Great money managers are like the rock stars of the financial world. The greatest investors have all made a fortune off their success and in many cases, they’ve helped millions of others achieve similar returns. This list doesn’t include all investors who made tons of money on the Stock Exchange, but it does include some notable ones. Obviously we are just looking on their ability to make money while investing on companies, and ignoring their personal life stories.
These investors differ widely in the strategies and philosophies they applied to their trading; some came up with new and innovative ways to analyze their investments, while others picked securites almost entirely by instinct. Where these investors don’t differ is in their ability to consistently beat the market.
Note: If you want fast track, there is a infographic at the end of this post.
Born on May 9, 1894 and died on September 21, 1976, Benjamin Graham was a British-born American investor, economist, and professor. He is widely known as the “father of value investing,” and wrote two of the founding texts in neoclassical investing: Security Analysis (1934) with David Dodd, and The Intelligent Investor (1949). His investment philosophy stressed investor psychology, minimal debt, buy-and-hold investing, fundamental analysis, concentrated diversification, buying within the margin of safety, activist investing, and contrarian mindsets.
Ben Graham excelled as an investment manager and financial educator.
The essence of Graham’s value investing is that any investment should be worth substantially more than an investor has to pay for it. He believed in fundamental analysis and sought out companies with strong balance sheets, or, those with little debt, above-average profit margins, and ample cash flow. (For more insight, see Introduction To Fundamental Analysis.)
After graduating from Columbia University at age 20, he started his career on Wall Street, eventually founding the Graham-Newman Partnership. After hiring his former student and future manager of Berkshire Hathaway, Warren Buffett, he took up teaching positions later at Anderson School of Management, and the University of California, Los Angeles.
His work in managerial economics and investing has led to a modern wave of value investing within mutual funds, hedge funds, diversified holding companies, and other investment vehicles. Throughout his career, Graham had many notable disciples who went on to receive substantial success in the world of investment, including Buffett, who described him as the second most influential person in his life after his own father. Other such disciples were William J. Ruane, Irving Kahn and Walter J. Schloss. In addition, Graham’s thoughts on investing have influenced the likes of Seth Klarman and Bill Ackman.
If you are interested to learn Graham’s investment strategies, check his books:
Security Analysis (1934)
Born on 29 November 1912 and died on 8 July 2008, Sir John Marks Templeton was an American-born British investor, fund manager, and philanthropist. In 1954, he entered the mutual fund market and created the Templeton Growth Fund.
As have been naturalized British citizen living in the Bahamas, Templeton was also knighted by Queen Elizabeth II for his many accomplishments.
In 2006 he was listed in a seven-way tie for 129th place on the Sunday Times’s “Rich List”. He rejected technical analysis for stock trading, preferring instead to use fundamental analysis. Money magazine in 1999 called him “arguably the greatest global stock picker of the century”.
One of his most famous sayings, which is certainly worth bearing in mind, was:
“Bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria.”
One of the past century’s top contrarians, said about John Templeton:
“he bought low during the Depression, sold high during the internet boom and made more than a few good calls in between.” Templeton created some of the world’s largest and most successful international investment funds. He sold his Templeton funds in 1992 to the Franklin Group. In 1999, Money Magazine called him “arguably the greatest global stock picker of the century.”
Thomas Rowe Price, Jr.
Born on 1898 March 16 and died on 1983 October 20, Thomas Rowe Price, Jr. was the founder of T. Rowe Price, an American publicly owned investment firm, established in 1937 and headquartered in Baltimore, Maryland. The company offers mutual funds, sub-advisory services, and separate account management for individuals, institutions, retirement plans, and financial intermediaries
Thomas Rowe Price, Jr. is considered to be “the father of growth investing”. He spent his formative years struggling with the Depression, and the lesson he learned was not to stay out of stocks, but to embrace them.
Price viewed financial markets as cyclical. As a “crowd opposer,” he took to investing in good companies for the long term, which was virtually unheard of at this time. His investment philosophy was that investors had to put more focus on individual stock-picking for the long term. Discipline, process, consistency, and fundamental research became the basis for his successful investing career.
