Analyzing the lives of some of history’s most successful investors seemed like an exciting research project to me.
You may recognize some of them, but there are others you may not. All of these people have unique and fascinating approaches to investing over the long term, therefore there is no specific order.
These people built huge fortunes by sticking to proven investing strategies.
Their tactics are straightforward; they focus on the bottom line while evaluating a firm. If they see potential, they put money into it, and if they’re right, they profit tremendously.
The best investors have a long history of making returns that beat the market over the course of their careers. When they do well, the investors who put their money in them get richer. They are well-known for their uncanny ability to make money.
Here’s a closer look at some of the world’s most famous investors:
The Vanguard Group, which most people connect with low-cost mutual funds, was founded by Jack Bogle. That is not how he phrased it. After graduating from Princeton, he moved to work at Wellington Management Company, where he swiftly progressed through the ranks to become Chairman. Despite being dismissed for a botched merger, he learnt a valuable lesson and went on to start The Vanguard Group.
Bogle planned to expand The Vanguard Group with his new firm and a novel concept for index mutual funds.
Vanguard Group has grown to become the world’s second biggest mutual fund firm. Bogle prefers to make his investment technique as simple as possible, and has outlined eight fundamental criteria for investors:
- Choose low-cost funds.
- Consider the additional expense of guidance wisely.
- Do not overestimate previous fund performance.
- Only use previous performance to establish consistency and risk.
- Be wary of celebrity managers.
- Be cautious of asset size.
- Don’t amass an excessive amount of money.
- Purchase and hold your fund portfolio!
He even has devoted fans called as bogleheads.
Read his best-selling book, The Little Book of Common Sense Investing, in which he expresses many of these ideas.
While his net worth of $80 million may not seem to be much, Vanguard has grown to manage over $5 trillion in assets.
In 1975, Jack Bogle established the Vanguard Group. He invented the no-load mutual fund, which does not charge a sales fee since it does not rely on third-party brokerages. He also launched the first low-cost index fund, the Vanguard 500, which intended to mirror the performance of the S&P 500 for a low fee. His method, which has only risen in popularity with the introduction of exchange-traded funds (or ETFs, a sort of index fund), allows investors to capture market-beating gains without paying exorbitant fees.
Buffett is maybe the most well-known investor of all time. He was known as the “Oracle of Omaha” because he worked for and learned from Graham until he retired. Buffett subsequently formed his own investment firm to concentrate on acquiring interests in high-quality firms at reasonable costs.
He bought textile manufacturer Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) in 1965 and transformed it into a holding company for his expanding stock portfolio. Berkshire Hathaway’s portfolio includes significant investments in a diverse variety of public firms.
He has transformed Berkshire Hathaway into an insurance, energy, and industrial behemoth with some of the world’s most recognizable brands.
Over many years, Buffett’s investing strategy has yielded impressive financial returns. Berkshire Hathaway has achieved an average annual return of 20% since 1965, about doubling the performance of the S&P 500 over the same time. To put such outperformance into context, the stock might plummet 99% and still beat the market.
Warren Buffett is largely considered as the world’s most successful investor, based on the amount of wealth he began with and the amount he was able to build it into. Prior to his partnerships, Buffett worked in numerous investing positions, the most recent of which paid him $12,000 per year. He had a personal savings of roughly $174,000 when he declared his partnerships. Today, he has increased that original investment to roughly $100 billion!
Buffett’s investment strategy is straightforward: purchase firms at a cheap price, enhance them via management or other changes, and realize long-term stock price gains (also known as value investing). He seeks for firms that he understands and keeps things simple.Many people have criticized him for not getting into the computer business or other areas, but by sticking to what he knows, he has done amazingly well.
His story is told in The Snowball: Warren Buffett and the Business of Life. It’s one of my favorite books ever.
Philip Fisher is considered the father of investing in growth stocks. In 1931, he founded his own investing business, Fisher & Company, which he ran until his retirement at age 91 in 1999. Throughout his seventy-year career, Fisher produced outstanding profits for himself and his customers.
Fisher concentrated on long-term investments. In 1955, he notably purchased Motorola shares, which he kept until his death in 2004.
He developed a fifteen-point list of criteria to look for in a common stock, focusing on two categories: management characteristics and business characteristics.
Essential managerial characteristics were Integrity, conservatism in accounting, accessibility and a long-term perspective, receptivity to change, effective financial controls, and sound personnel practices.
Important business traits include a focus on expansion, large profit margins, a high return on capital, a dedication to research and development, a great sales organization, a leadership position in the industry, and exclusive goods or services.
Common Stocks and Uncommon Profits is the title of his book if you want to simply follow his advice.
