The Investment Philosophies of Nine World-Class Top Investment Masters

Source: Qile Club

Driehaus, named by Barron's as one of the 25 most influential fund managers in the mutual fund industry over the past century, stated: 'Having a core philosophy is a fundamental element for long-term trading success. Without a core philosophy, you cannot adhere to your position or trading plan during truly difficult times.'

Investment philosophy represents the highest wisdom about investing. It is a highly condensed concept, an interpretation of the trading world, and a rationale for taking trading actions based on an understanding of the market. It acts as a shield of thought and a stabilizer to protect against emotional market fluctuations.

It also serves as a form of spiritual self-cultivation, characterized by questioning the essence of things and continuous reflection.

I. The Oracle of Omaha – Warren Buffett

The 'Oracle of Omaha' was born on August 30, 1930, in Omaha, Nebraska, a city in the United States known for its speculation and turbulence. Adhering to principles of simplicity and focus, he invested in the stock market with the mindset of a business operator. In less than 50 years, he amassed a vast financial empire, creating a wealth legend that grew from $100 to $72 billion. In 2009, Forbes magazine in the United States announced the 2008 global billionaire rankings, with Buffett ranked first, becoming the world’s richest man.

Among the pantheon of Wall Street investment gurus, no one has been as cohesive as Buffett. Whether his investment philosophy or his investment aphorisms, they have all been regarded by young investors as the 'Bible of Investment'.

Buffett once said, 'I always knew I was going to be rich. I don't think I ever doubted it for a minute.' Buffett's straightforward principles and patient, focused logic provide the investing public with a relatively clear and correct investment philosophy. While wealth cannot be replicated, the ideas and philosophies behind acquiring it can be learned.

1. Be fearful when others are greedy, and be greedy when others are fearful.

2. If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.

3. It takes 20 years to build a reputation and five minutes to ruin it. If you understand this, you'll do things differently.

4. Investing, for me, is both a sport and entertainment. I enjoy capturing rare, fast-moving elephants by hunting for good prey.

5. Only when the tide goes out do you discover who’s been swimming naked.

6. When a strong company faces a significant but manageable crisis, an excellent investment opportunity quietly emerges.

7. Invest in businesses, not stocks.

8. Owning a stock and expecting it to rise tomorrow morning is utterly foolish.

9. Even if the Federal Reserve Chairman whispered to me about monetary policy for the next two years, it wouldn’t change any of my investment decisions.

10. I have a fondness for simplicity.

II. Bernard Baruch: The Investment Master Who Dominated Both Wall Street and the Political Arena

Baruch was a legendary venture capitalist, one of the most renowned and admired figures who conquered both Wall Street and Washington. Entering Wall Street at the age of 19, he became a partner in a Wall Street brokerage firm by the age of 25 and had amassed a fortune to become a millionaire by the age of 32 through his investments. He then embarked on a career of public service at the highest levels of government. Baruch was one of the few 'big traders' of his time who not only made money but also preserved their gains.

In the book 'The Masters: Lessons from the Greatest Traders,' Baruch is listed as one of the five greatest securities traders. Roy Neuberger, the father of American mutual funds, said, 'Baruch is the investor who can best seize opportunities!'

1. I managed to avoid disasters because I always sold too early.

2. When everyone cheers for the stock market, you should decisively sell, regardless of whether it will continue to rise; when stocks are so cheap that no one wants them, you should dare to buy, without worrying about further declines.

3. New highs breed new highs, and new lows breed new lows.

4. Anyone claiming they can always buy at the bottom and sell at the top is surely lying.

5. Don't expect to be right every time; if you make a mistake, the sooner you cut your losses, the better.

6. Those who live the longest enjoy the most freedom and earn with the greatest ease.

7. They were not defeated by the market; they were defeated by themselves.

8. As investors, there are certainly some stocks that will lead to unforgettable losses.

9. One must understand the interaction between rationality and emotion as they alternately influence the market.

10. Be cautious of anyone who offers you insider information, whether it’s a barber, beautician, or restaurant waiter.

III. Legendary Figures in Fund History — Peter Lynch

Peter Lynch is hailed as the 'world’s best stock picker' and was named by U.S. fund rating agencies as the 'most legendary fund manager in history.' Peter Lynch joined Fidelity Management & Research Company as an analyst in 1969 and became the portfolio manager of the Magellan Fund in 1977.

By the time he resigned as the fund manager in May 1990 after 13 years, the assets managed by the Magellan Fund had grown from $20 million to $14 billion, with over one million fund investors. It became Fidelity's flagship fund and the largest fund globally in terms of asset management at the time. Its investment performance ranked first, with an annual average compound return rate of 29% during those 13 years.

1. There is a 100% correlation between a company’s condition and its stock performance.

2. Stocks in cyclical industries should be bought when the price-to-earnings ratio is high and sold when the price-to-earnings ratio is low.

3. Buy stocks of companies with profitability, and do not sell without a very good reason.

4. With a little research into stocks, ordinary investors can become stock investment experts and achieve results in stock selection as excellent as those of Wall Street experts.

