20 Greatest Investors of all time | Famous & Historical Legends

20 Greatest Investors of all time | Famous & Historical Legends

Investing into the stock market has attracted the greatest minds in History! Many with their own unique investing style, so in this post we’re going to take a trip back through time and reveal some of the most famous & Historical investors.

Many are still active today, some are no longer with us, but in either case their immense timeless wisdom lives on & is still extremely relevant today!

After all despite the increase in technology & computer trading there is one common factor which has been present in making decisions in the stock market throughout the ages, PEOPLE.

Where there are people there is volatility & psychological biases all which create opportunities for profit. 

Greatest Investors of all time Quotes Gallery

Who is the Greatest Investor of All Time?

1. Jim Simons

In terms of pure investment returns, Jim Simons is the greatest investor of all time. Simons Medallion Fund averaged an incredible 71.4% compounded return annually between (1994 and 2014). This puts him ahead of Warren Buffett’s investment conglomerate Berkshire Hathaway which earned “only” 20% compounded returns annually. 

Both are incredible returns massively outperforming the S&P 500 index which averaged a 10.2% annual return.

INVESTING LEGENDS GREATEST INVESTORS RETURNS STOCK MARKET JIM SIMONS OUTLIER

INVESTING LEGENDS GREATEST INVESTORS RETURNS STOCK MARKET JIM SIMONS OUTLIER. Jim Simons (renaissance technologies) Vs Warren Buffett (Berkshire Hathaway) Credit: www.motivation2invest.com/Jim-Simons

The Scatter plot i’ve created above plots outperformance over the S&P 500 (X Axis) vs Number of Years. It is clear to see that Jim Simons is a true outlier in terms of returns.

However, Warren Buffett has an incredible return over such a long period of time nearly 60 years! 

Why this is not a fair fight?

Jim Simons is a “Quant Investor” and advanced Mathematician who has created a computer model & algorithm for trading at Renaissance technologies. So although his firm has generated better returns than any other investor, the computer algorithm is the real success story.

 

Jim Simons Quotes Gallery

2. Warren Buffett 

Warren Buffett…the man, the myth, the legend is one of the best investors of all time & a wealthy billionaire. He is the epitome of a classic Value investor.

Valuing Companies not stocks, with an extremely disciplined approach to his trades. His strategy focuses on risk minimisation & long term investing gains. 

Investment Returns:

This has paid of substantially with an annualised compounded portfolio return of approximately 20% since 1964, for his investing conglomerate Berkshire Hathaway. Overall returns from 1964 to 2021 = 2,855% (approximately).

If you invested $1000 in 1964 into Berkshire, that would be worth an incredible $28,855. Close to a 29X Return!

Warren Buffett Quotes (8)

Warren Buffett Quotes (8). You can use this image if credit with clickable link: www.Motivation2invest.com/Warren-Buffett-Quotes

Warren Buffett is not just a great investor but also an incredible teacher, his wisdom, Witt and life Lessons are Legendary. Many of the greatest investors we see today stood on the shoulders of Buffett and credit him for their success. 

 

Warren Buffett Quotes Gallery

3. Ray Dalio

Ray Dalio is the Billionaire founder of the worlds largest hedge fund, Bridgewater associates. 

Dalio got his first taste of investing during the “nifty fifties” this was a major bull market and everyone was talking about stocks. 

He overhead many conversations while caddying at a golf club & thus saved up his wages before investing.

He bought his first stock, North East Airlines which immediately increased in price. After which Dalio was hooked on investing & fell in love with the opportunities.

Fun Fact: The 1950’s was a strong bull market, as it followed World War II thus pent up consumer demand was released. 

Ray Dalio Quotes MOTIVATION 2 INVEST (6)

Ray Dalio Quotes MOTIVATION 2 INVEST (6)Credit: www.Motivation2invest.com/Ray-Dalio

Ray Dalio’s investing Strategy has a big focus on Investing internationally and diversification across stocks, industries, asset classes etc.

all weather portfolio ray dalio 3D

all weather portfolio ray dalio 3D. Credit: www.motivation2invest.com/Ray-Dalio

Dalio is a major bull on investing into Gold, he states “If you don’t own gold, you know neither history or economics”.

