The golden rules that made billionaires Soros and Buffett

If there is a walk of fame in the financial world, insurance would have their gold star Warren Buffett, Peter Lynch, George Soros and Bill Gross. Just started t

The golden rules that made billionaires Soros and Buffett

If there is a walk of fame in the financial world, insurance would have their gold star Warren Buffett, Peter Lynch, George Soros and Bill Gross. Just started the year under uncertainties several —conflict between the united States and Iran, lower economic growth, interest rates under minimum, Brexit and trade tensions, could be convenient to make a review of the philosophy of investment of these more than millionaires.

Warren Buffett, the guru of Wall Street par excellence, also called the Oracle of Omaha, has a fortune of close to 90,000 million dollars (about 80.935 million euros). He began to knead when I was a little over 11 years, when he bought shares in a company for $ 38 (34,1 euros), and even today his 89-year-old still active at the forefront of Berkshire Hathaway, which closed 2019 with a return of 11%. "Price is what you pay, value is what you get". This is not just about investing cheap statistically. To understand what is purchased ("the risk is in not knowing what he is doing") and what your price includes. It is finding business good and understandable (quality values) at attractive prices (below their intrinsic value or real); towards good companies, the dynamics of which is known, well-managed, they know how to adapt to the changes that operate in your industry, able to last many years, and with any competitive advantage clear. Invest wisely in the future (philosophy of value investing). Of course, Buffett is a big proponent of the long-term: "Buy only what you would be happy to keep it for 10 years".

Peter Lynch, the famous investor of the fund Magellan at Fidelity Investments, achieved an average annual return of close to 30% between 1977 and 1990. Has always been generous in sharing their rationale for investment. In his book, One step ahead of Wall Street One Up on Wall Street) offers a fun way the basic lines of its philosophy of investment; in Beating on Wall Street, Beating the Street) elaborates on the investments most relevant for their professional career. Although retired and dedicated to philanthropy, and still today continues to share his ideas (and advisor to Fidelity).

For an individual investor ("you can even beat the professionals") are these: you must know the company in which it invests and the why of your choice ("actions are tenths of lottery"); have patience ("it is very important to have the stomach to endure the corrections of price and, if not, don't buy shares"); not to maintain actions that are no longer ("there is no shame for losing money; yes to hold on to a stock with bad fundamentals"). In his view, it is also important to devote some time to use the math ("the required level is fourth grade, so don't worry about it") and verify that the company has sufficient liquidity ("the bankruptcies are a big problem").

Soros, 8,000 million

George Soros is almost a character of legend. He has managed to put his knees at the very Bank of England in 1992, and of step to earn 1,000 million dollars (899 million euros) while operating against the british pound. Some say that with his fortune, according to Forbes magazine upper to 8,000 million dollars (7.195 million), is a philanthropist who, among other things, promotes education and defends the rights of LGBT and racial minorities; others claim, however, that simply tries to manipulate politics and the economy for their own benefit.

despite the controversy that raises your figure, no one in the financial market will subtract one iota of merit as an investor. His strategy can be summed up in four simple words: think, read, reflect, and listen (especially to those who think different). Soros values the stocks or bonds in that it intends to take up positions taking into account the information that there exists in the market, and how this information is being valued by market participants (with euphoria, fear, avoidance, mistrust, etc.). Once you've decided to take a certain position, the put to the test in the market. If the result is positive, the increases ("there is no investment position is too large"); if it is negative or just makes you feel uncomfortable, abandon it even if it generates losses. To Soros, to invest is to survive: to learn to be conservative, assume losses, do not enter the market if you do not see clear and strong play when the opportunity presents itself.

Bill Gross is known as the King of the Bonds and, above all, he recognizes the merit of having developed and changed the rules of the game in the fixed income market and, of step, to have obtained during more than three decades of high returns to achieve to follow the trends when, in his judgment, were correct and also quit at the right time. A pioneer in the use of mathematical models, Gross has always defended the time horizons of investment between three and five years —"it's always longer than those of my peers"— ignoring what he called market noise (or when this becomes unreasonable"). In your opinion, based on this, you just need to restructure the portfolio if it can obtain an advantage of any short-term trend.

Removed about a year ago, they are still famous the letters that it sends to investors in that it not only gives tips on the financial markets, but also to others about love or affairs on a daily basis, like the pleasure of sneezing. In the last, dated in October, makes an analogy between the song Saved by Zero, of the rock group The Fixx, and the current situation of the markets with interest rates zero or negative.

he Warns that we must prepare for a slow global economic growth and think that you have reached the end of the revaluation for two-digit months and past years. In his opinion, "the actions of high-performance and dividends to policyholders are what an investor cunning should begin to possess."

Updated Date: 11 January 2020, 17:00

ELPAIS

ELPAIS

You need to login to comment.

Please register or login.

RELATED NEWS