carlos Slim
"I am convinced that all this poverty in Mexico and in Latin America, like it's happening in China, is the opportunity to grow. It's an opportunity for investment."
One of the richest men in the world, Carlos Slim owns hundreds of companies and employs over 250,000 people.
Slim evaluates situations with an optimistic point of view, seeing opportunities for future growth in and amongst inadequacy. As is a common theme among many of these investors highlighted in this article, playing the stock market is a long-term game, which means you need to be in the mindset of constantly looking ahead to identify areas for future growth.
Slim applies this thinking to underdeveloped countries and their opportunity for future economic output, but this same idealogy should be applied to companies as well. Evaluate the present momentum and future goals when researching a company, and if the company is structured well over solid management (think back to Warren Buffet’s advice), then there is tremendous opportunity for an investment in it to pay off.
Great investors are forward-thinking, and if you’re looking to jump on the bandwagon for a stock that has already exhibited short-term gains (e.g. GameStop recently), then chances are you’re already too late. Instead, be able to look at, understand, and identify opportunities for growth objectively.
11. Jaime Rogozinski
"A massive group of people have organized where they collectively have a seat at the poker table, which was previously invite-only. You can't ignore them anymore."
Not really a stock guru compared to the other great investors on this list, but I had to include the founder of WallStreetBets after the recent GameStop fiasco plowed through the financial world.
Rogozinski, and the movement he helped launch, represents the little guy taking action and getting rich. As Rogonski says, the stock market was previously impacted mainly by wealthy investors, but with the availability of modern-day research and internet trading platforms, there has never been a better time for the average person to influence and gain from the stock market.
If the GameStop rally has shown us anything, it’s that the average person can win in the stock market too, and that you shouldn’t be intimidated by brokerage firms and large hedge funds beating you out. At the end of the day no one can predict the future, and large firms are no longer the only investors influencing market behavior.
I want to leave you with this message now that we’ve picked the brains of some of Wall Street’s greatest: don’t be afraid to apply this knowledge, stay informed, and take action towards securing your financial future. Investing is, after all, part art and part science.
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