Benjamin Graham is best known for being Warren Buffett’s teacher and guide. It’s important to remember, though, that he became the “father of value investing” because of his work. He made a lot of money for himself and his clients on the stock market without taking huge risks. He was able to do this because the only way he knew how to invest in stocks well was through financial analysis.
He also helped make many parts of the Securities Act of 1933, which required public companies to release financial statements that had been checked by a third party. Graham also said that investors should have a “margin of safety” in their investments. This meant buying a business for a lot less than what a conservative value would be.
He also wrote The Intelligent Investor, which is one of the most famous investing books of all time. In it, he talks about how he thinks about investing.
Benjamin Graham was one of the first people to invest. In the 1920s, he came up with the idea of value investing, which is based on buying stocks for less than they are worth. Graham wrote Securities Analysis with David Dodd and The Intelligent Investor, two of the best-known books on investing. Graham had a big influence on Warren Buffett’s rise as a value investor. He taught at Columbia University and ran a fund.
Most people know George Soros as the person who “broke the Bank of England.” When he shorted the British Pound in September 1992, he put $10 billion at risk on a single trade. He was right, and he made more than $1 billion in a single day. It is thought that the trade made almost $2 billion in total. He is also well-known for managing his Quantum Fund, which made an average annual return of more than 30% while he was in charge.
In 1973, George Soros started Soros Funds Management, which later turned into the Quantum Fund. He is an aggressive and very successful hedge fund manager whose portfolio returns are always more than 30%, and in two of those years, they were more than 100%. Soros makes huge short-term bets on the direction of currencies and securities like stocks and bonds to make huge profits.
Soros tries to find big macroeconomic trends and turn them into high-risk plays in bonds and commodities. Soros isn’t in the Top 10 Greatest Investors because he doesn’t have a clear strategy. Instead, he goes with his gut and bets on what he thinks will happen.
Many people call Bill Gross the “king of bonds.” He started PIMCO and is its chief manager. He and his team have over $600 billion in fixed-income investments under their care.
Bill’s main goal is to buy individual bonds, but his investment style is to look at the portfolio as a whole.
He thinks that long-term investment success depends on two things: being able to create and explain a long-term outlook and having the right portfolio structure over time to take advantage of this outlook. He goes on to say that long-term should be about 3 to 5 years, and that if investors think this far ahead, they won’t get emotional stress from the day-to-day markets.
Mutual funds as we know them today were made by John Templeton. He got this idea from what he did himself: in 1939, he bought 100 shares of every company on the NYSE that was trading for less than $1. He spent a total of $10,400 to buy 104 different businesses. In the four years that followed, 34 of these companies went out of business, but he was able to sell the rest of the portfolio for $40,000. This made him realize the importance of diversification and investing in the market as a whole, since some businesses will fail and others will do well.
People said that John Templeton was the best at finding deals. He would also look for companies all over the world when no one else did. He thought that the best stocks to buy were the ones that nobody cared about. He also ran everything from the Bahamas, so he never had to go to Wall Street.
John Templeton is thought to be one of the best investors who bet against the crowd. During the Great Depression, he was known for buying 100 shares of each company on the New York Stock Exchange that traded for less than $1. That simple and brave bet made him very rich. In 1954, he started the Templeton Growth Fund, which became his most famous mutual fund and gave annualized returns of more than 15% for 38 years. He was also one of the first people to invest internationally. He set up some of the biggest and most successful international investment funds. He eventually sold his company, Templeton Funds, to the Franklin Group, which is now called Franklin Resources (NYSE:BEN).
John Templeton was one of the first people to use diversified mutual funds. Over 60 years, he had consistently good returns. In 1939, when the economy was bad and the stock market was down, Templeton borrowed $10,000 and bought 100 shares of every stock on the New York Stock Exchange that was less than $1. All but four of the stocks would make money, and he sold them for more than $40,000 after four years. In 1992, a $10,000 investment in the Templeton Growth Fund in 1954 would have grown to $2 million.
Pershing Square Capital Management is a hedge fund that is run by Bill Ackman. He has a history of making a lot of money. From 2003 to 2021, Ackman had an annualized return of 17.1%, which was much higher than the S&P 500’s (S&P INDEX:GSPC) average annual return of 10.2%. Ackman’s fund has lost 1.7% in the first three months of 2022, just like many other investors’ funds.
But that was still about three percentage points better than the S&P 500.
Ackman has been successful for a long time in part because of how he invests. Ackman buys big shares of public companies that he thinks would be worth more if they changed how they work or how they are built. After getting a stake in the company that gives him a lot of power, he uses that power to get the company to change how it does business. Ackman sells his shares when the company’s value reaches what he wants it to be worth.
