Greatest Traders of All Time Cover

Greatest Traders of All Time: Top 5 Most Famous Traders in Stock Market!

List of the Most Famous Traders of All Time: Being a successful part of the world of trading already sets you apart from the rest. But have you ever wondered what it would be like to be one of the very best traders in the world? Don’t worry we have come up with a list of the greatest traders of all time that you’d probably have to take on to even contend for the title. 

Top 5 Greatest Traders of All Time

1. George Soros

George Soros in his office | Greatest Traders of All Time

Billionaire George Soros aka “the king of Forex trading” or the “The Man Who Broke the Bank of England” is, without doubt, the greatest trader. But growing up a Jew in the midst of WW2 and due to the struggles he went through no one would have predicted his rise. 

Born Gyorgy Schwartz, his family had their names changed to survive the way and fly under the Nazi radar. Making to England Soros worked jobs as a waiter or railway porter before he graduated from the London School of Economics. This finally paved the way for him into the world of banking when he got a job at Singer and Friedlander as a merchant banker. 

Thanks to his father’s help he moved to the US to work at a Wall Street Brokerage firm. After several successful stints helping him move up the ladder at various firms he decided to establish his own hedge fund in 1970 called “Quantum”. 

It is here where Soros rose to fame. His most important trade came in 1990 when he decided to short the British Pound. A couple of years before the trade took place Quantum kept buying the British Pound and accumulated 3.9 billion pounds. In addition to this Soros borrowed to bring the total pound holdings of the fund to 5.5 billion pounds.

 On September 9 the pound began to fall. This prompted Soros to short all 5.5 billion pounds against the German Mark on September 16 – the day we now know as Black Wednesday. Soror managed to make $1 billion in a single day due to this trade. This caught the Bank of England in a corner forcing them to withdraw from the European Exchange Rate Mechanism.

This earned him the title of “The Man who Broke the Bank of England”. 

Soros used a similar strategy during the ASEAN financial crisis of 1997. Here Soros targeted the Indonesian, Philippines, and Singaporean currency. The crisis financially put the countries back 15 years.  

Apart from his trading success, Soros is known for his philanthropy. Although he is currently worth $8.6 billion Soros has donated over 80% of his wealth.

2. Jesse Livermore

Jesse Livermore Portrait Image

If there’s another movie ever made on a trader it should be based on the story of Jesse Livermore. Born in 1877, Livermore ran away from home to escape the life of farming which he was otherwise destined for. 

Once he made it to Boston he began posting quotes for a stockbroker as a 15-year-old. It was here that Livermore bought his first share and earned a profit of $3.12 with a capital of just $5. He soon started making more money trading stocks than what he was paid. This prompted him to leave his job and begin placing leveraged bets at stock prices. Jesse Livermore was soo good at his trades that he was eventually banned from Bucket Shops where he placed his bets. 

He then began trading at Wall Street but faced huge losses. These however were not due to any mistake of his own but because the ticker tape was not updated fast enough. He finally got a break at the age of 24 when he converted $10,000 into $500,000. By the age of 30 Livermore was making a million a day during the Panic of 1907.

Livermore was now at the top of his game which made him a well-known elite but despite this, he went bankrupt twice by 1915.

Following WW1 Livermore began buying cotton in order to gain control of the market. He had to be stopped by the then US President Woodrow Wilson. It was on Woodrow’s request that Livermore refrained from further acting on cotton.

 “To see if I could, Mr. President.”

This famous quote came into being when President Woodrow inquired Livermore on why he was trying to corner the cotton market. What set him truly apart was during the crash of 1929. It was here when market crashes were not even known about, Livermore took huge short positions taking his fortunes to $100 million. This would have made him a billionaire today. This earned him the title “The Great Bear of Wall Street.”

What truly set him apart was his ability to bounce back to great fortunes despite facing bankruptcies 3 times in his life. Jesse Livermore however didn’t survive his third bankruptcy and died after committing suicide.

3. Paul Tudor Jones

Paul Tudor Jones during a conference | Greatest Traders of All Time

Paul Tudor Jones was one of the world’s leading hedge fund managers. Jones began his trading career as a clerk working for the biggest cotton merchants – Eli Tullis in the 1970s. Unknown to many Jones was fired by Tullis after he fell asleep at his desk after a night of partying. 

Jones found his own hedge fund in 1980 named Tudor Futures Fund. What’s astonishing to this day is that the fund managed to earn 100% returns during its first 5 years. What set him apart was when he shorted a couple of stocks before the 1987 stock market crash. This earned him around $100 million. This also earned him the nickname Black Monday Prophet.

Five years post this Jones went onto become the chairman of the New York Stock Exchange (NYSE). Today Jones is worth over $5 billion and is also known for his philanthropic works through the Robin Hood Foundation.

4. Jim Simons

Jim Simons giving lecture to students

Known as the “World smartest billionaire” or “Quant King”, Jim Simons is clearly a class apart on Wall Street. Simons, a well-regarded mathematician for his Chern-Simons theory also broke Russian codes during the Cold War.

Simons didn’t enter the stock market until his late thirties. What set him apart from the rest as he was one of the pioneers to trade based on quant, data analysis, and pattern recognition. After setting up the hedge fund Renaissance Technologies, Simons made it his mission to avoid Wall Street brains at all cost hiring only scientists and mathematicians. From 1994 to 2014 Renaissance Technologies Medallion fund gave a whopping 71.8% return. You must be wondering why you haven’t heard of the Medallion fund. This is probably because Simons closed the fund to all outsiders except employees of the company in 2005. 

Simons is today worth $24.6 billion making him one of the most successful and greatest traders of all time. 


The World’s Greatest Fund – Jim Simons’ Medallion fund!

5. Steve Cohen

Steve Cohen during a conference conversation | Greatest Traders of All Time

Billionaire Steve Cohen came from an economics and poker background. He entered the stock market in 1978 after securing a job at investment banking firm Gruntal. Cohen started off by making $8,000 on his first day and eventually moved on to make $100,000 per day for the firm. 

Cohen left Gruntal in 1992 and opened his own hedge fund – SAC Capital Partners. It was here where Cohen became known for his ability to make money under any market condition. By 2011 Cohen was the 35th richest person in the US according to Forbes. Despite having a net worth of $14 billion, Cohen still works at his firm. It is reported that almost 15% of his company’s profits are due to operations performed by him. 

In Closing 

What do you think about our list of the greatest traders of all time? Let us know in the comments the names you feel should be on this list. You might also be interested to know about the world’s greatest fund. Happy Trading!

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The World’s Greatest Fund – Jim Simons’ Medallion fund!

Who do you think runs the World’s Greatest Fund? Hold onto this answer. If you ask anyone in the world of investing about Renaissance’s Medallion fund you’ll find answers filled with awe due to the results they have managed to achieve – 60 to 70 percent returns for over 3 decades!!!! 

To put things in perspective at this rate you’d be a multi-billionaire over three decades just by having invested $1,000 (But it doesn’t work on a growth model). You might have to rethink your answer. Even Warren Buffet has managed an annual average of 23% in the long run. Because obviously a fund being given the title of the greatest of all time obviously will be headed by one of the greatest minds on Wall Street.

In this article, we cover the greatest fund in the world run by Rennaisance, its inception, how it works, the men behind it, and its performance amidst Covid-19. Keep Reading to find out.

How did the Rennaisance start?

The founder of Rennaisance technologies, Jim Simons is a legendary figure in the mathematics and investing community. After graduating from MIT and receiving a Ph.D. in mathematics at the age of 23, Jim Simons went on to work as a professor at MIT and Harward.

Over the years his research earned him the Geometry equivalent of the Nobel prize- the Oswald Veblen Prize in Geometry. He along with his partner professor Shiing-Shen Chern produced the breakthrough mathematical theory known as the Chern-Simons theory.

Jim Simmons - greatest investor - World's Greatest Fund

What many people do not know about Simons is that he also worked for the Pentagon’s Institute for Defense Analyses as a code breaker. The cold war had pushed both the US and Russia to try and outsmart each other. This also required some of the greatest minds to crack each other’s secret codes. Sadly Simons was fired from the IDA for voicing his opposition to the Vietnam War.  

Simons finally decided to focus on the big bucks. His initial days in trading commodities weren’t as successful. Simons had based his bets on the fundamentals of demand and supply which did not get him far.

Simons used this for much of the Renaissance’s early years when it was called Monemetrics. It however never occurred to him in his early years to apply maths to investing

The Working behind the World’s Greatest fund?

— Headhunting the Rennaisance team

Simons then tried applying statistics and maths to make trades. His experience at the IDA had helped acquaint him with several great cryptographers and other mathematicians. He began hiring them at Renaissance and they began their quest to decode the financial markets.

Among them were Elwyn Berlekamp and Leonard Baum who were his colleagues at IDA along with professor Henry Laufer and James Ax. They began looking for patterns in the market which they could exploit.

One such example of a loophole they recognized was that S&P’s options and futures closing times were 15 minutes apart which they exploited to make profits for a while. The markets were filled with many similar loopholes which they took advantage of. 

Greatest investor Jim Simmons during a lecture

They began building models which used both trend following and mean reversion while focussing exclusively on trading. Their results weren’t anything great, making 8.8% and 4.1% in 1988-89 respectively. Renaissance finally received a break in 1990 when its Medallion fund gave a 56% return. 

The Medallion was now going through heaps of data and using advanced maths and building systems that were ahead of their time into investing. On the other hand, his other counterparts were using the same old techniques which relied on the fund manager’s instinct to predict which direction the market would move in. 

— Ahead of its time – World’s Greatest Investor

The team in Renaissance included super nerds from their respective fields using some of the world’s most powerful computers to find signals to make predictions.

The scientists would keep looking for signals which they could exploit in the markets. They also teamed up with linguists and focussed on speech recognition and machine translation. Much of their work also set the scene for the creation of Google Translate and Siri. 

— Signals and Systems

The signals they identified worked on slim margins. One such signal was identified by analyzing cloud cover data. The team had found a correlation between sunny days and the market trending upwards on those days. This was observed from New York to Tokyo. The team of scientists worked day and night to identify such signals.

The Medallion fund maintains a library of over 8,000 signals. The fund then uses these signals thousands of times daily. The difference between the win and loss percentage is only 2% i.e. 51% win vs 49% loss probability. But as this edge is applied thousands of times per day their odds increase. The funds’ team keeps looking for such signals on a regular basis. 

Another example of how far ahead of their systems were was found out when Rennaisance tried to file for a Patent in 2016 for executing synchronized trades in multiple exchanges. In order to achieve this, they had to use one of the most precise time instruments on earth i.e. atomic clocks. These clocks are accurate down to a billionth of a second.