This is contrary to Warren Buffett who doesn’t invest into gold as it “doesn’t produce anything”, Buffett prefers farmland.

 

Ray Dalio Quotes Gallery

4. Benjamin Graham (1894 to 1976)

Benjamin Graham (1894- 1976)  is known as the “Father of Value Investing”, a pioneer of Deep Value investing & the incredible Warren Buffett’s mentor! 

Graham wrote the book the intelligent investor of which his prodigy the Legendary Warren Buffett widely cites as the “best investing book ever written”. Graham also wrote the bible of value investing “Security Analysis”. 

Warren Buffett studied under Benjamin Graham at Columbia University and was his top student (no surprise).

Fun Fact: A series of unfortunate events led to Buffett’s encounter with Graham. As one of the richest people on this planet was TURNED DOWN by Harvard Business school in 1950.

Buffett stated: “I spent 10 minutes with the Harvard alumnus who was doing the interview, and he assessed my capabilities & turned me down,” Then Buffett Realised Graham was at Columbia and having read his books multiple times cover to cover he rang him up

“I thought you were dead! If not it would be great to study with you” , Buffett even offered to work for free for Benjamin Graham in his original investing partnership. 

Benjamin Graham Quotes The Intelligent Investor You can use this image if credit with clickable link (do follow) www.Motivation2invest.com/benjamin-graham-quotes

Benjamin Graham Quotes The Intelligent Investor You can use this image if credit with clickable link (do follow) www.Motivation2invest.com/benjamin-graham-quotes

Investment Returns:

Benjamin Graham averaged a compounded return of approximately 20% annually between 1936 to 1956. During the same period the general market returned just 12.2% annually on average.

Investment Strategy:

Benjamin Graham’s deep value investment strategies although simple were game-changing for those who adopted them, concepts include:

  • Recognising a Stock is a portion of a Business
  • Margin of Safety (Valuing a company then buying below than fair value) 
  • Mr Market (The concept that the Market is governed by a bipolar person which fluctuates from Fear to Greed) 
  • Deep Value Investing. 

Is Benjamin Graham still relevant today?

Yes! The principles outlined in books such as the Intelligent investor are still very relevant today for both business and investing, although the book is not so easy to read. 

The strategy of deep value investing has become more difficult, this is due to a few factors, from the increasing availability of strategy information, to network connection of the stock market, algorithmic trading and more. 

Many Stock Market inefficiencies tend to be plugged extremely fast these days which makes it harder to find opportunities. 

Even Warren Buffett evolved Benjamin Graham’s traditional deep value investing style to pay more for “wonderful companies at fair prices” .

This was partly thanks to the influence of another legendary Investor, who will discuss next Charlie Munger. 

 

Benjamin Graham Quotes Gallery

5. Charlie Munger

Charlie Munger is a famous historical investor with a net worth of $2.2 Billion. Munger is an exceptional value investor with great Witt, Wisdom & no filter when it comes to saying what he thinks!

Munger is also a great friend & Business partner of Warren Buffett. Buffett often jokes about himself & Munger knowing “what each other are thinking” like former Siamese Twins & they used speak on the phone almost daily. 

Munger is credited to have helped Warren Buffett invest into “Wonderful companies at fair prices”, rather than just deep value investments, using the Benjamin Graham method.

Buffett had traditionally done cigar butt strategy investing, where he looked to buy companies trading below net asset value, with “one last puff” in them. 

Charlie Munger Quote 8 MOTIVATION 2 INVEST (1)

Charlie Munger Quote 8 MOTIVATION 2 INVEST (1)

How did Charlie Munger Meet Warren Buffett?

Warren Buffett and Charlie Munger first met in 1959.

The famous investors were introduced to each other at a dinner, with the referral coming from a popular family doctor of in Omaha. 

The story is Legendary, In 1957 Doctor Edwin Davis had a meeting with Buffett and agreed to allow him to manage his money…because he reminded him of someone named “Charlie Munger.”

In a CNBC Interview, Buffett stated:
“Well, I don’t know who Charlie Munger is, but I like him”

The Doctors wife, Dorothy made it her mission to connect Buffett and Munger. Two years she managed to connect the two at a dinner in 1959.

