The strategies of these and other legends, such as Peter Lynch or Bill Gross, to achieve the highest profitability
If there was a walk of fame in the financial world, it would surely have its gold star Warren Buffett, Peter Lynch, George Soros and Bill Gross. Having just started the year under various uncertainties —conflict between the United States and Iran , lower economic growth, low interest rates, Brexit and trade tensions—, it might be convenient to review the investment philosophy of these more than millionaires.
Warren Buffett, the Wall Street guru par excellence,
Also called the Oracle of Omaha, has a fortune close to 90,000 million dollars (about 80,935 million euros). He began to amass it when he was just over 11 years old, when he bought shares of a company for 38 dollars (34.1 euros), and even today at 89 years old he is still active as head of Berkshire Hathaway, which closed 2019 with a return of 11%. “Price is what you pay, value is what you get.” It’s not just about statistically cheap clct stock. You have to understand what you are buying (“the risk lies in not knowing what you are doing”) and what its price incorporate. It is about looking for good and understandable businesses (quality values) at attractive prices (below their intrinsic or real value); to go towards good companies whose dynamics are known, well managed, that know how to adapt to the changes that are taking place in their industry, capable of lasting for many years and with some clear competitive advantage. Invest intelligently in the future (value investing philosophy) . Of course, Buffett is a great advocate of the long term:”
Peter Lynch, the famous Magellan fund investor at Fidelity Investments,
Achieved an average annual return of close to 30% between 1977 and 1990. He has always been generous in sharing his investment fundamentals. In his book One Up on Wall Street (From him) he offers in an entertaining way the basic lines of his investment philosophy; in Beating Wall Street (Beating the Street) he expands on the most relevant investments of his professional career. Although retired and devoted to philanthropy, he still shares his ideas (and advises Fidelity) today.
For a private investor (“it can even outperform the professionals”),
these are: you have to know the company in which you invest and the reason for your choice (“stocks are not lottery tickets”); have patience (“it is very important to have the stomach to endure price corrections and, if you don’t have it, don’t buy shares”); don’t hold stocks that are no longer worth (“there’s no shame in losing money; yes in holding on to a stock with bad fundamentals”). In his opinion, it is also important to spend some time using mathematics (“the required level is fourth grade, so no need to worry”) and to check that the company has sufficient liquidity (“bankruptcies are a big problem” ).
The way to build wealth is to start investing early. The most dominant ingredient when it comes to investing is time. With the influence of compound interest, your investment can grow and your cash can work. You may feel discouraged with investing, don’t be discouraged.
Being consistent is an important part of investing strategies.
You need to set aside money for your future every month and make it a habit to save some money every time. To make the procedure basic, set up automatic contributions each time you receive a payment so you don’t have to consider it.
Investing comes with a number of risks, however, there are ways you can be active in securing yourself. The key segment is to expand your investment. You need your asset allocation or how much money you have in each investment vehicle, for example, stocks, bonds and money to make a sound mix, so you can get the add-ons you need while lowering your overall risk.
One of the brilliant rules of investing is to have a good and appropriately expanded portfolio. To do this, you need to have a variety of investments that will usually work differently over time that can help strengthen your overall portfolio and decrease with huge risk.