Medallion funds’ Results and Comparison

The unique strategies have helped the Medallion fund achieve 60 to 70% annual returns for over 30 years. According to Bloomberg, the fund has produced more than $US74.5 billion over a period of 28 years. This meant that the Medallion fund generated $10 billion more in profit than those run by legendary investors Ray Dalio and George Soros.

$1 invested in the fund would have earned you $20,000 after fees. Despite assessing the fund on the basis of net returns it still beats the S&P index where your investment for the same period would only result in $20. Let’s make the comparison harder and pit the returns against Warren Buffett’s Berkshire Hathaway. A dollar invested for the same period would have resulted in $100.

What Simons and his team have achieved at Medallion is nothing short of a miracle. The fund beats one of the greatest wealth creators the S&P500 index by 1,000 times and the greatest investor of all time by 200 times.

The fund has been soo profitable and consistent that Renaissance started charging its investors 5% in management fees and 44% in performance fees. This meant that in 10 years the fund itself would make more money than its investors.

Despite this, the fund received loads of interest once the word got out. However prospective investors were met by the unhelpful customer service which included the company’s legal department. 

Why is the Medallion fund only worth $10 billion?

Even the Medallion funds size is intentionally limited to only $10 billion. Simons has always believed that the funds’ size could hamper its performance. Due to this, the assets of Medallion are currently capped at $10 billion.

As the profits from Medallion are reliable the firm is able to leverage up to ten times its capital. This means that even though the fund asset is worth only $10 billion dollars they have a trading footprint of $100 billion. 

Having a fund that is too big also limits the investment alternatives. This also limits their ability to use the same Ghost Signals. The Signals used by Medallion also cannot handle a huge size. In order to maintain this size, the fund ensures that the profits are distributed every 6 months.

Employees of the Fund – ( no to wall street and riches and Simons as a manager)

Medallion fund in the midst of a crisis?

The ultimate test however comes in the face of crisis. The Medallion fund suffered a $1 billion loss in a few days during the 2008 financial crisis. But still made up for the losses and posted an 85.9% gain as the market began rebounding. In the midst of Covid when most funds were struggling to service Medallion flourished by posting a 116% gain before fund fees. 

Closing Thoughts

Most of you will be looking for the means to invest in this fund ASAP. Possibly some apps may assist you to invest in the US markets. Sadly for all of us, the Medallion fund stopped accepting money from external investors in 1993. By 2005 the firm had bought out all of the external investors.

Today access to the fund is only limited to the 300 employees working in Renaissance. Thanks to Medallion at least 100 of them are worth more than $5 million. The remaining at least worth $1 million. Despite being employees they aren’t free from the exorbitant fund charges.

From what we’ve seen so far it is clear that competing with Medallion is next to impossible. Primarily because it is a herculean task to assemble a team of the world’s greatest minds and get them to work in the stock markets and ensuring they have the best systems in place. 

Book on Jim Simons - greatest investor

That’s all for this post on the World’s Greatest Fund by Jim Simons. Find out here! If you found this interesting be sure to check out the book “The Man Who Solved the Market” by Greg Zuckerman. We think now you can answer who is the greatest investor of all time. Let us know what you think about Medallion. Are quant funds the future of trading? Let us know if you think such a fund will work in the Indian markets. Happy Investing!

Ramesh Damani Success Story

Ramesh Damani Success Story – Journey, Mistakes & Advice to Investors!

Ramesh Damani Success Story: “How to make 100 crores by investing 10 lakhs” was the highlight of an interview given by investor Ramesh Damani. But unlike most gurus, we find online these days Ramesh Damani is a man who practices what he speaks. He has done well for himself over the 3 decades in the Indian market to boast a fortune of over Rs. 200 crore.

In this article, we cover the success story of the Investor along with the advice and mistakes he made while building his personal wealṭh. 

Ramesh Damani’s life before becoming an Investor

Ramesh Damani Success Story

Ramesh Damani was born into the world of investing as his father too had earned a living by trading in shares. His fathers’ efforts put their family in a well-to-do spot financially.

Damani graduated from the H.R. College of Commerce & Economics and went onto get an MBA from California State University-Northridge. But what may surprise you is that, unlike some investors to whom the stock market meant everything from a young age, Damani wanted nothing to do with the stock market.

His father on the other hand wanted him to return to India and be involved in the markets along with him. Part of this stemmed from the fact that he couldn’t imagine living far away from his only son. 

Damani however had other plans. After failing to convince his son multiple times his father decided to give one more final try. He got into a deal with his son where he sent him $10,000 to invest the money. If Damani was successful in doubling the money the amount would be his. If the investment went sideways his father would put an end to all questions. 

Sadly, in a span of 6 months, Ramesh Damani somehow managed to lose the huge sum. Although disappointed his father stuck to the deal and no questions were asked.

The story however took a turn for good. Damani could not believe that an MBA graduate was defeated. That too in bullish markets. The loss had hurt his ego and to reclaim himself he decided to dive into the world of investing. 

Ramesh Damani Success Story: Journey to become an Investor

After returning to India, the MBA graduate became a member of the Bombay Stock Exchange. He also went on to make a living as a broker at his own brokerage firm.

Damani was able to make a lot of money for his clients during the Harshad Mehta Bull run in the early 90s but at the end of the day would receive only 1% of the returns. Some of his clients had made returns up to 100%. Once the Harshad Mehta bubble burst, Damani decided to invest for himself. 

Ramesh Damani Portrait Photo

Damani was already following the footsteps of his father who also had been successful enough to earn an income from the market to live well off. His father followed a strategy where he would sell the investment after the stock price went up.

But what excited Damani was identifying potentially successful businesses, and investing in them for the long term. After all, he was part of the generation that started getting influenced by great investors like Warren Buffet and Charlie Munger’s style of investing.

“I learned that just because a stock doubles, it is not a reason to sell it.”

Damani had worked as a coder for the brief period he was in the US. Hence after noticing Infosys go public in 1993 he was quick to identify the potential the company had in the future. He jumped upon the opportunity. He invested 10 lakhs in 2 companies, Infosys and CMC.

By 1999, his investment had grown a hundredfold. This was proof enough for Damani to hold onto stocks instead of selling them immediately after making a decent return.

Following this Damani was quick to identify that the entire Indian liquor industry was available for Rs 500-odd crore. Damani quickly became bullish on the industry and the investment paid off handsomely.

In addition to this, he also identified Bharat Electronic Ltd and Bharat Earth Movers Ltd in the early stages. His only regret with these companies was that he did not invest enough.


Porinju Veliyath Success Story – How Porinju Became The Smallcap Czar!

Lessons to learn from Ramesh Damani’s mistakes

Damani made a lot of mistakes as an analyst but these have served as lessons for the next 30 years of his life. Let us take a look at some of which he has shared with us:

Damani’s very first investment of $10,000 in the market offered some very valuable lessons. Damani’s strategy involved looking back at the price history of stocks and picking stocks that had fallen but performed exceptionally in the previous bull markets.

This taught him an expensive lesson that it is not necessary that a fallen stock is a good investment. 

“There are no losses, only lessons learned” – Ramesh Damani

Another mistake that Damani recalls is not buying aggressively when the markets crashed in 2008. By the time he had entered the market, the market had already crashed.

Ramesh Damani Success Story: Advice to Investors

Ramesh Damani while interacting with other investors

  • Advice for potential investors

“Market has gone up so much that people keep asking me if they should invest. I would reply by saying that the market would grow further. Use the market as a vehicle to get rich over time. It is not a quick-rich scheme. If you move 18-20 percent of your money over 20-25 years, you will be fine. A small portion of the money will become large in the long-run. My advice to everyone especially India which is a young country is to get it started. The first thing in order to test waters is to get your feet wet.”

He also stated that “Compounding is the surest thing to make you rich. The earlier you start, the better off you are,” he said.

  • Simplicity beats complexity 

We try to find out the obvious. If I expect a business to make Rs 1,000 crore profit over the next five years and currently getting the same business at Rs 500 crore then you do not need to put that into a spreadsheet and figure it out. It is not rocket science. The way to do it is to understand the market capitalisation and external opportunities. For instance, in the logistics industry, if say the Indian economy is supposed to grow from a trillion-dollar to five trillion dollars there would be enormous movement of the goods. Also, with the introduction of the GST, they will create a national marketplace for the first time. And today you are getting these companies at Rs 500-1,000 crore, which is clearly at the lower end of the spectrum.”

  • The other upsides of buying cheap

We want to buy them cheap relative to its external opportunities. That’s the number one rule in the financial markets. If you buy cheap even in the case of a bad purchase decision you will be able to get out of it over a period of time. Besides, understand the market capitalization, understand the discounted cash flow (DCF), price to earnings ratio and look at the external opportunities.

  • When investing in Bull Markets

As the price may already be inflated in the bull market offering a reduced margin of safety. Damani states  “Probably, the margin of safety is not there. But, whenever we have seen leadership in the market like we have seen cement stocks in 1992 or technology stocks in the year 2000, these stocks generally have a long way to go. They are seen as expensive initially but as the earnings catch up they get re-rated and become even more expensive.” 

  • When prices are falling or in relation to the maxim ‘Never catch a falling knife.’

The maxim comes from the principle that a lot of people start buying just because the stock has fallen 10 percent, 20 percent, or 50 percent. This is a fairly dangerous way to make a living. When we go back to the technology boom and see the so-called K-10 stocks in that era, they fell from the peak they made by 50 percent and then by another 50 percent and then another 50 percent. So, any time if you try to bargain hunt or catch the falling knife you essentially put blood on your hands. There is only one way to buy the stock, buy them when they are cheap and you do that by way of including a variety of factors.”

  • Do the rules of investing change over time

The Law of Gravity cannot change. The same thing applies to the rule of investing. These are the universal principles.

  • Getting to 100 crores 

“Suppose you start with Rs 10 lakh and double your money every three years over 30 year period, Rs 10 lakh become Rs 100 crore. So that’s a phenomenal amount of money to have.”

Closing Thoughts 

The Ramesh Damani success story offers advice and motivation for anyone looking to enter into the stock market and most importantly highlights the importance of investing with a long-term view. He is among the most successful stock market investors in India.

For a novice investor looking to enter the markets but afraid of losses, “The first thing in order to test waters is to get your feet wet.” Happy Investing! 

Top 5 Stock Market Investors of All Time cover 2

Top 5 Stock Market Investors of All Time!

A hand-picked list of the top 5 stock market investors in the world: Its been over 4 centuries since the inception of the world’s first stock exchange in Amsterdam. Since then there have been many investors- some known for their success and others for their ability to loose their massive wealth.

The list below includes investors that struggled through poverty, escaped the Nazi’s and even those that worked closely with spy agencies during the Cold War. An extremely interesting list to go through and even better footsteps to follow. Today we bring to you a comprehensive list of the top 5 investors of all time.