Like Bill Ackman, Carl Icahn is an activist investor who buys large stakes in public companies to force changes that he thinks will increase the value of his investments.
Icahn became known as a “corporate raider” in the late 1970s and early 1980s. A “corporate raider” is someone who plans hostile takeovers of companies and then cuts costs and sells assets to make the value of the corporate raider’s shares go up.
Icahn’s activism is mostly focused on companies that he thinks are undervalued because of bad management. He often tries to force changes to a company’s leadership team and how it is run.
Carl Icahn is known as either a ruthless corporate raider or a leader in shareholder activism in the world of investing. I think your opinion will depend on what you do at the company he’s after. Icahn is a value investor who looks for businesses he thinks are badly run. He tries to get on the Board of Directors by buying enough shares so that he can be voted in. He then changes the senior management to people he thinks will do a better job of getting good results. Over the past 30 years, he has done this well a lot of the time.
Even though he doesn’t do true value investing, he does focus on undervalued companies. He just looks for ones that are worth less than they should be because of bad management, which he thinks is easy to fix once he is in charge.
Peter Lynch made a name for himself as an investor by running the Fidelity Magellan Fund, a mutual fund run by Fidelity Investments. Lynch took the fund’s assets under management from $20 million in 1977 to more than $14 billion in 1990. In 11 of his 13 years as manager, the Fidelity Magellan Fund did better than the S&P 500, with an average annual return of 29%.
Lynch wrote a number of important books about investing, such as One Up on Wall Street, Beating the Street, and Learn to Earn (with the latter co-authored with John Rothchild). Lynch’s books have a lot of helpful information about investing.
Peter Lynch is best known for running the Fidelity Magellan Fund for more than 13 years, during which time the amount of money under his control grew from $20 million to over $14 billion. More importantly, with an average annual return of 29%, Lynch beat the S&P500 Index in 11 of those 13 years.
Lynch always used the same eight basic rules when making his choices:
- Be sure of what you know
- Predicting the economy and interest rates is a waste of time.
- You have a lot of time to find and recognize great businesses.
- Don’t take long shots
- It’s important to have good management, so buy good businesses.
- Be open and humble, and try to learn from your mistakes.
- Before you buy something, you should be able to say what you want it for.
- There is always something to worry about. Do you know what it is?
Peter Lynch didn’t just make huge profits at Fidelity’s Magellan Fund; he also wrote “One Up on Wall Street” and “Beating the Street,” two of the best-known books on investing. His authority came from his 13 years at Magellan, where Lynch’s growth-focused fund earned an average of 29.2% per year, which was much higher than the average return of the Standard & Poor’s 500 index, which was 15.8%. Lynch turned $18 million into $14 billion for Magellan. If you had put $10,000 into Magellan in 1977, you would have had $280,000 when Lynch retired.
Another investor that few people outside of Wall Street will know. Steinhardt had a track record on Wall Street that still stands out: Over 28 years, the average annual return was 24%, which was more than double the S&P 500 during the same time period. Steinhardt did this with stocks, bonds, long and short options, currencies, and time horizons ranging from 30 minutes to 30 days, which is even more impressive. As a strategic trader, he is known for putting his attention on the long term while making investments in the short term.
Later in life, he talked about the six things investors need to do to keep their feet on the ground:
- Start making mistakes as soon as you can. The more hard lessons you learn early on, the less mistakes you will make later on.
- Make a living by doing something you like.
- Be smarter than other people. The key to research is to gather as much information as you can so you can be the first to notice a big change.
- Make good decisions even when you don’t have all the facts. You will never have everything you need to know. What matters is what you do with the information you know.
- Always go with your gut, which is like a supercomputer hidden in your head. If you give it a chance, it can help you do the right thing at the right time.
- Don’t put in little money. If you’re going to put money at risk, make sure the reward is big enough to make it worth your time and effort.
Cathie Wood is the founder, CEO, and chief investment officer of ARK Invest, an investment management company that sets up and actively manages a portfolio of ETFs. ARK Invest was started in 2014, and by the beginning of 2022, it was managing $24 billion in assets. As of early 2022, the ARK Innovation ETF (NYSE:ARKK), one of the company’s best ETFs, had gained 177% over the past five years.
Even though that is much less than its peak because tech stocks dropped, it was still better than the S&P 500’s 106% return in the same time period. Wood also thinks that the sell-off is a chance for long-term investors. Even though her fund aims for a 15% annualized return over a five-year period, she thinks it could earn more than 50% if the market continues to improve.