He defined a growth company as one which: “has demonstrated long-term growth of earnings, reaching a new high level per share at the peak of each subsequent major business cycle and which, after careful research, gives indications of continuing growth from one business cycle to the next at a rate faster than the cost of living”.
“In short, invest money in a business that must cope with the minimum of consumer, labor, and government interference, that is managed by men with vision who understand the significance of the social and economic trends, and who are preparing for the future through intelligent research and development”.
John B. Neff, CFA, (born 1931) is an American investor, mutual fund manager, and philanthropist. He is notable for his contrarian and value investing styles as well as for heading Vanguard’s Windsor Fund. Windsor became the highest returning, and subsequently largest mutual fund in existence during Neff’s management—eventually closing to new investors for a period in the 1980s. Neff retired from Vanguard in 1995.
Neff joined Wellington Management Co. in 1964 and stayed with the company for more than 30 years managing three of its funds. His preferred investment tactic involved investing in popular industries through indirect paths, and was considered a value investor as he focused on companies with low P/E ratios and strong dividend yields. He ran the Windsor Fund for 31 years (ending 1995), and earned a return of 13.7%, versus 10.6% for the S&P 500 over the same time span. This amounts to a gain of more than 55 times an initial investment made in 1964.
Neff has referred to his investing style as a low price-to-earnings (P/E) methodology, though others consider Neff a variation of the standard value investor. He is also considered a tactical contrarian investor who placed emphasis on low-tech security analysis, that is, digging into a company and its management and analyzing the books, in contrast to David Dreman, who is more of a statistical contrarian investor. Neff’s strategies generated relatively high turnover with an average holding period of three years. One area in which Neff is similar to value investors such as Warren Buffett is in emphasizing ROE (return on equity), stating that it is the single best measure of management effectiveness. However, differing from many value investors, Neff places emphasis on predicting the economy and projecting a company’s future earnings. Also, Neff liked to pick stocks where dividend yields were high, in the 4% to 5% range.
John Neff wrote an interesting book about investing, but also about his personal life story. By reading about Neff’s life experiences and his personality, readers can understand why value investing is such a good fit for him.
Born on July 26, 1877 and died on November 28, 1940, Jesse Lauriston Livermore was an American investor and security analyst. Livermore was famed for making and losing several multimillion-dollar fortunes and short selling during the stock market crashes in 1907 and 1929.
Jesse Livermore had no formal education or stock trading experience. He was a self-made man who learned from his winners as well as his losers. It was these successes and failures that helped cement trading ideas that can still be found throughout the market today.
Livermore began trading for himself in his early teens, and by the age of fifteen, he had reportedly produced gains of over $1,000, which was big money in those days. Over the next several years, he made money betting against the so-called “bucket shops,” which didn’t handle legitimate trades – customers bet against the house on stock price movements.
One of his famous phrases: “The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.”
Peter Lynch managed the Fidelity Magellan Fund from 1977 to 1990, during which time the fund’s assets grew from $20 million to $14 billion. More importantly, Lynch reportedly beat the S&P 500 Index benchmark in 11 of those 13 years, achieving an annual average return of 29%.
Often described as a “chameleon,” Peter Lynch adapted to whatever investment style worked at the time. But when it came to picking specific stocks, Peter Lynch stuck to what he knew and/or could easily understand.
He also co-authored a number of books and papers on investing and coined a number of well known mantras of modern individual investing strategies, such as Invest in what you know and ten bagger. Peter Lynch is consistently described as a “legend” by the financial media for his performance record. He was called “legendary” by Jason Zweig in his 2003 update of Benjamin Graham’s book, The Intelligent Investor.
Lynch uses this principle as a starting point for investors. He has also often said that the individual investor is more capable of making money from stocks than a fund manager, because they are able to spot good investments in their day-to-day lives before Wall Street. Throughout his two classic investment primers, he has outlined many of the investments he found when not in his office – he found them when he was out with his family, driving around or making a purchase at the mall. Lynch believes the individual investor is able to do this, too.