Top 5 Stock Market Investors of All-time!

5. Benjamin Graham

There are very few investors who have not only succeeded in their investment pursuits but also have successfully influenced multiple generations of investors at the same time. Any investor on this list cannot deny being influenced by Benjamin Graham.

Benjamin Graham was born to Jewish parents in England in the year 1894. Despite experiencing poverty first hand he graduated from Columbia University on a scholarship and went on to work in Wall Street. By the age of 25, Graham was earning $500,000 annually in the 1920s.

Benjamin Graham

— His transition into an Investment Guru 

But he soon lost almost all of his investments during the stock market crash of 1929. It was after this that Graham took the time to put the observations he made for investing in a book called Security Analysis while working as a lecturer at the Columbia Business School. It was in this book that Graham brought forward the concept of value investing, where investments are made based on the intrinsic value of the stock and not that of the market price. 

But it was Grahams’ next book “The Intelligent Investor’ which is considered mandatory in every investors’ home. It was in this book that he introduced Mr. Market. Mr. Market shows up at every investors’ door giving them an option to buy or sell. But Mr. Market is often irrational and his emotions are run by greed and fear. Graham emphasized that i is necessary for every investor to do their own research and not depend on Mr.Market. According to him, a successful investor makes Mr. Market his servant and not his friend.

— Notable Investments

Grahams’ most notable investments include his 50% purchase of GEICO in 1948 for $712,000. This position grew to $ 400 million by 1972. His teachings and work inspired many notable investors like Warren Buffet, Irving Kahn, Walter Schloss, and Bill Ackman.

His book ‘ The Intelligent Investor’ is considered the bible for investing. Although it has been over 4 decades since Benjamin Graham passed away, his contributions still remain relevant and will continue to do so for the years to come.

4. David Swensen

Yale University, an Ivy League college, the third-oldest institution of higher education in the US was founded in 1701. Its alumni list includes 5 US presidents. Ever considered who is the highest-paid at Yale? Is it the University President Peter Salovey who is paid $1.4 million in 2015. The answer is ‘No’. The highest-paid employee at the school is its Cheif Investment Officer David Swensen who makes over $4 million annually.

David Swensen

— Early Career

Swensen himself is an alumnus of Yale and pursued a Ph.D. in economics. Before joining Yale as a Fund Manager, Swensen spent 6 years working at Wall Street. Advising the Carnegie Corporation, the NYSE, and also worked for the Salomon and Lehman Brothers. It was in 1985 that Swensen received the offer to manage Yale’s Endowment Fund which was worth $1 billion. Swensen was only 31 years old at the time, had no experience in portfolio management, and taking the job would mean taking an 80% pay cut. Suicide if you would ask anyone at the time.

Swensen, however, took the job. It was here that he along with Dean Takahashi invented the Yale theory. Swensen succeeded in implementing the theory and now is commonly known as the Endowment Model.

— The Endowment Fund

One may think that Swensen hit the lottery by managing the Yale fund. But to provide returns of the scale he did is nothing short of herculean. Especially due to the nature of the fund was made up of donations received by the university and hence require secure investments. The fund is also used to provide scholarships. All this on top of student protests over the choice of investments made that do not fall in line with the changing social causes. This forced Swensen to move away from investing in the companies that have a large carbon footprint. 

As of 2019, the endowment fund was worth $29.4 billion. Second to Harward whose endowment fund is worth $39.2billion. According to former Yale President, Richard Lenin Swensens contribution to Yale is greater than the sum of all the donations made in more than two decades.

3. Jim Simons

Jim Harris Simmons was known to be gifted in mathematics from a very early age. He joined MIT at the age of 17 and went on to receive his Ph.D. in mathematics from Berkely at the age of 23. 

— Early Career

Jim Simons

He began working at the Institute of Defence Analysis, which was a branch of the NSA in the US. It was set to break Russian codes during the cold war. Simons states that he loved the job because it paid well and he was allowed to work on his personal math projects for half of the time. The work he did here remain confidential.

He, however, was fired after he expressed his views against the Vietnam War in an interview. He later went on to work at Stony Brooke University. Jim Simmons is famous not only in the world of investing but is also a highly acclaimed mathematician. He is noted for the Chern-Simons form which contributed to the development of string theory. 

— Transition into an Investment Manager

Jim Simons investment advisor

Jim Simons’s first investment was from the amount he received at his wedding in 1959. He invested this in stocks but found it boring and later invested it in Soy-beans. It was only in the 1970s that Simons began taking investing and trading seriously. He took out his investments from his friends firm in Columbia and began trading with foreign currencies. He founded his own hedge fund Rennaissance Technologies and decided to crack the market y applying his mathematical skills here. Due to this reason, both he and his fund are called Quantum Investors. 

His fund did not make good returns which led to him closing it for a year in order to figure out what went wrong and to restrategize. After opening again the Medallion fund went on to become to most successful hedge fund of all time. The fund gave a staggering 66% per annum returns and a net return of 39.1% after the huge investor fees. This made the Simons a billionaire and currently has a net worth of $21.6 billion according to Forbes.

Even though the strategy used has been released in a book all employees are made to sign an NDA agreement. In addition, they are also asked to sign a non compete agreement later on in order to keep the means used to achieve these returns within the company.

2. George Soros

Soros was born in the 1930s to a Hungarian Jew family. A terrible time for the Jews in Europe. His teens were spent escaping persecution by the Nazi’s during WW2. His family did this by changing their names from Shwartz to Soros and by masquerading as Christians. Soros went on to study at the London School of Economics after which he did several odd jobs before entering Wall Street.

— The man who broke the Bank of England

George Soros

In 1970, Soros founded Soros Management where he managed the Soros fund. But it was only on September 16, 1992, that Soros rose to fame. For months leading up to this date, Soros built a huge sort position of 10 billion Pounds. This day was termed as Black Wednesday in the UK. Soros, on the other hand, made a profit of $1 billion on a single day. This came at a cost of 3.4 billion pounds to the Bank of England. Hereafter he was known as the man who broke the bank of England. 

— Is Soros still infamous today?

In recent times too, unfortunately, Soros is known for all the wrong reasons. He is often targeted by the rightwing politicians and has often been the center of many conspiracy theories. This has been particularly because of his economical support to the Left and his charitable organization ‘Open Society’.

The Open Society has been accused multiple times of attempting to topple governments that oppose illegal immigration and the influx of Muslim refugees in Europe. Soros, however, claims that he founded the society to ensure the building of vibrant and tolerant democracies. Soros and his NPO are currently banned in 6 countries.

1. Warren Buffett

The brilliant track record and wealth that Warren Buffet amassed from investing gives him the number one spot undisputably.

Warren Buffet was born in 1930 to a future US Congressman, Howard Buffet. Despite this Buffet spent his childhood in poverty and so the importance of money was instilled in him at a very young age. This drove him to set the aim of becoming a millionaire by the age of 30 or jumping off the tallest building in Omaha. 

— Early Career

young warren buffett

The entrepreneurship spark and his obsession with numbers were visible in him from a very young age. He adopted a paper route when young and learned the benefits of diversification as he realized that he could make more money by selling magazines as well and made $175 a month from this.

Apart from this Buffet sold CocaCola, chewing gum, golf ball, stamps, and also worked at his grandfathers grocery when young. Buffets’ infatuation with numbers got him interested in the stock market and made the first investment at the age of 11. Warren Buffet filed his first tax return at the age of 14. At around the same time he also bought a farm. Buffet went on to buy 3 shares of the Citi Service for himself.

Although Harward would have been his first choice Buffet was rejected. He then went on to study at Columbia Business School because one of the investing greats Benjamin Graham taught there. After graduating he went and achieved one of his most prized possessions a diploma for a course in Public Speaking under the legendary Dale Carnegie. Warren Buffet then went on to work under Benjamin Graham under whom he grew as an investor.

Warren Buffet retired at the age of 26 after buying a house and having $174,000 in savings. But his dream of becoming a millionnaire brought him out of retirement. 

— The Berkshire Hathaway Story

His investment strategy in the initial days included Cigarette Butt Investing. In 1962 this strategy led him to invest in a textile manufacturing firm called Berkshire Hathaway. He held the shares for 3 years but later came to terms that this was the worst investment he ever made. In 1964 the company made him a tender offer at $11.50 per share.

However, when Buffet received the offer in writing 3 weeks later the price was quoted at $11.375 per share. This $0,125 reduction angered him and he bought Berkshire Hathaway and immediately fired its owner Seabury Stanton. But after this, he realized that the business would not improve. He shut down the core business of textiles in 1967 and expanded into the insurance industry and investing. 

Warren Buffett

Some of the other notable investments by Buffet include Washington Post, Exxon, Geico, and CocaCola. In 1979, Warren Buffet had a net worth of $620 million due to Berkshire Hathaway. He then set a new goal of becoming a billionaire. Buffet reached the goal when the shares of Berkshire Hathaway closed at $7175 on May 29th, 1990. As of 2020, has a net worth of $69.6 billion.  In the world of investing Warren Buffet is nothing short of a rock star.

what is Peter Lynch's Investment Strategy cover

Peter Lynch’s Investment Strategy and Success Tips!

Unwrapping Peter Lynch’s Investment Strategy: Peter Lynch was to the investing world what rockstars are to us. He is primarily known for his work at Fidelity Management and Research where he managed the Magellan Fund. This fund was launched in 1977 and ended when Mr. Lynch retired in 1990.

Even though 3 decades have passed since he retired, his work in Fidelity still astonishes investors as he grew the assets of the fund from $14 million in 1977 to $18 billion in 1990. With Lynch at its helm, the fund was among the highest-ranking stock funds throughout his 13 years tenure beating the S&P 500, its benchmark, in 11 of the 13 years.

Peter lynch and warren buffett

Over the years there also have been debates on who was the ‘greatest investor of all time’ Buffet or Lynch? Clearly the 54 years Buffet spent at Berkshire Hathaway offering 20.9% annual return gives Buffet the greatest title. But Lynch achieving a 29% annual returns also provides solid arguments.

Just to put things in perspective a $10,000 investment that earned this return for 13 years would have grown to nearly $280,000. But it is not only this achievement that makes Lynch one of the greatest but also because he shares the strategy he used to achieve this in a simple manner gaining him considerable fame.

Peter Lynch’s Investment Strategy

Lynch was an institutional investor. Can his strategy be used for individual investors?

Lynch always believed that an average investor can generate better returns in comparison to professional or institutional investors like mutual fund managers, hedge funds, etc. This is because according to him individual investors hold a distinct advantage over Wall Street as they are not subject to the same bureaucratic rules.