Chamath Palihapitiya is the CEO of Social Capital and works in venture capital. He is also an engineer. Palihapitiya was one of the first senior executives at Meta Platforms (NASDAQ:META), which used to be called Facebook. He is also an investor who does not do this for a living. He left Facebook in 2011 to start The Social+Capital Partnership, a venture capital fund for tech companies. In 2015, it was renamed Social Capital.
Palihapitiya uses the structure of a special purpose acquisition company (SPAC) to make money when companies go public. Richard Branson’s space company Virgin Galactic (NYSE:SPCE), the online real estate company Opendoor Technologies (NASDAQ:OPEN), the financial services company SoFi (NASDAQ:SOFI), and the data-driven health insurance company Clover Health are all examples of companies that SPACs have tried to merge with in the past (NASDAQ:CLOV).
As the stock market started to fall in 2021, the shares of the four companies lost an average of 30% of their market value. Even though some of Palihapitiya’s big investments didn’t work out, he is known as the “SPAC King” for his ability to bring new companies to the public market.
Sallie Krawcheck is the CEO of Ellevest and one of its founders. Ellevest is an investment platform for women that is based online and has a mission. She is also the head of the Pax Ellevate Global Women’s Leadership Fund, which is a mutual fund that invests in companies that do a good job of helping women get ahead.
Before those jobs, Krawcheck was the CEO of some of Wall Street’s biggest companies, such as Merrill Lynch, Smith Barney, US Trust, Citi Private Bank, and Sanford C. Bernstein. Krawcheck wants to help women reach their financial and career goals and close the pay and wealth gap between men and women.
David and Tom Gardner
We would be doing a huge injustice if we didn’t mention David and Tom Gardner. In 1993, they helped start The Motley Fool, a company that helps people get out of debt and become financially free.
Since they started their main service, Stock Advisor, in February 2002,, the Gardner brothers have given their subscribers a total return of 353% through May 9, 2022. This is much better than the S&P 500’s gain of 123% during the same time period. The Gardner brothers tell their subscribers which stocks to buy, and then they buy the same stocks themselves.
Bill Miller has done something that some of the best investors of all time have never been able to do: Over the 15 years from 1991 to 2005, Miller’s Legg Mason Value Trust always did better than the S&P 500 index.. Between 1990 and 2006, Miller grew the amount of money in his fund from $750 million to more than $20 billion. Miller is an unusual value investor who thinks that stocks with high growth can be value stocks if they trade at the right price. Morningstar.com honored him as “Fund Manager of the Decade” in 1999.
David Swensen is the chief investment officer at Yale University. He is a financial all-star with a record that can’t be beat. Swensen took over Yale’s endowment in the middle of the 1980s. Over the next 30 years, it earned an average of 13.9% per year, which was better than its benchmark by 4% per year and easily beat the 10.7% average return on domestic stocks. He was very smart because he was one of the first people to come up with modern portfolio theory, which is about spreading your money out among different high-return asset classes. In his book “Pioneering Portfolio Management,” Swensen explains his methodology in depth.
Kirk Kerkorian wasn’t a guru of the stock market, but he was still a legendary investor. Born to immigrants, he saved the money he made as a pilot during World War II, bought a $5,000 Cessna, and flew for a short time as a commercial pilot before buying a small airline for $60,000 in 1947. He grew it a lot, and in 1968 he sold it for $104 million. He used his money to build huge resorts and casinos in Las Vegas and to buy the movie studio Metro-Goldwyn-Mayer. Kerkorian was worth $4 billion when he died in 2015.
Like Kerkorian, Jerry Buss went from being poor to having a lot of money, and he didn’t do it through the stock market. As a child, Buss did odd jobs like shining shoes and digging ditches to make money. In 1959, he and four partners used a combined $100,000 in loans and a $6,000 down payment to purchase a 14-unit apartment complex. Within 18 years, the building turned into a $350 million real estate business. In 1979, he paid $67.5 million for the Los Angeles Lakers of the NBA, the Los Angeles Kings of the NHL, the Forum, and another property.
The list above isn’t everything. Many other investors have become well-known because they are able to beat the market year after year. For example, Warren Buffett and John Templeton are two of the most well-known value or contrarian investors. However, Jim Rogers, Marc Faber, and others have also made a name for themselves as successful value investors.
Some investors, like Thomas Rowe Price Jr. and Phillip Fisher, have made their names by investing in growth stocks and making money. Both of them are known as the “fathers” of growth investing.
Bill Gross, who was known as the “King of Bonds,” stayed away from the stock market and put his money into bonds instead.
Not all well-known investors got to be famous because they made a lot of money on the stock market. Sam Zell, Stephen Ross, and Donald Trump are well-known billionaires who have made a lot of money from real estate investments.