World's greatest investors and their strategies

Nilesh Soman Keynotes Financial

The word “Strategy” refers to a plan of action design to achieve a particular goal. In other words we can said that the strategy is the direction and scope of an organization over the long term which achieves advantages for the organization through its configuration of resources within a challenging environment to meet the needs of markets and to fulfill stakeholders expectations.

I thought it would be interesting to look at some of the best investors with their strategy in modern times. These are all individuals who made significant amounts of money by sticking to solid investment philosophies. If you look at their strategies as well, they aren’t very difficult or complex; they stick to basic financials of a company and look for value. If they believe there is value they invest and make profits. By this article, I am trying to throw some light on those strategies. Following are some of the important strategies adopted by some greatest investor of all times.

1. Warren Buffet Investment style: Long-term growth Best investment: Coca Cola, 1988 Buffett is a phenomenon. In 1986, he was briefly the richest man in the world, with a net worth of $16bn, thanks entirely to his stock picking skills and fee income from investment management. He is now worth over $20bn. Yet he started out in 1954 with just $100 to invest. After training as a broker with Benjamin Graham, he founded an investment partnership, with himself as manager.

2. Sir John Templeton Investment style: Global contrarian Best investment: Japan, 1962 Templeton’s career began shortly before World War II when he borrowed $10,000 and turned it into $40,000 in four years. Famous for his Templeton Growth Fund, he built his fortune spotting opportunities internationally before others did. Templeton advises investing for real returns, keeping an open mind, and going against the crowd.

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Nilesh Soman

Keynotes Financial

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3. Peter Lynch Investment style: Growth and recovery Best investment: King World Productions. He started as an analyst in 1969, was promoted to director of research in 1974, and took over the Fidelity Magellan fund in 1977. By 1990, he decided to take early retirement in order to spend more time with his family, its value had swollen to $14bn. No manager in history has ever run so large a fund, so successfully, for so long.

4. Philip Fisher Investment style: Long-term buy and hold Best investment: Motorola, 1955 After training as an analyst in a San Francisco bank, Phil Fisher started his own investment advisory business in 1931. He has always specialized in the type of firm for which California is best known: innovative technology companies driven by research and development. But he began almost 40 years before the name Silicon Valley was even thought of.

5. George Soros Investment style: Short term speculation Best investment: Shorting the British Pound, 1992 Specializing in bonds and currencies, Soros turns broad economic trends into highly leveraged plays. He instructs investors to focus not on the amount of winners and losers but on the amount of money made or lost respectively. His Quantum fund has posted some of the all-time biggest profits, including a $2 billion dollar gain by shorting the British Pound and nearly breaking the Bank of England.

6. Benjamin Graham Investment style: Value Best investment: Teacher and mentor to Warren Buffet A pioneer in value investing, Benjamin Graham initiated the use of fundamental analysis and value investing principles used by fund managers today. Graham recommends buying stocks trading below their historical P/E ratio and below their book value. Because they pose less risk, Graham prefers large companies with strong sales.

7. David Dreman Investment Style: Contrarian Best investment: Health care After losing 75% of his net worth by following the crowd, Dreman became fascinated with the role psychology plays in investing, a role he considers the most important yet least understood. His portfolio includes a high percentage of financial and health care stocks. Dreman advises exercising strict discipline, and buying battered stocks with low P/E ratios and higher than average yields.

8. John Neff Investment Style: Value Best Investment: Ford Motor Company, 1984 While managing the Vanguard Windsor fund, Neff implemented a simple investment strategy focusing on companies with low P/E ratios and solid dividends. He avoided companies with exposure to cyclical downturns, preferring solid companies in growing fields with a strong fundamental case for investment. Neff instructs investors to sell when investment fundamentals deteriorate or the price meets expectations.

9. T. Rowe Price Investment style: Value and steady growth Best Investment: Merck, 1940 Cyclical investor in long-term growth companies, buying at the bottom of the business cycle and selling at the top. In later life, Price switched to a more value-driven style, investing in steady-growth, oil and gold stocks. Price was very much an entrepreneur rather than a manager. He liked to start a fund, establish it and then move on to launch another one. Some of his most famous funds are still running today: T Rowe Price Growth Stock, New Horizons and New Era.

10. Ralph Wanger Investment Style: Medium to long-term small growth Best Investment: International Game Technology, 1988 After a brief period in insurance, Wanger joined Harris Associates in 1960 as an analyst. Later he became a portfolio manager. In 1970, he was put in charge of the Acorn Fund. He has since turned this into one of the top-performing growth funds of the last 30 years.