Also, individual investors do not have to be bothered by short term performances. In comparison, professionals are answerable to their investors if a fund performs badly in a year. A justification saying “The assets are going through a phase and will perform better in the future” will not convince a fund’s clients.

Finally, individual investors also have the advantage of a smaller scale. It is easier to double $10,000 in the market than it is to double $10 billion.

Peter Lynch’s Investing philosophy

“Invest in what you know.” – Peter Lynch

Peter Lynch’s whole investing philosophy revolves around this. “Investing in what you already know about”. To support his argument he gives the example of a doctor. Say you are a cardiologist and are beginning your journey into the world of investing. Almost all of us have a fairly good idea of what companies like Mcdonalds and Nike do.

But would you have an edge by investing in these? Say, as required by your field you are made aware of a new heart pump being introduced. You being able to judge this will obviously be aware of the revolutionary effects the heart pump may have in saving human lives. Hence, in this case, your in-depth knowledge of the subject gives you an advantage while deciding if ever you could invest in the company or not. 

Just like this, we may own experiences–for instance, within our own business or trade, or as consumers of products that provide us an edge to improve our investment judgment. Hence the quote “Buy what you know”. This is an advice that has also been advocated by Warren Buffet.

Sources that Peter Lynch Uses

The greatest stock research that we have at our disposal in order to identify superior stocks are our eyes, ears, and common sense. Also, Lynch does not believe that investors can predict actual growth rates, and he is skeptical of analysts’ earnings estimates.

Lynch was proud of the fact that many of his great stock ideas were discovered while walking through the grocery store or chatting casually with friends and family. Even when we are watching TV, reading the newspaper, driving down the street, or traveling on vacation just by noticing an investment opportunity we can do first-hand analysis over it.

Peter lynch quotes

Lynch is something of a ‘Story Investor’. Now that it is clear that Lynch advocates investing in what you know, and his initial research begins with his senses in the environment. The step that Lynch follows is that of finding a story behind the stock.

Often being engrossed in the investing world has led us to believe that stocks are nothing more than just a collection of blips on a screen or just numbers to be judged by ratios. But for Lynch, the stock is more than just that emphasis us to realize that behind the stock is a company with a story.

What is this ‘story’ Peter Lynch looked for?

According to Lynch a company’s plan to increase earnings and its ability to fulfill that plan is its “story,”. He lays down the 5 ways that a company can increase its earnings. Lynch points out five ways in which a company can increase earnings:

  • It can reduce costs.
  • Raise prices.
  • Expand into new markets.
  • Sell more in old markets.
  • Revitalize, close, or sell a losing operation.

Hence this is where is the advice of ‘Investing in what you know’ falls into place. The only way you can have a better edge to judge a company’s plans to increase earnings is if you are familiar with the company or industry. This will increase your chances of finding a good story.

For this reason, Lynch is a strong advocate of investing in companies with which one is familiar, or whose products or services are relatively easy to understand. Thus, Lynch says he would rather invest in “pantyhose rather than communications satellites,” and “motel chains rather than fiber optics.”.

How Peter Lynch Categorized Companies?

We may have come across several companies that may grab our interests after first-hand research. Peter Lynch suggests that in order to be able to judge their story potential better it is best that we categorize then by size. This will help us form reasonable expectations from the company.

This is because if the company is categorized by size we can then judge their ability to increase their value and hence their story. Large companies cannot be expected to grow as quickly as smaller companies. This will further help us decided if the expectations are what we would like to receive in our portfolio. According to him, the categorization can be done in the following 6 ways:

  • Slow Growers

Large and aging companies expected to grow only slightly faster than the economy as a whole. These generally make up for their growth by paying large regular dividends.

  • Stalwarts

These include large companies that are still able to grow, with annual earnings growth rates of around 10% to 12%. If purchased at a good price, Lynch says he expects good but not enormous returns–certainly no more than 50% in two years and possibly less.

  • Fast-Growers

Small, aggressive new firms with annual earnings growth of 20% to 25% a year. These do not have to be in fast-growing industries. Fast-growers are among Lynch’s favorites, and he says that an investor’s biggest gains will come from this type of stock. However, they also carry considerable risk.

  • Cyclicals

Companies in which sales and profits tend to rise and fall in somewhat predictable patterns based on the economic cycle; examples include companies in the auto industry, airlines, and steel. Lynch warns that these firms can be mistaken for stalwarts by inexperienced investors, but share prices of cyclical can drop dramatically during hard times. Thus, timing is crucial when investing in these firms, and Lynch says that investors must learn to detect the early signs that business is starting to turn down.

  • Turnarounds

Turnarounds are companies that were on the verge of bankruptcy but have been revived. This could be because the government bailed them out or another company made a strategic investment in them. Lynch calls these “no-growers”.The best example of such a company is Satyam. The stocks of successful turnarounds can move back up quickly, and Lynch points out that of all the categories, these upturns are least related to the general market. 

  • Asset opportunities

Finding these hidden assets requires a real working knowledge of the company that owns the assets, and Lynch points out that within this category, the “local” edge–your own knowledge and experience–can be used to greatest advantage.

(Lynch would pick a David over Goliath company on any day)

(Lynch would pick a David over Goliath company on any day)

The category an investor prefers for his/her portfolio may vary as per investor preference. But Lynch always preferred Fast Growers, this, however, came with considerable risk. To be more precise Fast Growers that are not from fast-growing industries.

This is because in contrast every stock in a fast-growing industry would be growing as well but not specifically because of the company. This growth is only because of investors Fear Of Missing Out due to a short hype in the industry. Over time, however, the high growth industry will also attract significant competitors. This will eventually lead to a drop in growth.

Peter Lynch Stock Categories

Lynch also coined in the term “Tenbagger” and these companies will clearly be found to be among the fast growers. Tenbaggers are stocks that go up in value tenfold or 1000%. These are the kind of stocks that Lynch looked out for when he was running the Magellan Fund.

The first rule that he set for the Magellan stock is that if one was identified to have the potential, then the investor must not sell the stock when it goes up 40% or 100%. Peter Lynch felt that this amounted to “pulling the flowers and watering the weeds.”

Evaluation and Selection of stocks

The simplicity of the strategy that we have gone through so far may lead us to believe that it is easy. But we are only halfway through the strategy. After classifying the stocks, we now come to its evaluation. Lynch was extremely dedicated when it came to researching. He always believed that the more he researched the greater were his odds of finding the best ones to invest in.

Peter Lynch follows what is called the ‘Bottoms-up’ approach. According to this every stock picked must be thoroughly investigated. Such analysis will expose any pitfalls in the story of the company. Also, it is important to note that if the stock was purchased at a too high of a price then the chances of making a profit will be reduced or wiped off. Hence it is important that the stocks are diligently researched and evaluated.

Here are some of the key numbers Lynch suggests investors examine:

— Year-by-year earnings

While looking at the company’s earning over the years one should try and assess if the earnings are stable and consistent. Ideally, the earnings should keep moving up consistently. Assessing the earnings over the years is important because this trend will eventually be reflected in the stock price revealing the stability and strength of the company.

— Earnings growth

It is also necessary that not only for the earnings to keep moving upwards consistently but also to match the company’s story. This means that if a company has the story of a fast grower its growth rate must be higher than those of slow growth rates. One must also keep an eye out for extremely high levels of earnings that are not consistent over the years.

This will also help us identify stocks that are overvalued as a result of attracting attention in that extremely high growth period. Investors here bid up the price. But if a continued growth rate is noticed then it may be factored into the price

— The price-earnings ratio

At times the market may get ahead of itself and overprice a stock even when there is no significant change in the earnings. The price-earnings ratio helps you keep your perspective, by comparing the current price to most recently reported earnings. Stocks with good prospects should sell with higher price-earnings ratios than stocks with poor prospects.

— The price-earnings ratio relative to its historical average

Studying the pattern of price-earnings ratios over a period of several years should reveal a level that is “normal” for the company. This should help you avoid buying into a stock if the price gets ahead of the earnings, or sends an early warning that it may be time to take some profits in a stock you own.

— The price-earnings ratio relative to the industry average

At this point, we may come across stocks that are undervalued in an industry. By comparing its P/E ratio with the rest of the industry we can figure out if it is because it is a bad performer or if the stock has simply been overlooked

— The price-earnings ratio relative to its earnings growth rate

Companies with better prospects should sell with higher price-earnings ratios, but the ratio between the two can reveal bargains or overvaluations. A price-earnings ratio of half the level of historical earnings growth is considered attractive, while relative ratios above 2.0 are unattractive.

For dividend-paying stocks, Lynch refines this measure by adding the dividend yield to the earnings growth [in other words, the price-earnings ratio divided by the sum of the earnings growth rate and dividend yield]. With this modified technique, ratios above 1.0 are considered poor, while ratios below 0.5 are considered attractive.

— The ratio of debt to equity

Lynch is especially wary of bank debt, which can usually be called in by the bank on demand. This is because a Balance sheet that does not have debt or minima debt will come in handy when the company chooses to expand or faces financial difficulty

— Net cash per share

Net cash per share is calculated by adding the level of cash and cash equivalents, subtracting long-term debt, and dividing the result by the number of shares outstanding. High levels provide support for the stock price and indicate financial strength.

— Dividends & payout ratio

Dividends are usually paid by larger companies, and Lynch tends to prefer smaller growth firms. However, Lynch suggests that investors who prefer dividend-paying firms should seek firms with the ability to pay during recessions (indicated by a low percentage of earnings paid out as dividends), and companies that have a 20-year or 30-year record of regularly providing dividends.

— Inventories

This is a particularly important figure for cyclical businesses. When it comes to manufacturers or retailers, an inventory buildup is a bad sign, and a red flag is waving when inventories grow faster than sales. On the other hand, if a company is depressed, the first evidence of a turnaround is when inventories start to be depleted.

Other Characteristics Peter Lynch finds favorable

When evaluating companies, there are certain characteristics that Lynch finds particularly favorable. These include:

  • Lynch keeps an eye out for ugly ducklings. These are companies that have a boring name or those that function in boring industries. He also considers companies that are in depressing and disagreeable industries. Examples being Funeral homes that are depressing or Waste Management which is disagreeable. Most investors invest in interesting companies like Tesla where cars are launched into space etc. But Lynch is aware that it is these ugly ducklings where their nature is reflected in the share price. This offers up good bargains 
  • Spin-Offs. This is because investors are skeptical of spin-offs and hence receive lesser attention in comparison to the parent company.  
  • Companies that operate in industries with multiple entry barriers. A niche firm controlling a market segment would be attractive
  • Companies that offer products that are a necessity. These companies provide stability as people tend to buy their products regardless. eg razor blades.
  • Companies that take advantage of technological advances in their industry but are not directly producing technology say like Google and Apple. This is because companies that produce technology are stock prices that are valued highly.
  • Companies with low analyst coverage as they are generally not priced too high.
  • The company is buying back shares. Buybacks are announced once companies start to mature and have cash flow that exceeds their capital needs. The buyback will help to support the stock price and is usually performed when management feels share price is favorable.