5. Investing without research is like playing poker without looking at the cards; it is bound to fail.

6. Ultimately, the fate of investors is decided not by the stock market or listed companies, but by the investors themselves.

7. Confidence is essential in stock trading; without it, failure is inevitable.

8. Market trends are often born out of despair, grow amidst skepticism, mature in anticipation, and perish in hope.

9. The winning rule in the stock market is: do not buy lagging stocks, do not buy mediocre stocks, and focus entirely on leading stocks.

10. Let the trend be your friend.

IV. The Most Mystical Technical Analysis Master - William Gann

Gann was one of the greatest market speculators of the early 20th century, dominating the speculative market for 45 years. He earned over 50 million US dollars using trading methods based on his self-developed mathematical and geometric theories, equivalent to more than 1 billion US dollars today. He was not only a successful investor but also a wise man and a great philosopher. Using his mysterious analytical techniques and methods rooted in ancient mathematics, geometry, and astrology, he amassed tremendous wealth during his time.

The theory he created, which perfectly combines time and price, continues to be highly regarded and widely praised in the investment community. The essence of Gann's theory lies in establishing strict trading rules within what appears to be a chaotic market. He formulated Gann's Time Rule, Gann's Price Rule, and Gann Lines, among others. These tools can be used to identify when prices will retrace and to what level they will retrace.

The Gann Theory primarily focuses on market forecasting. By integrating mathematics, geometry, religion, and astronomy, Gann developed his unique analytical methods and market forecasting theories. His analytical methods are known for their extremely high accuracy, sometimes reaching an astonishing level.

The most notable instance was an on-site visit conducted by Richard Wyckoff, the editor of the American magazine 'The Ticker and Investment Digest,' in October 1909.

Under the supervision of the magazine's staff, Gann executed 286 trades over the 25 market trading days in October, resulting in 264 profitable trades and 22 losses, achieving a profitability rate of 92.3%.

1. For every entry into the market to buy or sell, the loss should not exceed one-tenth of the capital.

2. Always set a stop-loss position.

3. Never trade excessively.

4. Never allow a profitable position to turn into a loss.

5. Never go against the market trend.

6. If in doubt, close the position and exit the market.

7. Only trade in active markets.

8. Never set a target price for entering or exiting the market; only follow the market trend.

9. Without a valid reason, do not close out existing positions; use stop-profit orders to secure realized gains.

10. After successive victories in the market, part of the profits can be withdrawn to prepare for emergencies.

11. When buying stocks, never expect dividend payouts or interest income.

12. In case of losses from trading, avoid doubling down in a gambler's mentality.

13. Do not enter the market out of impatience, nor exit the market due to impatience.

14. It is crucial to avoid being willing to take losses but unwilling to realize gains.

15. Stop-loss orders placed upon entering the market should not be carelessly canceled.

16. Wait for opportunities before entering the market; avoid overtrading.

17. Flexibility in going long or short is essential; one should not only trade on one side of the market.

18. Do not buy simply because the price is too low, nor sell short simply because the price is too high.

19. Never hedge.

20. Avoid pyramid buying in inappropriate circumstances as much as possible.

21. Without a proper reason, avoid making arbitrary changes to the trading strategy for the stocks held.

V. Speculative Genius - André Kostolany

André Kostolany is Germany's most renowned investment guru, known as the 'witness of the 20th-century stock market' and 'one of the most successful investments in this century’s financial history.' Referred to as the godfather of the German securities world, his position in Germany's investment community is akin to Warren Buffett in the United States.

His success is regarded as a major miracle in the European stock market, and his theories are considered authoritative. André Kostolany is the uncrowned king of the German stock market. German investors, experts, and journalists often base their actions or analytical articles on his views about the stock market.

1. Crashes are typically preceded by surges, and surges always end in crashes, repeating over and over again.

2. A stock will never be too high to start buying, nor too low to start selling.

3. When prices start to rise, the smaller the trading volume of the stock, the more optimistic the situation.

4. Any software is at most as intelligent as its programmer.

5. Money is to the securities market what oxygen is to breathing, and gasoline is to an engine.

6. A breakout following a period of price consolidation is typically a trading opportunity worth taking a risk on.

7. Pullbacks often halt at gaps.

8. The stocks of the most renowned listed companies are the most prone to excessive speculation.

9. Over 80 years of securities trading, I have learned at least one thing: speculation is an art, not a science.

VI. Japan's Stock God - Ginzo Shikawa

Mr. Ginzo Shikawa is a renowned stock master in Japan. He began exploring the world from his youth, enduring hardships while starting his business. Over 60 years of relentless efforts in the stock market—often referred to as 'the world's largest casino'—he has created countless miracles. At the age of 30, he entered the market with a capital of just 70 yen and gained a hundredfold profit, becoming a celebrated figure in Japan's stock market.

Relying solely on stock investments, he ranked first in Japan’s individual income rankings for 1982 and second in 1983.

His most remarkable achievement was earning 20 billion yen in a single year at the age of 82. His infallible judgment and accuracy in predicting economic trends and stock market movements were astonishing, earning him the title of 'God of the Stock Market.'