Peter Lynch main three texts on investing are:
George Soros (born August 12, 1930) is a Hungarian-American investor, business magnate, philanthropist, and author. He is considered by some to be one of the most successful investors in the world. As of May 2017, Soros has a net worth of $25.2 billion making him one of the 30 richest people in the world
George Soros was a master at translating broad-brush economic trends into highly leveraged, killer plays in bonds and currencies. As an investor, Soros was a short-term speculator, making huge bets on the directions of financial markets. In 1973, George Soros founded the hedge fund company of Soros Fund Management, which eventually evolved into the well-known and respected Quantum Fund. For almost two decades, he ran this aggressive and successful hedge fund, reportedly racking up returns in excess of 30% per year and, on two occasions, posting annual returns of more than 100%.
Born in Budapest, he survived Nazi Germany-occupied Hungary and emigrated to England in 1947. He attended the London School of Economics graduating with a bachelor’s and eventually a master’s in philosophy. He began his business career by taking various jobs at merchant banks before starting his first hedge fund, Double Eagle, in 1969. Profits from his first fund furnished the seed money to start Soros Fund Management, his second hedge fund, in 1970.
He is known as “The Man Who Broke the Bank of England”, because of his short sale of US$10 billion worth of Pound sterling, making a profit of $1 billion during the currency crisis called Black Wednesday, which occurred in 1992, harshly affecting the UK markets at the time.
Any greatest investor list would not be complete if didn’t include the “Oracle of Omaha”, Warren Buffett, who is viewed as one of the most successful investors in history.
Following the principles set out by Benjamin Graham, he has amassed a multi-billion dollar fortune mainly through buying stocks and companies through Berkshire Hathaway. Those who invested $10,000 in Berkshire Hathaway in 1965 are above the $50 million mark today.
Buffett’s investing style of discipline, patience and value has consistently outperformed the market for decades.
Buffett is a notable philanthropist, having pledged to give away 99 percent of his fortune to philanthropic causes, primarily via the Bill & Melinda Gates Foundation. In 2009, with Bill Gates and Mark Zuckerberg, Warren founded The Giving Pledge, whereby billionaires pledge to give away at least half of their fortunes.
Buffett rebutted the academic efficient-market hypothesis, that beating the S&P 500 was “pure chance”, by highlighting the results achieved by a number of students of the Graham and Dodd value investing school of thought.
Amongst his most famous quotes, Warren Buffet have:
“Price is what you pay. Value is what you get.”
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
“Risk comes from not knowing what you’re doing.”
“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”
There are tons of books about Buffet, his investment style and life, but none of them was written by him directly. He already said he prefers:
John (Jack) Bogle
John Clifton “Jack” Bogle is an American investor, business magnate, and philanthropist.
Bogle founded the Vanguard Group mutual fund company in 1974 and made it into one of the world’s largest and most respected fund sponsors. Bogle pioneered the no-load mutual fund and championed low-cost index investing for millions of investors. He created and introduced the first index fund, Vanguard 500, in 1976.
Jack Bogle’s investing philosophy advocates capturing market returns by investing in broad-based index mutual funds. These funds are characterized as no-load, low-cost, low-turnover and passively managed. Bogle’s idea of index investing offers a clear yet prominent distinction between investment and speculations. The main difference between investment and speculation lies in the time horizon.
Investment is concerned with capturing returns on the long-run with lower risk, while speculation is concerned with achieving returns over a short period of time. John Bogle believes this is an important analysis to be taken into account as short-term, risky investments have been flooding the financial markets.
Bogle argues for an approach to investing defined by simplicity and common sense. Below are his eight basic rules for investors:
- Select low-cost funds
- Consider carefully the added costs of advice
- Do not overrate past fund performance
- Use past performance to determine consistency and risk
- Beware of stars (as in, star mutual fund managers)
- Beware of asset size
- Don’t own too many funds
- Buy your fund portfolio – and hold it
His 1999 book Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor became a bestseller and is considered a classic within the investment community.
Infographic of the the world’s greatest investors