Characteristics Lynch finds unfavorable are:

  • “If I Could Avoid a Single Stock, It Would Be the Hottest Stock in the Hottest Industry.”
    Hot stocks in hot industries are those that attract a lot of attention in the initial stages due to its explosive growth. This growth, however, burns away as the growth achieved does not match the increase in price due to the added publicity. Over time it becomes clear that the company does not have the earnings, profits, or growth potential to back the buzz. Also as soon as a company with such hot stocks exist copy cats start to appear in the industry deflating the company’s stock value.
  • Companies that diversify into unrelated businesses. Lynch suggests staying away from such companies. Lynch calls this ‘Diworsefication’.
  • Companies in which one customer accounts for 25% to 50% of their sales.

Advice for new investors

Lynch suggests that for an investor who is just stepping into the stock market it is best that he starts off with a paper portfolio. And pick 5 companies to buy. Then he investor should ask himself why he is buying these stocks. Answers like “the sucker’s going up.” arent good enough of a reason.

And if the stock performs better for a period then he should again question himself. Why did it go up? Noticing the changes that occurred during this period is also what research is all about. One must also then notice what kind of stock is one good at picking. A person may have a better eye for cyclical while another may be good at selecting fast growers.

Lynch also lets us know that in the stock market it is not the brain that is the most important but the stomach. This is mainly because one must remain invested in stocks that are selected for the long term. There may be ups and downs on a daily basis and the waves of information made available to us do not help in this aspect. Hence being able to hear the news and still have faith in the stock for 10-30 years is necessary. Market falls occur regularly hence it one should have a significant tolerance for pain. Most people do really well because they just hang in there.

Even when it comes to professionals it is not necessary that those will grow multifold. Some may even make a loss.

“In this business, if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.”

A stock may lose 100% of its value but even one great investment that grows at 1000% of its value will not only make up for the losses also change your life. This shows that you don’t have to be perfect as an investor as a handful of multi-baggers can help you create all the wealth you need.

When is the right time to invest?

peter lynch right time to sell

Lynch conducted a study to determine whether market timing was an effective strategy. Here he took two sets of investors one that would’ve invested on an absolute high day from 1965-1995. And another who would invest the same amount but on the lowest days of the year.

According to the results of the study, the investor who invested on the absolute high day would have earned a compounded return of 10.6% for the 30-year period. The other investor who invests on the lowest day of the year would earn an 11.7% compounded return over the 30-year period. According to this study, the investor who invested in the worst market timings trailed only by 1.1% per year.

This led Lynch to believe that it wasn’t worth it to run around figuring the right time to invest. This time would be better invested in focussing on what was important i.e. finding great companies.

When to sell your investments?

Despite Lynch being an advocate of long term commitment and not favoring market timing, he does not believe that investors should hold one stock forever. According to Lynch investors should keep an eye on their investments and review their holdings once every 6 months. One may not expect it but just like the buys the sales also depend on the story on the company. An investor should sell his stock if he feels that the stock has played out according to the story and its performance is reflected in the price.

Another reason would be that the story itself is changed by the company or the stock fundamentally deteriorates. Or else as long as the story is as expected a price drop would only mean an opportunity to buy more. Therefore you have to define when a company is getting close to maturity, and that’s when you exit. Or the story deteriorates. If the story’s intact, you hold on.

“A good stock can take several years before it really pays off. Give your investment time to grow. No one can tell you when the right time is to sell a stock. You need to have patience. If you are averse to risk, the stock market is not for you,”

Lynch also advocates for rotation selling. According to him once a stock’s story is played and the expected returns achieved the investor should sell the shares and replace them with those of another company with similar prospects

Closing Thoughts

peter lynch quote famous

Peter Lynch’s performance and stock-picking ability have set him, leagues, apart from most of his peers at Wall Street. The strategies that he has provided us with not only provide us with a fresh perspective towards the investing world. One which is generally considered to be simply mundane snd a game of numbers.

His last lesson, however, can be noted in his walking away from the mutual fund industry at the pinnacle of his career. Where he chose to use his wealth to live life to the fullest instead of simply chasing money.

DMart Owner RK Damani Success Story cover

D-Mart Founder- RK Damani Success Story [Bio, Facts, Net worth & More]

D-Mart Owner RK Damani Success Story: Radha Kishan Damani or RK Dami is a Mumbai based billionaire investor, businessman, and owner of the mega-retail chain stores “D-Mart” in India. The veteran investor Rakesh Jhunjhunwala considers him as his guru (mentor) in the Indian share market. Here are some interesting facts about RK Damani

  • Current Age: 66 (Born 1954)
  • Net worth: $15.5 Billion
  • Occupation: Trader, Investor, Businessman
  • Status: Self-Made Billionaire

According to Forbes’s latest Richest Indian’s list, RK Damani is the 7th richest person in India, with a net worth of over $15.5 Billion, which is equivalent to over Rs 116,200 Crores.

RK Damani Success Story

— Background

RK Damani does not consider himself as a highly educated person. He dropped out of college while pursuing B Com from the University of Mumbai. Before entering the stock market, RK Damani had a small ‘ball-bearing’ business. However, after the death of his father, he started working as a stockbroker in his family business. He was 32 at that time.

Therefore, unlike most tech entrepreneurs who start their startup journey in their 20s, RK Damani was a little late to join this journey, still was able to make it big.

— Stock Market Career

Although RK Damani started his career as a stockbroker, he soon understood that if he wants to make real money from the market, then he needed to trade his own money in the market, instead of being just a broker. And soon he started trading his in the Indian stock market.

RK Damani made a lot of profits from his trading in stocks. He was a very flexible trader and believed in making profits using different market swings. For example, during the Harshad Mehta scam, he made a lot of money by ‘Short-selling’ the stocks, which was not common at that time. However, after getting influenced by value investor Chandrakant Sampat, later RK Damini changed his approach. He shifted to long-term value investing.

RK Damani made a lot of money by investing and holding multi-baggers stocks. A few best-performing stocks from his portfolio are VST Industries, Sundaram Finance, Indian Cement, and Blue Dart. He also invested in VST Industries at an average of Rs 85 and it is currently trading at Rs 3,400. Further, India cement gave a return of +115% to his porfolio.

Some other companies in his portfolio are Food & Inns Ltd, Simplex Infrastructure Ltd, Mangalam Organics, Spencer’s Retail, BF Utilities, Prozone Inty Properties, Kava Ltd, Astra Microwave products, etc.

RK Damani latest stock portfolio 2020 june tradebrains

— D’Mart Owner – The career as a Businessman

RK Damani has been very interested in consumer retails for a long time. That’s why he opened D-mart in 2002 with one store in suburban Mumbai. Nevertheless, being a value investor, this was a very planned move by him.

In March 2017, D-Mart went public by offering its IPO, under the name of the parent company- ‘Avenue Supermarts’. The IPO was a big hit. Avenue supermart offered its shares to the public at a  price of Rs 299 and got listed at Rs 604 after over-subscription. (Also read: 10 secrets behind the stunning success of D-Mart’s Radhakishan Damani). Currently, the shares of Avenue Supermarts are trading at Rs 2,372 per share, as of 30 April 2020.

d mart

Further, by 2019, D-Mart has over 176 stores spread across Maharashtra, Andhra Pradesh, Telangana, Gujarat, Madhya Pradesh, Chhattisgarh, Rajasthan, National Capital Region, Tamil Nadu, Karnataka, Daman and Diu, and Punjab. Dmart stores generated a total revenue of Rs 19,916 Crores in the year ending March 2019.

dmart success story rk damani

(Fig: Dmart Stores Success Story)

— Other Facts about RK Damani

RK Damani considers himself as both a trader and an Investor. He trades in market swing and invests when he’s getting long-term value.

Personally, Mr. Damani lives a very simple life. He is known as ‘Mr. White and White’ because most of the time he wears a simple white shirt and white trousers. Besides, he avoids media and public gatherings.

(Video Credits: FinnovationZ)

That’s all for this RK Damani success story. I hope this article will motivate you towards your own success journey. Let me know whose story should we cover in the next article by commenting below. Happy Investing.

Raamdeo Agarwal Success Story cover

Raamdeo Agarwal Success Story -The Warren Buffet of India!

A Brief Study on Raamdeo Agarwal Success Story: If you are involved in the Indian stock market for quite some time, you might already have heard the name of “Raamdeo Agarwal” somewhere on financial websites or the News Channels.  Mr. Raamdeo Agarwal is one of the most renowned names in the Investing world. His influence and ‘so-called genius’ was such that he is also known as ‘Warren Buffet from India’.

Raamdeo Agarwal is also popularly known for co-founding Motilal Oswal Financial Services and his family today owns about 36% stake in the company. As of 2018, Mr. Raamdeo Agarwal had a net worth of $1 billion according to Forbes. Further, he is regularly in the spotlight where he has been even interviewed by Saif Ali Khan.

Today, we have a look at Ramdeo Agarwal’s journey in his personal life and in the investment world in search of the spark that has catapulted him to this status. We’ll particularly focus on Raamdeo Agarwal Success Story in the Indian stock market industry.

Raamdeo Agarwal’s Early life

Raamdeo Agarwal hailed from Raipur, Chhattisgarh. Being the son of a farmer he talks shares that the only investment strategy his father knew was saving and investing in his kids. Raamdeo Agarwal moved to Mumbai to complete his higher studies. He pursued Chartered Accountancy and completed the course in five years.

It was in Mumbai where he met his soon to closest associate and business partner Motilal Oswal. Their paths crossed as they lived in the same hostel. Oswal described him as a very bookish person who was very interested in reading company reports and Balance Sheets. 

Raamdeo Agrawal and Motilal Oswal

(Left to Right: Raamdeo Agrawal and Motilal Oswal)

Nothing so far? Let’s keep looking for that spark that one of the richest men in India must possess.

Life After entering the Stock Market

Raamdeo Agarwal and Oswal had one common interest, it was the Stock Market. In 1987 they decided to become sub-brokers in the BSE. He managed to become a stockbroker by 1990 and also began investing for himself in the stock market. By doing so he was able to develop a portfolio of over Rs 10 lac.

