No matter what style a successful investor uses it always involves hard work, time, and research. Each of these top ten investors of the past decade used innovative methods for picking stocks, and a passion for the market to lead them into fantastic monetary gains. If you study the best, you can use their strategies to build your own portfolio.
Benjamin Graham, the father of investing, taught Value Investing, buying stocks at less than their intrinsic value, at Columbia Business School in 1928. He wrote the classic book, “Security Analysis,” the bible of investments. Warren Buffet sat under his tutelage, and uses updated forms of his strategy today.
Warren Buffett, the second richest man in the world, is a long-term value investor. His strategy involves buying uncomplicated companies, where earnings can be predicted confidently, and that generate cash. His favorite industries are personal products and beverages, because people buy them regardless of the economy. He holds Coca Cola and Gillette.
Another brilliant investor is Peter Lynch, who managed the Fidelity Magellan fund for thirteen years, beating the S&P 500 for eleven of them and converting a $22 million fund into $14 billion in that time. He categorized companies and looked for fast growers. His big successes included Taco Bell and Pier One.
T. Rowe Price, a cyclical investor in long term growth, concentrated on industry leaders with outspoken management, R&D leaders, strong balance sheets, high return (10%+) on capital, and above average earnings growth. He did well with Xerox and Texas Instruments.
Kenneth Fisher bought 1.5% of Verbatim Corporation. The mainstream market predicted that poor management and finance decisions would cause this computer diskette company to drop in value. But, within 2 years it’s shares went from $3.50-$55. With great instincts, he called the top of the tech bubble on March 6, 2000, and predicted the last three bear markets (’87, ’90, 01/’02).
Sir John Templeton’s strategy includes flexibility and searching for global value. In 1939 he bought $100 worth of all 104 stocks on the NYSE selling for under $1.00. Three years later he profited handsomely on 100 of them. Often a contrarian, Templeton, like Fisher, sold tech stocks in 2000 right before their disastrous drop in price.
Bill O’Neil seeks out growth stocks with upward price potential. He devised an acronym C-A-N-S-L-I-M to sum up his investment strategy.
C=Current quarterly returns
A=Annual earnings
N=New products and management
S=Supply and demand
L=Leaders
I=Institutional sponsorship
M=Market direction
John Neff used this formula: [(Earnings growth + Dividend yield) divided by the P/E ratio] to fatten his portfolio. Instead of buying big oil companies, he invested in drilling pipe or oilrig companies that supplied the giants. In 1984 his fund invested in Ford, whose P/E had sunk to 2.5. From $14, within 3 years it increased to $50,making his Windsor Fund half a billion dollars.
John Bogle founded the Vanguard Group mutual fund in 1974, which became one of the world’s largest. Creating the first Index 500 Fund, he advocates investing in broad based funds that are no-load, low-cost, low turnover, and passively managed, and prefers index funds to traditional mutual funds. Calling the stock market “a giant distraction” he reminds us that we are investing in businesses that pay dividends not in the market, which is volatile and fickle.
Hungarian born financial expert George Soros opened a hedge fund, and has been criticized for speculation that helped weaken Asian and Latin American economies. His Quantum fund, achieved a 4000% return in ten years. His net worth reached $11 billion. He favored currency trading and sold the British pound short about 10 billion pounds worth, earning him the infamous title of “man who broke the bank of England”.
These ten famous investors studied the market and were able “to read the writing on the wall” and predict future trends. With hard work and time anyone can succeed in this fascinating financial market.