Isikawa, with years of experience, believed that investing in stocks is like the race between the rabbit and the turtle. The rabbit, overly confident and overwhelmed by early success, ends up failing. On the other hand, the turtle, though slow, proceeds steadily and cautiously, ultimately securing victory. Therefore, investors must adopt the mindset of the turtle—observing patiently and trading prudently.

The so-called 'Three Principles of the Turtle' are as follows:

1. Choose stocks with significant long-term potential that have yet to be recognized by the public, and hold them over the long term.

2. Closely monitor daily economic and stock market movements, conducting thorough research independently.

3. Avoid excessive optimism; do not assume the stock market will rise indefinitely, and always operate using one’s own capital.

Isikawa Ginzo's 'Five Principles of Investment':

1. Do not rely on others’ recommendations for stock selection; conduct independent research before making a choice.

2. Be able to predict economic changes one to two years ahead.

3. Every stock has its appropriate price level; avoid chasing stocks that exceed their intrinsic value.

4. Ultimately, stock prices are determined by company performance; avoid speculatively manipulated stocks at all costs.

Unpredictable events can occur at any time; therefore, it must be remembered that investing in stocks always carries risks.

Seven: Jim Rogers - The Globetrotting Investor

Jim Rogers, a prominent figure on modern Wall Street, is hailed as the most visionary international investor and one of the most successful practitioners in the U.S. securities industry. He graduated from Yale University and Oxford University and began his career in the investment management industry.

In 1970, he co-founded the Quantum Fund with Soros. The Quantum Fund achieved an average annual return of over 50% for ten consecutive years. In 1980, at the age of 37, Rogers exited the Quantum Fund, having amassed a fortune of tens of millions of dollars for himself. After 1980, Rogers embarked on his own investment ventures and has since become one of the greatest investors worldwide.

1. If I act solely based on my understanding rather than being told what to do by others, it will be both easier and more profitable.

2. Never lose money, do what you are familiar with, and invest only when great opportunities arise.

3. I have never paid attention to market fluctuations; I only care if there are companies in the market that meet my investment criteria.

4. When everyone is going crazy, you must remain calm.

5. Stand aside and let the market develop naturally.

6. Based on historical experience, once commodity markets enter a bull cycle, it can last a minimum of 15 years and a maximum of 23 years.

7. The integration of making money and pursuing ideals is the most wonderful thing.

8. After achieving success, one is often clouded by triumph; it is precisely during these times that calm reflection is needed.

9. When media opinions lean overwhelmingly to one side, you should calmly take a position on the opposite side.

10. Risk resides within the market itself.

VIII. The Father of American Mutual Funds — Roy Neuberger

Roy Neuberger, known as the father of American mutual funds and a pioneer in joint-stock funds, achieved two remarkable feats in his investment career: successfully avoiding the 1929 U.S. stock market crash and the 1987 U.S. stock market collapse. Not only did he avoid losses on both occasions, but he also generated impressive returns, growing his wealth from $150,000 to $1.6 billion.

In the 1920s, Roy Neuberger spent time in Paris before arriving at Wall Street just in time to become a direct witness to the 1929 Great Depression. Later, Neuberger became a trailblazer in the field of joint-stock funds.

1. I understand that money makes the world go round, but I don’t believe in money; I know that art cannot make the world go round, but I believe in art.

2. Investment success is built upon existing knowledge and experience.

3. Someone else’s shoes will not fit your feet.

4. Timing may not determine everything, but it can decide many things.

5. A true investor does not place funds arbitrarily like gambling; he only invests in instruments with a sufficient probability of generating profits.

6. Stocks are clearly the preferred asset for all investors seeking long-term growth.

7. Technical indicators may vary endlessly, but trading volume represents real buying and selling.

8. Shareholders may not care if the CEO reads novels or drives under the influence, but they do care about fraud committed by the CEO.

9. Loving a stock is fine, but when its price becomes overvalued, let others love it instead.

10. If a stock can remain stable within a certain price range over the long term, that price level can be considered reasonable.

IX. The Stock Market's Talent Scout — Philip Fisher

Philip A. Fisher (1907-2004): One of the pioneers of modern investment theory, the father of growth stock investment strategies, a godfather-level investment master, and one of the most respected and admired investors on Wall Street.

1. Hold onto growth stocks.

2. The funniest thing about the stock market is that everyone who buys and sells at the same time thinks they are smarter than the other party.

3. You will never be able to fully understand every aspect of yourself or the market.

4. Cash flow is a key indicator of any company’s financial health.

5. In this highly competitive era, even if a company’s products or services are excellent, it cannot survive without effective marketing.

6. Do not follow the crowd.

7. Investors seeking substantial capital growth should downplay the importance of dividends.

8. When investing in stocks, it is essential to thoroughly understand the company's operations and avoid being misled by inaccurate figures.

9. When buying truly outstanding growth stocks, in addition to considering the price, timing must not be overlooked.

10. In stock investment, some aspects inevitably rely on luck, but in the long run, good and bad luck will offset each other; sustained success must depend on skill and the application of sound principles.

AI Portfolio Strategist!One-click insight into holdings,Fully grasp opportunities and risks.

Editor/jayden