Over the next few years, we could say that he was lucky to have stayed invested in the stock market when the Harshad Mehta bull run arrived in 1992. His investment of 10 lac had now become 30 crores. Once the bull run was over reports of the Harshad Mehta scam broke out. This saw his investment value drop from 30 crores to 10 crores. 
Warren Buffet and Raamdeo Agrawal

(Left to Right: Warren Buffet and Raamdeo Agrawal)

This was the period where he took a step back to rethink his approach to the markets. In 1994, he went to the US to attend the shareholders meeting of Berkshire Hathway and meet his idol Warren Buffet. After his meeting with Warren Buffet, the first thing he focussed on was getting the most by reading all the letters written by Warren Buffet to Berkshire Hathaway.

It was after this that he changed his investment strategy. Till then his 10 crore portfolio included 225 stocks. He sold most of them and invested in only 15 stocks. This was because he realized that it was the quality and not the quantity that mattered. H later came to call this the Focus approach. His portfolio increased its value to 100 crores by the year 2000. In 2018 Forbes listed him as a billionaire.

Some of notable investments of Raamdeo Agarwal

Here are a few of the famous and most profitable investments made by Mr. Raamdeo Agarwal in the early phase of his career:

  1. Hero Honda – He had purchased Hero Honda stock at Rs. 30 in 1996 and sold it Rs. 2600 in the year 2016. In the 20 year period, he also received a dividend of around Rs 600 per share.
  2. Infosys – He purchased shares of Infosys in mid-90s and sold them to get a return of over 12 times. In this holding period, he also received consistent bonuses and dividends from this stock.
  3. Eicher Motors – He purchased Eicher at Rs. 900. The investment touched over Rs. 32,000 in 2017.

If we consider an investment of one lac in each of these stocks, the three lac portfolio would increase wealth to 1.5 crores i.e over 50 times.

Raamdeo Agarwal Success Story: Secret Sauce

(Source)Secret Sauce of Raamdeo Agarwal Success Story

The investment strategies followed by Raamdeo Agarwal have been suited as per his experience. They are as follows

— QGLP (Quality, Growth, Longevity & Price)

QGLP stands for the four factors considered while purchasing a stock.

1. Quality

Raamdeo Agarwal realized the importance of this factor after investing in Financial Technologies. This is an example he shares as one of his poor choices. He made a loss while investing in Financial Technologies (India) Ltd. This made him realize the importance of the quality of management in a company. He purchased the shares of at Rs. 1150 and later was forced to sell at Rs. 150.

Raamdeo ensured that after this he always paid extra attention to the management. He also considers this as a deciding factor as in comparison all the other data is accessible or computable by the regular public. But it is the management that is left in the dark. He ensures that his investments have good, honest, and transparent management. The management should also take care of the shareholders and give timely dividends and at the same time also have capita for growth.

2. Growth

Raamdeo considers a growth stock as one that is of a big company that is not yet popular. By investing in these companies the returns will be high but secured at a low cost. Raamdeo says that investing is nothing but figuring out the present value of all the future earnings and deciding accordingly.

3. Longevity

This factor encourages investors to invest in companies that have been around for a long time. This not only gives the investments some stability but also gives the investors enough data to enable them to take decisions.

4. Price 

According to this at the time you buy the stock, its price must be lower than its valuation.

Raamdeo Agarwal’s Strategy with regards to portfolio

According to Raamdeo an investor for his personal purposes should have invested in a maximum of 15 stocks. According to him, 15 stocks is too much. He instead would suggest 4-5 stocks. Investing in multiple stocks gives investors the benefits of diversification.

But 90-92% of the benefits are claimed by the time the portfolio reached 15. From here on the benefits are slim. An investor wishing to tap into the final 10% would have to invest in numerous stocks. It would reach a point where it also impairs the quality judgment. This because it would not even enable him to go deep enough into finding about the stock.

— Buy and Sell Strategy 

Raamdeo put forward the theory of ‘Buy Right, Sit Tight’. According to this, one should research in-depth while purchasing a stock. He should be confident enough to invest at least 10% of his portfolio. He also adds that if things go really awry the price of a quality stock will not just suddenly drop. An investor who has researched enough will see it coming and the gradual decline will give ample time for the investor to exit.

— Disciplined Approach to portfolio

The discipline Raamdeo follows with regards to his portfolio is remarkable. When he noticed that the shares of Berkshire Hathway no longer suit his portfolio filters he decided to sell them. This was despite his idol Warren Buffet remaining invested.

Also read: Rakesh Jhunjhunwala Success Story- Rs 5,000 to Rs 19,000 Crores!!

Closing Thoughts

The success story of Raamdeo Agrawal is one of hope to all investors. Throughout his journey, we never found the special greatness spark that we thought is made available to only a selected few. His story shows that at times luck may be in our favor but not to be dependant on it.

Most importantly it also shows that we are to have a disciplined approach to our investments and also to learn from our mistakes. It shows how market tests patience and reward conviction. 

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31 Hand-Picked Best Quotes on Investing: Buffett, Munger, Graham & More

31 Hand-Picked Best Quotes on Investing: Buffett, Munger, Graham & More: Over the years, there are many successful investors who have shared their wits with the world. Warren Buffett, Benjamin Graham, Philip Fisher, Charlie Munger, Peter Lynch, Seth Klarman, Joel Greenblatt, etc are few of the famous investors who have inspired the world by their ‘words of wisdom’.

Here are the 31 hand-picked best quotes on Investing by a few of the world’s most successful investors. Enjoy Yourself.

31 Hand-Picked Best Quotes on Investing:

– Warren Buffett

warren buffett

  1. “Price is what you pay. Value is what you get.”
  2. “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1”
  3. “Risk comes from not knowing what you are doing.”
  4. “It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”
  5. “In the business world, the rearview mirror is always clearer than the windshield.”
  6. “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
  7. “Someone’s sitting in the shade today because someone planted a tree a long time ago.”
  8. “The difference between successful people and really successful people is that really successful people say no to almost everything.”
  9. “The stock market is a device for transferring money from the impatient to the patient.”
  10. “Diversification is protection against ignorance. It makes little sense if you know what you are doing.”
  11. “I will tell you how to become rich. Close the doors, be fearful when others are greedy. Be greedy when others are fearful.”

Also read: Why Warren Buffet Suggests- ‘Price Is What You Pay, Value Is What You Get’?

– Philip Fisher

philip fisher

  1. “Conservative investor sleep well.”
  2. “The stock market is filled with individuals who know the price of everything, but the value of nothing.”

Also read: Common Stocks and Uncommon Profits by Philip Fisher- Book Review

– Benjamin Graham

  1. “Buy not on optimism, but on arithmetic.”
  2. “The individual investor should act consistently as an investor and not as a speculator.”
  3. “If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume.”
  4. The underlying principles of sound investment should not alter from decade to decade, but the application of these principles must be adapted to significant changes in the financial mechanisms and climate.”

Also read: ‘The Intelligent Investor’ by Benjamin Graham- Book Review

– Charlie Munger

  1. “Spend each day trying to be a little wiser than you were when you woke up.” – Charlie Munger
  2. “Our job is to find a few intelligent things to do, not to keep up with every damn thing in the world.”
  3. “No wise pilot, no matter how great his talent and experience, fails to use his checklist.” – Charlie Munger Peter

Also read: 21 All-Time Best Quotes by Charlie Munger

– Peter Lynch

peter lynch

  1. “Behind every stock is a company. Find out what it’s doing.”
  2. “Although it’s easy to forget sometimes, a share is not a lottery ticket… it’s part ownership of a business.”
  3. “If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.”
  4. “Go for a business that any idiot can run – because sooner or later, any idiot probably is going to run it.”
  5. “If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.”

Also read: One up on wall street by Peter Lynch- Book Review

– A few Other Best Quotes on Investing

  1. “Minimizing downside risk while maximizing the upside is a powerful concept.” – Mohnish Pabrai
  2. “The secret to investing is to figure out the value of something – and then pay a lot less.” Joel Greenblatt
  3. “Every once in a while, the market does something so stupid it takes your breath away.” – Jim Cramer
  4. “While it might seem that anyone can be a value investor, the essential characteristics of this type of investor-patience, discipline, and risk aversion-may well be genetically determined.” -Seth Klarman
  5. “Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” – Paul Samuelson
  6. “The four most dangerous words in investing are: ‘this time it’s different.'” – Sir John Templeton

Also read: The Little Book That Beats The Market by Joel Greenblatt- Book Review


None of the quotes mentioned above by any of the successful investors is too complex to understand. Stock investing is simple if you have the right attitude and follow the proper approach.

That’s all. I hope this post- “31 Hand-Picked Best Quotes on Investing -Buffett, Munger, Graham & More” is useful and entertaining to you. If I missed any of the best quotes on investing, feel free to comment below. #HappyInvesting

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21 All-Time Best Quotes by Charlie Munger

Best Quotes by Charlie Munger: The name Charlie Munger, 95, doesn’t require any introduction for those involved in the investing world. If you are new to investing, you might have heard Charlie as Warren Buffett’s right hand. However, even individually, Charlie Munger is considered as one of the world’s wittiest investors.

Anyways, let me first introduce Charlie Munger to the newbies. Charlie Munger is an American investor, businessman, and self-made billionaire with a net worth of over $1.7 Billion (as of Feb 2019). He is the vice-chairman of Berkshire Hathaway, the conglomerate headed by Warren Buffett. And like Buffett, Charlie Munger is also an active philanthropist and has donated millions of his personal wealth for good causes.

Interestingly, if you look into his background, Charlie Munger never took any course in investing, finance or economics while he was in university. During World War II, Charlie studied meteorology at Caltech to become an army meteorologist. Later, he earned a degree in law from Harvard Law School.

Charlie Munger and Warren Buffett met in 1959 during a dinner party and got along immediately. Although they knew each other for a very long time, however, they built their informal partnership by investing together only in the 1970s. Later in the 1980s, both started the present structure of Berkshire Hathaway and have been running in profitably ever since by building wealth for themselves and their investors. Here’s what Warren Buffett thinks of his business partner Charlie Munger:

We’ve got an extremely good partnership and business is more fun — just as life is more fun — with a good personal partner and to have a great business partner. You know it’s just — we’ve accomplished more but we’ve also had way more fun.” -Warren Buffett

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Charlie Munger’s wisdom is an asset for all the investing community. The knowledge and success that he has gained in the past many decades is quite inspirational.  Therefore, in this post, we are going to highlight twenty-one evergreen quotes by Charlie Munger that every investor should know. Let’s get started.

21 All-time best Quotes by Charlie Munger

Charlie Munger Quotes on investing wisdom

“People calculate too much and think too little.”

“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

“What is elementary, worldly wisdom? Well, the first rule is that you can’t really know anything if you just remember isolated facts and try and bang ’em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form. You’ve got to have models in your head. And you’ve got to array your experience — both vicarious and direct — on this latticework of models. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and fail in life. You’ve got to hang experience on a latticework of models in your head.”

Charlie Munger Quotes on Wealth Creation

“The big money is not in the buying or the selling, but in the waiting.”

