Guru is aspiration, guru is inspiration. Learning is limitless, whether content wise or age wise. India has always been famous for its Guru-Shisha tradition. Hence, on this Teacher’s day, we dedicate to learning more on managing money. We take a look at few investing gurus and their ideas on money and learn how to follow their investing tips achieve your financial goals.
Famous Students include Warren Buffet, Charlie Munger
“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.” - Benjamin Graham, an investor and investing mentor who is generally considered the father of security analysis and value investing. An author of books like “Security Analysis” and “The Intelligent Investor” inspires not only the masses, but also the investing maestro Warren Buffet.
Benjamin Graham emphasizes on 3-investing principles. Always invest with a margin of safety, expect volatility and profit from it and know what kind of investor you are.
Investing with a margin of safety provides protection, in case the things don’t work out as planned. Value investing can be substantially profitable once the market re-valuates the stocks and ups its price to fair value. Use the volatility of the market to your advantage, rather than fearing the wild fluctuations to get bargains in the market or to sell out when holdings become way too overvalued. Understanding what kind of an investor are you - an active or a passive one, a speculator or an investor is essential to choose the right stocks for your portfolio.
Managed the legendary Magellan Fund at Fidelity
“People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.” - Peter Lynch, one of the most successful investors believes that an investor requires intelligence, awareness, patience, a bit of skill and ability to do some research to succeed in stock market. The author of “One Up on Wall Street” and “Beating the Street” managed the Magellan Fund at Fidelity Investments and managed to gain double the returns on S&P500.
Lynch suggests investing for a long-term to earn higher returns from the stock market, the power of compounding can make a huge difference over time. He believes stock markets act as better investment, than any other form of investments. However, choosing right stocks at the right time by conducting a thorough research of the company and understanding the various growth aspects of the company is very essential to gain returns on your stocks. Not getting easily afraid, accepting periodic losses and understanding that not all your stocks will do well, is something to look out while investing.
Introduced an investment strategy called the ‘magical formula of investing”
“Stock prices move around wildly over very short periods of time. This does not mean that the values of the underlying companies have changed very much during that same period. In effect, the stock market acts very much like a crazy guy named Mr. Market.” - Joel Greenblatt, the former portfolio manager of Gotham capital led his funds to achieve an average annualized compounded return of exactly 50%. The author of books “You can be a Stock Market Genius” and “The Little Book that Beats the Market” believes in the power of value investing and understanding what you are buying.
He suggests valuing the company and buying them at a discount. Greenblatt introduced the magic formula to help investors, filter companies that are good prospects from a value investing perspective. He says that if you can’t figure out the value of a company, you have no business investing in it.
Like a teacher who guides you through life, all the three investment gurus have emphasized, that before you place your money in something, have complete understanding of what you are investing into. Investing may seem hard but, with the right guidance, tact and patience you can overcome any obstacle.
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