It is said that the best
way to learn the art of investing is to learn it from the Gurus. We look at 8
such global stalwarts of the investing world. Although they are global
investors, they do have had a substantial influence on how Indians invest. One
condition was that they must not be academicians but must have handled real
money. To this day, they continue to influence Indian investors and fund
managers. Here is our check list on the 8-member elite club.
1. You always begin with Ben Graham
For anybody even remotely interested in the vagaries of the
stock market, Ben Graham is an obvious choice. He introduced the concept of
value investing to the world and even some of the most successful investors of
today like Warren Buffett swear by Ben Graham’s approach. Graham focused on the
fundamentals of the stock and bought only if there was a margin of safety in
the price. That principle has been passed down through the generations. Apart
from being a successful investor himself, Ben Graham bequeathed to the world
the scintillating art of investing.
Buffett; does he need an introduction?
No, he doesn’t! Best known for his long term picks like Coca
Cola, American Express, Wells Fargo and much later Apple. Warren Buffett has
built a fortune through fundamental investing. Buffett claims that he is not
worried even if the markets shut for five years. His principal is to look at
the business behind every stock and check if it is genuinely profitable.
Buffett brought in the concept of moat, which refers to the unique advantage or
barrier that the business can create. In monetary terms, he is the most
successful equity investor of all time.
3. Peter Lynch
and the art of stock picking
It is very unlikely that any aspiring investor anywhere in
the world has not read his landmark books, “One up on Wall Street” and “Beating
the Street”. Lynch laid emphasis on selecting stocks from the most unlikely
places and looking for cues all around you. He successfully managed to beat the
index for more than 10 years in succession at Fidelity Magellan with his out of
the box approach. To an extent, Fidelity owes its formidable reputation to
Livermore; the man who taught us to trade stocks
Livermore was not an investor and never claimed to be one.
He got his kick from trading. This was long before the era of computers and he
relied on the tape. He remains one of the most successful traders in the
history of the markets. Livermore was the first to figure out that in trading
there is no bull side or bear side, but only the right side. The right side is
what the market is telling you and hence he never tried to beat the market.
Instead trade within the market trend. Livermore has been like a Bible for
traders across the world and he remains relevant to traders across the world to
emerging markets: John Templeton way
If emerging markets like India and China are hot markets
today, it is largely due to the efforts of a man called John Templeton. He
propounded in the 1970s that emerging markets would sustain higher growth for
longer periods of time and would make better investment cases. Over the years,
John Templeton has been bang on target and it is hardly surprising that his
fund has done exceedingly well. In a way, Templeton was the torchbearer for US
fund managers to diversify their risk by investing in emerging markets.
6. Index and
save money; the Jack Bogle way
You may wonder why we have the father of index funds as a
marquee investor. He was the first to realize that making retail investors park
their money in low cost index funds could be the best way to generate wealth.
Buffett had commended Bogle in his annual newsletter for saving nearly $1
trillion in costs for investors and creating phenomenal wealth for retail
investors. His fund Vanguard manages over $4.3 trillion currently.
7. George Soros
– Audacity of conviction
Back in 1992 when fund managers were still celebrating their
millions, one audacious trader made a profit of $1 billion betting against the
UK£. The pound fell sharply after it was ejected from ECU. Soros made a
similarly audacious bet against Asian currencies before they crashed in 1998
and also against equities in 2008. Along the way, Soros also lost a pile of
money betting against Donald Trump, but then that is what audacity is all
8. Carl Icahn –
The investor who made companies behave
Among all the other investors, we have included Carl Icahn
in this elite list for the huge influence he had; not only on investments but
also on the way corporates behaved. Icahn believes in taking a significant
stake in a company and then force the management to work in the interests of
the shareholders. This approach has at times been controversial but the bottom
line is that he made billions of dollars for his investors and for himself. It
was Carl Icahn who pressured Apple to reward shareholders more liberally. That
says a lot!