“What are the secrets of success? – one word answer: ”rational”

“It takes the character to sit with all that cash and to do nothing. I didn’t get to where I am by going after mediocre opportunities.”

“To get what you want, you have to deserve what you want. The world is not yet a crazy enough place to reward a whole bunch of undeserving people.”

“All I want to know is where I’m going to die so I’ll never go there.”

Charlie Munger Quotes on Importance of learning

“There isn’t a single formula. You need to know a lot about business and human nature and the numbers… It is unreasonable to expect that there is a magic system that will do it for you.”

I paid no attention to the territorial boundaries of academic disciplines and I just grabbed all the big ideas that I could.”

“In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time — none, zero. You’d be amazed at how much Warren reads — and at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”

“Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day-if you live long enough-like most people, you will get out of life what you deserve.”

Also read: 31 Hand-Picked Best Quotes on Investing: Buffett, Munger, Graham & More.

Charlie Munger Quotes on Circle of Competence

“Knowing what you don’t know is more useful than being brilliant.”

“If something is too hard, we move on to something else. What could be simpler than that?” 

I try to get rid of people who always confidently answer questions about which they don’t have any real knowledge.”

“We have three baskets: in, out, and too tough. … We have to have a special insight, or we’ll put it in the “too tough” basket.” 

Charlie Munger Quotes on life rules to live by

“Mimicking the herd invites regression to the mean.”

“Remember that reputation and integrity are your most valuable assets — and can be lost in a heartbeat.”

Just because you like it does not mean that the world will necessarily give it to you.”

“Life, in part, is like a poker game, wherein you have to learn to quit sometimes when holding a much-loved hand — you must learn to handle mistakes and new facts that change the odds.”

Take a simple idea, and take it seriously.”

Suggested Readings on Charlie Munger

Recommended Books

Hand-picked Articles

Billionaire Carl Icahn- Investment Strategy, Philosophy, Quotes & More-min

Billionaire Carl Icahn: Investment Strategy, Philosophy, Quotes & More

If you’ve been involved in the stock market for quite some time, you must have heard of Carl Icahn. He is a famous American investor and founder and controlling shareholder of Icahn Enterprises. In case you haven’t, don’t worry. In this article, we shall discuss his investing philosophy. So, if you are a newbie in the world of investing, you are surely going to learn something new and informative today.

Apart from being a seasoned investor, Carl Icahn is also an established businessman and a philanthropist. He is the Chairman of Federal-Mogul which is an American developer, supplier, and manufacturer of vehicle safety products and power train components.

During the year 2017, Icahn provided his service to the present US President Donald Trump as a special economic adviser on financial regulation.

He founded his famous Asset Management Company in 1987 named Icahn Enterprises L.P. It is a conglomerate, headquartered at New York, USA. He is having the ultimate controlling power of his company where he owns a 95% stake in the same. The company has invested in diverse industries which include energy, auto parts, metals, casinos, rail cars, real estate, food packaging, and home fashion.

Carl Icahn Investing Philosophy

Let us now understand the investment philosophy of Carl Icahn

As per Mr. Icahn, he is a contrarian investor. He said, “My investment philosophy, generally, with exceptions, is to buy something when no one wants it.”

Carl Icahn looks to invest in those companies with share prices reflecting poor price-to-earnings (P/E) ratios. He hunts for those corporations with stocks having book values exceeding their current market values.

After that, he aggressively invests in the significant portion of equities of those corporations. Consequently, he becomes the largest shareholder of those companies.

Eventually, he calls general meetings to hold elections to form a new Board of Directors or passing the resolution for initiating divestiture of assets to deliver greater value to the shareholders.

Icahn focuses highly on the managerial remuneration. He believes that many top managerial people are highly overpaid and their compensation has little correlation with the equity performance.

You can study Carl Icahn’s portfolio here. From the portfolio of Icahn, we can learn three things about his investing approach.

1. Carl Icahn is more into trading than investing:

An analysis of his portfolio reveals that most of his stocks were bought in the last two years. It is his habit of not keeping stocks in his portfolio for more than one and a half years.

When he invests in a company, he invests to the extent that he becomes the largest stakeholder of the same. So, he gets the authority to call general meetings. He pressurizes such company for using cash or raising a loan to buyback stocks. This results in increasing the stock price in the short run.

Icahn is more concerned with making short term profits and little does he care for the long term viability of the company.

2. He invests in securities with high conviction:

When Icahn invests in a stock, it is highly likely that he has a strong conviction behind the investment. He invests in the equity of a company where he has a gut feeling to earn huge returns.

Icahn purchases stocks of those companies which are poorly managed and not performing profitably. He invests in such companies with the intention to force changes to occur in their operations and management.

He even makes the companies declare big dividend payout to the shareholders if he thinks it will lead to his increase in returns in the long run.

3. Icahn is an activist investor:

He is a frequent stock trader. He majorly invests in equities of the companies with the objective of making changes in those companies. It is an effort he makes to push the price of the stocks.

The management of a company can easily ignore an activist holding a small number of shares in the same. But, if a billionaire investor holds a high percentage of the company, he/she can’t be easily ignored by the company.

Icahn’s investing strategy is simply beyond the reach of individual retail investors. Every investor, whether big or small, should not blindly follow any investor to take any position in a company. But, still, Icahn’s quarterly filing of shareholdings to SEC is certainly worth paying a glance for a few minutes.

Also read: Howard Marks’ Investing Strategies & Lessons

Famous Quotes By Charle Ichan

— Charles Icahn on his investment strategy:

“I look at companies as businesses, while Wall Street analysts look for quarterly earnings performance. I buy assets and potential productivity. Wall Street buys earnings, so they miss a lot of things that I see in certain situations.”

— This is what Icahn has to say on takeovers:

“In takeovers, the metaphor is war. The secret is reserves. You must have reserves stretched way out ahead. You have to know that you could buy the company and not be stretched.”

— Charles Icahn thoughts on ethics:

“I’m happy stockholders benefited. But I’m no Robin Hood. I enjoy making money.”

— Finally, two other remarkable quotes of Charles Icahn:

“I make money. Nothing wrong with that. That’s what I want to do. That’s what I’m here to do. And that’s what I enjoy.”

“CEOs are paid for doing a terrible job. If the system wasn’t so messed up, guys like me wouldn’t make this kind of money.”


(Image Credits: Azquotes)

Also read: 31 Hand-Picked Best Quotes on Investing: Buffett, Munger, Graham & More.

Closing Thoughts

In order to be a successful financial investor, an individual needs to be a finance enthusiast first of all. Secondly, he/she needs to study financial markets from various books and also follow the macroeconomic events and global stock markets. Lastly, it is important to study the investment approaches of renowned investors to understand their investing psychology.

Financial Market practitioners majorly advocate value investing to be a successful investor. Of course, it is one of the most successful ways to make wealth but there exist other methods to make money as well.

Carl Icahn is a different type of a stock market investor as compared to the old school value investors like Benjamin Graham and Warren Buffet. Unlike these two gentlemen, Mr. Icahn is more into trading than investing. Carl Icahn also focuses on Corporate Governance of the company whose share he buys. His philosophy is more based on short term profiteering rather than long term value investing.

He is an investor who has let us taste a different flavor of investing. There is no doubt in saying that one can definitely learn a lot as a fresher from the veteran investor.

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Howard Marks’ Investing Strategies & Lessons

Howard Marks, born during the 1940s, is a renowned investor and writer in the United States of America. In 2017, he was ranked the #374 richest person in the United States, with a net worth of $1.91 billion by Forbes.

During the early part of his career, Howard Marks worked with Citibank in senior positions. In the year 1985, he joined TCW where he created high yield, convertible securities, and distressed debt groups and led them all by himself.

After working in TCW for a decade, Howard resigned and eventually founded Oaktree Capital Management in Los Angeles with five partners. Interestingly, the partners of Howard in Oaktree are all ex-employees of TCW like him. The Asset Management Firm of Marks started growing in size and operations at a rapid pace with the passage of time. Oaktree focused on distressed debt, high-yield bonds, and private equity. Mr. Howard is currently the Co-chairman of the organization.

He is also a very popular personality among finance enthusiasts in the US and the world. His detailed discussion on investment strategies and insights into the US economy is known as “Oaktree memos”. It contributed highly towards his popularity among the investing community across the world. He has also authored several books on investing which are quite famous around the globe like Mastering The Market Cycle: Getting the odds on your side The Most Important Thing: Uncommon Sense for The Thoughtful Investor.

Investing strategies of Howard Marks

Let us have a look at some pointers which would help you understand the investing philosophy of this famous billionaire investor. 

1. Be a contrarian investor: Howard Marks stated that your behavior as an investor towards the financial market should be different from the other retail investors. When people buy some stock, you have to sell the same and vice versa. You need to observe what others are doing and try to comprehend where they are going wrong.

As per Marks, the market is driven by greed and fear of investors. You should not follow the herd. What others are doing, not necessarily it has to be correct. You can’t afford to get carried away by the actions of the herd. Controlling your emotions is extremely important to achieve success in financial investing.

2. You might face punishing times in your investing career: You can’t expect any industry to perform well every time. It is also not possible for an asset class to provide high returns on all occasions. It might happen that the investing approach of yours fails to generate your target returns on every occasion.

Your portfolio might stay reddened for a substantial period of time. It is pretty okay to incur losses while investing. Losing your corpus in the financial market is a part and parcel of investing.

3. Patience is highly needed to succeed in the financial market: If an asset is underpriced, it doesn’t mean its price is going up tomorrow. Similarly, an overpriced asset doesn’t indicate it will start going bearish soon.

You might come across a plethora of opportunities in the stock market to book quick profits at low risk. But, it is always recommended to stay firm with your investing strategies. Have faith in your investing philosophy to yield returns for you in the long run.

4. Don’t look for “exact bottoms” in the market: Marks said that he looks to buy a stock at a cheap price. He enters into the market when the price is low, not necessarily it has to be the price. It is not always possible that you get to buy all quantities of a share at its rock bottom price.

After an initial investment, when the same stock gets cheaper, Marks again buys more of it. It is not necessary to buy all your shares at the market low to make huge money.

5. Refrain from buying quality stocks at any price: It is not true that you will earn huge profits by investing in high-quality securities. You should look to buy a stock which is trading at a price lower than its intrinsic value.

Investing in stocks at a low purchase price not only generates the scope for future gain, but it also puts a limit on the downside risk. The more is the discount from the fair value (intrinsic value), the greater is the “margin of safety” a stock could provide you with.

6. Psychology is more important than market predictions: You don’t have a crystal ball to predict the future. You can’t forecast how the market will perform tomorrow. You can only mentally prepare yourself from probable situations in the market. For making money in the stock market you require having a deep insight into companies, asset classes, and sectors.

