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All You Need to Learn from All-Time Great Investors

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Synopsis:

Whether you are beginning to invest or an experienced investor, there is a lot to learn from all-time great investors, like Benjamin Graham, John C Bogle, Warren Buffett, George Soros, Carl Icahn, and Peter Lynch.


These greats devised a system to invest by doing their own analysis. They found a way to take decisions rationally, without letting emotions come into the picture. Hence, if you learn from them, you too can become an intelligent investor.

 

The two most important lessons you can learn from them are: Do Your Own Research and Be Disciplined About Investing.


If you are about to start participating in the Indian Stock Market, then learning lessons from all-time great investors, like Benjamin Graham, John C Bogle, Warren Buffett, George Soros, Carl Icahn, and Peter Lynch, should be your top priority.

While these greats differed in terms of their approach, they all believed in being extremely disciplined about investing. They suggested investors to have their own approach, do their own analysis, and take action only if they have to and not because everyone else is doing it. Read this blog, as it will help you in learning lessons from these great investors.

Benjamin Graham

Benjamin Graham is one of the most significant investors of the 20th century. He is famous for writing an extremely important book on investing called “The Intelligent Investor” and mentoring Warren Buffett.

Graham firmly believed that we should invest with a margin of safety. In simpler words, it means that we should buy a stock only if it is available at a significant discount to its true value. There could be many ways to find the true or intrinsic value of a stock.

To do this, you need to learn how to analyse a company’s balance sheet or how to assess the true value of its assets and liabilities. At times, companies trade at a discount to their true value because their stocks take a beating for several reasons. Graham suggested that we should invest in such companies.

John C Bogle

There is a lot to learn from John C. Bogle, a famous American investor and the founder of The Vanguard Group. Bogle believed that if you are genuinely an investor, you invest in a business and hold on to it forever. He did not believe that speculation has a place in an investor’s portfolio because, as per him, speculation is betting on price.

In other words, Bogle believed that an investor is like an entrepreneur. As an entrepreneur does not speculate on the price of his business and stays invested in it for a long time, so should an investor.

Warren Buffett

Perhaps no other investor is as famous as Warren Buffett. Buffet advocates that we should be fearful when others are greedy and greedy when others are fearful. When most people are greedy, it inflates stock prices because most of them end up buying stocks.

On the other hand, when most people are fearful, a kind of panic sets in the stock market, causing stock prices to fall at a rapid rate. In such a situation, often stocks are available at a discount. Hence, we can buy stocks when others are fearful.

In other words, Buffet advises us to not join the herd and use our own minds while investing. Even when stock prices are depressed, an intelligent investor should not buy all the stocks. Instead, he should analyse stocks and when he thinks that a certain stock is available at a discount, he should buy it.

George Soros

George Soros is one of the most famous investors and philanthropists in the world. He is known for speculating on a short-term basis. Hence, his bets are huge and highly leveraged in the direction of financial markets. Soros believes that when an investor has conviction and his timing is right, he should not just bet, instead he should bet hard. While Soros’ strategies have worked extremely well for him, his strategies can be risky for retail investors because they involve betting big. If at all you want to bet, you should do so only after doing thorough research.

Carl Icahn

Carl Icahn is one of the most successful investors in the US. His strategy involves taking a large stake in companies and expecting such companies to grow by changing their corporate policies.

The biggest lesson that we can learn from Icahn is by paying heed to his warning about two cardinal sins of investing: acting on an impulse and not acting altogether. When an investor acts on an impulse, he does not analyse the situation properly and he is in a rush to take a stock market position. As a result, he ends up making a huge mistake.

Conversely, when an investor does not act altogether, he is either too scared to take action or is just lazy. Whatever the case, he ends up letting trading opportunities go, which might have helped him make money.

Peter Lynch

Peter Lynch is a legendary investor who was earlier the manager of Magellan Fund at Fidelity. Lynch firmly believes that we need to know the assets we own. If you invest in a company, you need to know it thoroughly, like it is your own business.

Lynch also believes that you should not invest in a company whose business you cannot explain in 30 seconds or less. His advice is extremely relevant in this day and age when people invest in all sorts of instruments, like shares, debentures, futures & options, bonds, mutual funds, etc.

As the options to invest are many, we are all vulnerable to investing in securities we do not entirely understand. However, Lynch says that we should first understand an asset and only then should we invest in it.

Conclusion

If you are about to open demat account, you should learn as much as you can from the all-time great investors mentioned above. A lot of things might have changed in the world of finance. However, the basic human traits remain the same. Moreover, with the advent of the internet, people can trade from anywhere and anytime. Hence, the probability of making a mistake is also high. By learning lessons from the all-time great investors, you will have a thorough understanding of the market, which will prevent you from making mistakes.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

For All Disclaimers Click Here: https://bit.ly/3Tcsfuc

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Frequently Asked Questions

What are the key investment strategies used by legendary investors like Warren Buffett and Benjamin Graham?

Answer Field

Warren Buffett believed that we should be fearful when others are greedy and greedy when others are fearful. In other words, when too many investors are either buying or selling, they perhaps are doing it too much because they have joined the herd. From Benjamin Graham, we should learn to buy stocks only if they are available at a discount to their true value.

How do all-time great investors approach risk management in their portfolios?

Answer Field

All-time great investors believe in the margin of safety. In other words, they buy those stocks that are available at prices lower than their intrinsic value. Besides, whenever they take a position, before doing so, they analyse the maximum possible losses for taking that position. If they are comfortable with incurring the maximum possible losses, only then do they take a position.

What common traits do successful investors like Peter Lynch and Charlie Munger share?

Answer Field

Both Peter Lynch and Charlie Munger believed in buying only those businesses which they genuinely understood. If you understand what makes a business successful and what makes it stand apart from its competitors, only then should you think of buying a stake in it.

How do great investors make decisions during market downturns?

Answer Field

Great investors often take a long-term view of a situation. Hence, when the market begins to decline, they do not panic and start doing what most other investors are doing. Instead, they think for the long run. At the same time, they also learn quickly from their mistakes. Hence, when they think that the decline in the market is for valid reasons, they are also willing to change their strategies.

What long-term investing principles can be learned from iconic figures like John Templeton and Philip Fisher?

Answer Field

John Templeton firmly believed in thoroughly analysing stocks before taking a position in them. Philip Fisher believed in collecting all kinds of information about a stock from diverse sources, like customers, competitors, and vendors because such varied information provides a holistic view of a company.

How have the investment philosophies of past greats influenced modern-day investing techniques?

Answer Field

Past great investors have helped people understand the psychology of the market. Learning lessons from such masters can help you avoid making mistakes. They have made people realise that while the market follows certain rules, it can have its own mind. In other words, market movements cannot be entirely explained and there is always a possibility of something unpredictable.

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