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How do Legendary Investors choose what stocks to invest in ?

Author

AJ Neeme
November 10, 2024

How do Legendary Investors choose what stocks to invest in ?

This list isn’t for everyone.

And, it is not exhaustive.

It’s made up of investors who have been successful for 2 to 3 decades.

I.e.: They’ve been around the block a few times and survived multiple downturns.

But, if you’re looking for investors who are likely to jump on the latest trends or take large amounts of Risk, this isn’t the list for you.

Let’s get to it!

1) Warren Buffett:

  • Bio: Often referred to as the "Oracle of Omaha," Warren Buffett is one of the most successful investors of all time. His investment philosophy centers around value investing and long-term holding periods.

  • The Wisdom: "Invest in businesses you understand."

  • The Application: Before investing in a company, ensure you have a clear grasp of its business model, industry dynamics, and competitive advantage. By focusing on businesses within your circle of competence, you can make informed decisions and mitigate risks.

2) Peter Lynch:

  •  Bio: A legendary mutual fund manager, Peter Lynch is known for his ability to identify high-growth stocks. His investing philosophy emphasizes finding companies with strong growth potential and understanding their underlying businesses.

  • The Wisdom: "Look for companies that can grow tenfold over time."

  • The Application: Identify companies with strong growth potential, such as those in emerging industries or with innovative products and services. Consider factors like strong management teams, sustainable competitive advantages, and solid financial performance.

 3) Benjamin Graham:

  • Bio: Often called the "father of value investing," Benjamin Graham's investment philosophy focuses on finding undervalued securities with a margin of safety. His book, "The Intelligent Investor," is considered a classic in the field of investing.

  • The Wisdom: "Invest in undervalued securities with a margin of safety."

  • The Application: Seek out stocks that are trading below their intrinsic value. Analyze financial statements, assess management quality, and consider long-term prospects. By investing in undervalued companies, you can reduce downside risk and increase your potential for significant returns.

 3) Charlie Munger:

  • Bio: A renowned investor and long-time business partner of Warren Buffett, Charlie Munger is known for his sharp intellect and eclectic approach to investing. He emphasizes the importance of understanding multiple mental models.

  • The Wisdom: "Use multiple mental models to understand the world."

  • The Application: Develop a diverse toolkit of mental models from various disciplines, such as psychology, history, and physics. By applying these models to investment decisions, you can gain a deeper understanding of complex situations and make more informed choices.

 4) Howard Marks:

  • Bio: A renowned investor and founder of Oaktree Capital Management, Howard Marks is known for his insightful investment memos and his emphasis on risk management and contrarian thinking.

  • The Wisdom: "The most important thing is to not lose money."

  • The Application: Prioritize risk management and avoid taking excessive risks. Be patient and disciplined, and invest with a long-term perspective.

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The information contained in this newsletter is for general informational purposes only. It should not be construed as financial or investment advice. Please consult a qualified financial advisor before making any investment decisions.