You can’t let your emotions get better of your investment strategies. What matters most is your psychology. You have to be either aggressive or defensive in your approach. It doesn’t matter whether you are investing in stocks or bonds.

It hardly matters whether you pour your money in domestic or international markets. Your returns remain unaffected irrespective of the fact whether you invest in a developed economy or an emerging market. 

Famous quotes by Howard Marks

You can find a plethora of quotes from Marks on the internet. Here are a few quotes which I found worth sharing from his book, The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor’.  

— “The process of intelligently building a portfolio consists of buying the best investments, making room for them by selling lesser ones, and staying clear of the worst.”

— “There are old investors, and there are bold investors, but there are no old bold investors.”

— “There’s a big difference between probability and outcome. Probable things fail to happen—and improbable things happen—all the time. That’s one of the most important things you can know about investment risk.”

Here are two more of my favorite quotes of Howard from his book, ‘Mastering the Market Cycle: Getting the Odds on Your Side’.

— “There are three ingredients for success—aggressiveness, timing, and skill—and if you have enough aggressiveness at the right time, you don’t need that much skill.”

— “What do value investors do? They strive to take advantage of discrepancies between “price” and “value.” In order to do that successfully, they have to (a) quantify an asset’s intrinsic value and how it’s likely to change over time and (b) assess how the current market price compares with the asset’s intrinsic value, past prices for the asset, the prices of other assets, and “theoretically fair” prices for assets in general.”

Also read:

Closing thoughts

Investing requires a person to have patience, dedication, and studying the market thoroughly. In case you want to earn quick profits in the short term, it is possible through trading but not by investing. But, if you are looking to grow your wealth and willing to stay invested for a long time, investing can make it a reality.

Howard Mark has not made huge money in one day. It took him years of experience to reach where he is now. To grow as a fundamental analyst, it is very important to learn from the eminent personalities who have achieved grand success as investors. The investing approach of Marks is immensely informative for any fresher willing to pursue a career in the financial market.

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The Ultimate Guide to Walter Schloss Investing

When you think of investing, the first name that comes to your mind is Warren Buffet- and with good reason. Buffet has a legendary track record and has generated very high returns for his investors since the ’60s. But a lesser-known investor who was just as good and referred to as ‘Big Walt’ by Buffet is Walter Schloss, one of the most legendary investors in the investment world.


Walter Schloss’ investment theories are most applicable to small value investors and were based on the teachings of Benjamin Graham (another icon in the investing world and also known as the father of the value investing).

Schloss’s studies helped gain an insight into how to perform deep value investing that is still relevant in today’s market. While the basis of Walter Schloss’s principles were based on Graham, he developed his own strategies while staying close to the fundamentals. His theories earned him the title ‘Superinvestor’ in 1984.

The Investing Playbook

Walter Schloss’ investment strategies involved a more ‘play by the book’ approach of investing in undervalued stocks. He focused on the quantitative factor and instead of following every stock he owned, Schloss decided to follow stocks based on valuation and buying at a discount to the intrinsic value. In 1994 Schloss listed the factors he believed were required to make money on the stock market. I have discussed the most important factors below:

1. Price is the most important thing when it comes to buying stocks

Walter Schloss’ believed Ben Graham’s philosophy that ‘a stock well bought is half sold’. He felt that every stock will become an attractive buy at a certain point as long as the price dropped low enough to provide a safety margin.

2. The price of a stock in relation to its book value is the most important factor in valuing stocks

Walter Schloss never bought stocks that had a premium to book value ratio. Instead, he bought it at a discount to book value as it provided a margin of safety. The investors who remained patient in the short run would be rewarded in the long run if they systematically bought discounted stocks.

3. Buy stock in companies that have been in business for a while

Schloss preferred to invest in stocks of companies that have a long history of being in business. The fact that these businesses have been in operation for so long gives the investor the confidence that the company will continue to operate long into the future as well. It can also help identify their business cycle and compare the book value earnings. Walter Schloss’s also invested in companies that were going through a downturn in their business cycle if he believed that the asset portfolio was strong and the chances of the company performing well in the long-term seemed favorable.

4. Maintain a diverse asset portfolio and stay fully invested

Walter Schloss usually traded a 100 different stocks at any given time and he was a 100% invested. During a high market valuation, he would adjust his price to book value upward if the company was paying a good dividend. But he relied on dividends rather than earnings as an indicator of a company’s profitability.

When analyzing the quality of the management in the company you choose to invest in, Walter Schloss believed that being ethical was more important than just being smart. In an interview, he said: “In a choice between a smart guy with a bad reputation and a dumb guy, I think I’d go with the dumb guy who’s honest. Of course, you can’t always protect yourself there, either. I guess the choices we’ve made are probably in those areas.”

The ‘rules of investing’ were written by Walter Schloss many years ago but they still remain relevant today. If an investor learns to stick to a small value approach, it will benefit them in the long run. Keep it simple.

Also read: Why Warren Buffet Suggests- ‘Price Is What You Pay, Value Is What You Get’?

Walter Schloss and Portfolio Management

Walter Schloss did not invest too much time assessing the details of a particular stock to the very last detail rather he studied the company financials and did not overanalyze each investment opportunity. He spread his risks evenly and sometimes invested just $10,000 in a stock. His portfolio consisted of a hundred stocks.

In the initial investment, Schloss would take a small position and eventually buy more if the difference between the trading price and intrinsic value continued to widen. In particular, he preferred to invest in companies with a higher margin of safety and focused on stocks with low leverage.

Walter Schloss’s deep value investing

As a small value investor, the strategies used by Walter Schloss are extremely relevant. Walter Schloss’s investment strategy was incredibly old-school, he was a simple man and operated more like a small-time investor rather than a professional financial advisor. Schloss never aimed to reach new heights as an investor and continued to use and search for new deep value investing ideas till the very end.

Value investing are stocks that trade lower than their book value and while it is hard to find these stocks in today’s market where ‘money never sleeps’, this old school strategy developed by Walter Schloss is still important. Here are the key takeaways of this investing style:

  • The main criteria of the investor should be to discount your stock to a tangible book value
  • The quality of the management is also important, if the company is not confident in their management, then neither should you
  • Having a diversified portfolio is incredibly important. In the long term, it is the valuation of your portfolio that helps you earn large gains in the stock market.

Also read: #5 Things Warren Buffett looks for before investing.

BONUS: 16 Investing Rules from Walter Schloss


  1. Price is the most important factor to use in relation to value.
  2. Try to establish the value of the company. Remember that a share of stock represents a part of a business and is not just a piece of paper.
  3. Use book value as a starting point to try and establish the value of the enterprise. Be sure that debt does not equal 100% of the equity. (Capital and surplus for the common stock).
  4. Have patience. Stocks don’t go up immediately.
  5. Don’t buy on tips or for a quick move. Let the professionals do that if they can. Don’t sell on bad news.
  6. Don’t be afraid to be a loner but be sure that you are correct in your judgment. You can’t be 100% certain but try to look for the weaknesses in your thinking. Buy on a scale down and sell on a scale up.
  7. Have the courage of your convictions once you have made a decision.
  8. Have a philosophy of investment and try to follow it. The above is a way that I’ve found successful.
  9. Don’t be in too much of a hurry to see. If the stock reaches a price that you think is a fair one, then you can sell but often because a stock goes up say 50%, people say sell it and button up your profit. Before selling try to re-evaluate the company again and see where the stock sells in relation to its book value. Be aware of the level of the stock market. Are yields low and P-E ratios high? If the stock market historically high. Are people very optimistic etc?
  10. When buying a stock, I find it helpful to buy near the low of the past few years. A stock may go as high as 125 and then decline to 60 and you think it attractive. 3 years before the stock sold at 20 which shows that there is some vulnerability in it.
  11. Try to buy assets at a discount than to buy earnings. Earning can change dramatically in a short time. Usually, assets change slowly. One has to know much more about a company if one buys earnings.
  12. Listen to suggestions from people you respect. This doesn’t mean you have to accept them. Remember it’s your money and generally, it is harder to keep money than to make it. Once you lose a lot of money, it is hard to make it back.
  13. Try not to let your emotions affect your judgment. Fear and greed are probably the worst emotions to have in connection with the purchase and sale of stocks.
  14. Remember the work compounding. For example, if you can make 12% a year and reinvest the money back, you will double your money in 6 yrs, taxes excluded. Remember the rule of 72. Your rate of return into 72 will tell you the number of years to double your money.
  15. Prefer stock over bonds. Bonds will limit your gains and inflation will reduce your purchasing power.
  16. Be careful of leverage. It can go against you.


The Walter Schloss investing style is great for anyone looking to invest in small companies. The strategies help reduce risk with the promise of high returns.

Unlike Warren Buffet’s investing style which requires the ability to identify a competitive advantage and do thorough research into a company’s financial statements that most people don’t have the know-how to do. Schloss provides a great alternative to this- focus on assets rather than earnings.

Many small investors are in the habit of solely investing in a company based on its annual earnings but they are more likely to succeed if they focus on the assets in the balance sheet. Walter Schloss investing is a time-tested lesson that still holds true today.

becoming warren buffett

Becoming Warren Buffett – 2017 HBO Documentary [Video]

Becoming Warren Buffett – 2017 HBO Documentary [Video]

Warren Buffett, also known as the ‘Oracle of Omaha’ is a popular name in the investing world.

He is an American business magnate, investor, speaker and philanthropist who serves as the chairman and CEO of Berkshire Hathaway. Warren Buffett is considered the greatest investor of all time. As of June 2018, he is the third richest person on the world with a net worth of over $88.5 billion

Warren Buffett was born on 30th August 1920, in Omaha, Nebraska. He made his first stock investment as an age of eleven. Later, he attended Columbia Business School as a graduate where he learned the philosophies of Value Investing through his mentor- Benjamin Graham, the father of value investing. In 1959, Warren Buffett created his Buffett Partnership after meeting Charlie Munger.

In 1962, Warren Buffett started buying stocks in a textile manufacturing firm called Berkshire Hathaway On May 10, 1965 Warren Buffett, through his investment partnership, took over the management and control of Berkshire Hathaway. Buffett’s partnership firm had accumulated about 49% of the shares of Berkshire.

As of today, Berkshire Hathaway is the third largest public company in the world, the ninth largest conglomerate by revenue and the largest financial services company by revenue in the world.

Becoming Warren Buffett – 2017 HBO Documentary

In 2017, HBO released a documentary on Becoming Warren Buffett, a co-production of HBO and Kunhardt Films; directed by Peter Kunhardt; produced by Teddy Kunhardt and George Kunhardt.

Here’s the video on how Warren Buffett became the greatest investor in the world –>

(Credits: Advexon TV)

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