Charlie Munger, who was then a lawyer in Los Angeles, was visiting Omaha after his father, Alfred had passed away.

The two immediately made a connection and the rest of the room melted away as Buffett & Munger talked for hours. 

 

Charlie Munger Quotes Gallery

6. Philip Fisher

Phil Fisher is a great Historical Investor who pioneered the strategies of growth stock investing & a more qualitative approach to investing.

Fisher Pioneered the “Scuttlebutt” investing strategy which involves speaking to Management, Customers & even competitor companies in order to gain a special insight into a businesses quality.

Fisher looked to buy great businesses, with high returns on capital and to hold them long term, as opposed to repeatedly buying low & selling high.

Phil Fisher also focuses on Customer insight, Marketing & sales processes in his book he states:

 In the business world customers simply do not beat a path to the door of the man with the better mousetrap.

In the competitive world of commerce it is vital to make the potential customer aware of the advantages of a product or service.

This awareness can be created only by understanding what the potential buyer really wants (sometimes when the customer himself doesn’t clearly recognize why these advantages appeal to him)

and explaining it to him not in the seller’s terms but in his terms.” – Common Stocks & uncommon profits. 

Phil Fisher has a very similar approach to a modern day Legendary Investor Nick Sleep whose investment partnership produced compounded returns of 20.8% with over 40% of the fund in just one stock, Amazon!

This is the power of investing into long term compounders with great Managers.

Nick Sleep Nomad Investment Partners Letters Quotes

Nick Sleep Nomad Investment Partners Letters Quotes. Returns if invested into Tesla Stock or Amazon. Source: Motivation2invest.com

Warren Buffett is often considered to be part Ben Graham and part Phil Fisher.

Buffett stated in a 1995 Berkshire Hathaway shareholder meeting

“I was very influenced by Phil Fisher when I read his books in the 1960’s, they are terrific books”

“I think of myself as 100% Ben graham and a 100% Phil Fisher [at the same time]

It takes more business experience to apply Fishers approach compared to Ben Graham

Ben was more of a teacher as he had no urge to make alot of money” 

Charlie Munger is also quoted to share fond thoughts on Phil Fisher at the same annual meeting in 1995.

 

Phil Fisher Quotes Gallery

7. Sir John Templeton

Sir John Templeton (1912-2008) is one of the greatest contrarian investors in history. Templeton is most famous for making bold bets against the consensus and being right! 

The Ultimate Contrarian (World War 2) Investment:

An extreme example of this includes a bold investment during World War 2! 

In 1939, WW2 was just beginning and the stock market crashed as most people were in fear (understandably).

However, Templeton saw this volatility as an opportunity.

John Templeton MOTIVATION 2 INVEST Quotes (1)

John Templeton MOTIVATION 2 INVEST Quotes (1)Credit: www.Motivation2invest.com/John-Templeton-Quotes

Templeton borrowed thousands to buy 100 shares of EVERY STOCK selling for less than one dollar, during Stock Market Crash.

At that point one third of the companies faced bankruptcy, but he held his shares firm. After which all but four stocks rebounded, which made him an incredible 400% return in just 4 years! 

John Templeton MOTIVATION 2 INVEST Quotes (1) Credit: www.Motivation2invest.com/John-Templeton-Quotes

John Templeton MOTIVATION 2 INVEST Quotes (1) Credit: www.Motivation2invest.com/John-Templeton-Quotes

The Time of Maximum PESSIMISM is the Best time to BUY, the time of maximum OPTIMISM is the best time to SELL.

When stocks crash and fear grips the stock market, people perceive a greater risk. However, stocks are actually LESS RISKY as they are cheaper to buy…effectively stocks are on sale.

The same is true when stocks go up and euphoria is prominent, the perception from the media is now you should buy, when actually that is the most dangerous time to buy and the best time to sell. 

This is very similar to Legendary Investor Warren Buffett’s quote: “Be fearful when others are greedy and greedy when others are fearful”.

This sounds easy on paper but during the heat of a stock market crash it requires immense courage and independent thinking to buy when others are selling in fear. 

 

John Templeton Quotes Gallery

8. Peter Lynch

Peter Lynch is one of the greatest investors in History who has also inspired a generation (including myself!). 

As the manager of the Magellan Fund at Fidelity Investments, Lynch averaged an incredible 29.2% annual return! Between 1977 and 1990.

This was consistently more than double the S&P 500 stock market index and thus this was the best-performing mutual fund in the world.

Lynch believes the average retail investor can get “one up on Wall street” which was the name of his famous book. 

Peter Lynch Investing Quotes Wall Street Legend (5)

Peter Lynch Investing Quotes Wall Street Legend (5). Credit: www.Motivation2invest.com/Peter-Lynch-Quotes

Peter Lynch is also a great teacher similar to Warren Buffett . Lynch has the incredible skill of being able to simplify an investment strategy enough for anyone to understand.

Famous Value Investor Mohnish Pabrai, tells a story of how reading Peter Lynch’s books got him into investing. 

Mohnish was running an IT services company and decided to pick up one of Lynch’s books to read on a flight. He loved the book and saw many synergies which would help him to run his own business better.

Then decided to read another one of Lynches books,  Mohnish stated:

I was then out of Peter Lynch Books, but Lynch talked about this guy named Buffett in the book, so then I started reading his books

 

Peter Lynch Quotes Gallery

 

9. George Soros 

George Soros is a legendary Investor who is most famous for his bold Macro economic predictions & currency trades.  Soros is most famous for making $1 Billion in a single day when his bet against the British pound paid off!

This was called the “greatest Trade of all time” and he executed this with his former business partner & Trading Legend Stanley Druckenmiller. 

Investing Strategy:  Contrarian, Economics, Trader, Top Down

George Soros Quotes Motivation 2 invest (3). Credit: www.Motivation2invest.com/George-Soros-Quotes

George Soros Quotes Motivation 2 invest (3). Credit: www.Motivation2invest.com/George-Soros-Quotes

George Soros Quotes Gallery

10. Stanley Druckenmiller

Stanley Druckenmiller is a Famous Investing great with an estimated net worth of $6.6 billion.

Druckenmiller is most famous for executing what has been called the “greatest trade of all time” in which he made up $1 Billion in a single day!

This was accomplished by a bold bet against the British pound during the early 90’s when Stanley Druckenmiller was at the Quantum Fund with another Legendary investor George Soros

Stan Druckenmiller and George Soros (Quantum Fund)

Stan Druckenmiller and George Soros (Quantum Fund)

Stan Druckenmiller Quotes Gallery

11. Sam Zell 

Sam Zell is one of the greatest Real Estate investors of all time! Known as the “King of Real Estate” he has an net worth of $6 Billion according to Forbes. 

Zell is also nicknamed the “Grave Dancer” as he buys when everybody in the real estate world is getting killed! 

How to build a Real Estate Empire from Scratch?

Zell has humble beginning as the son of Polish Emigrants which fled Nazi Germany in 1939. From young it was clear Zell had a strong entrepreneurial tendency.

As a boy he started buying Playboy Magazines in the city and selling them to friends for a massive 600% mark-up! 

Sam Zell Quotes Investing Real (18)

Sam Zell Quotes Investing Real (18).Credit: www.Motivation2invest.com

In college, he asked the landlord of a 15 unit student housing building if he could manage the property in exchange for a free room & board.

Zell learnt a lot from the experience about refurbishing properties and he began buying distressed properties, renovating them and then renting to students. 

Afterwards Zell branched out from student rentals to commercial properties to
other residential units, resorts, even manufactured homes.  Zell began
incorporating his different types of holdings into real estate investment
trusts.

He organized his different real estate investments into various trusts which allowed him to sell them off as he wished. A notable example is the whopping $36 billion sale to investment giant Blackstone.

Sam Zell Quotes Investing Real (11)

Sam Zell Quotes Investing Real (11). Credit: www.Motivation2invest.com

Sam Zell Quotes Gallery

 

 

12. Carl Ichan

Carl Icahn is a legendary activist investor who’s brash & outspoken Strategy of investing has made him a billionaire, with an estimated net worth of $16.7 Billion. 

As an activist investor Ichan analyses poorly run companies where he believes a change in management strategy will improve the company & increase shareholder value.  

To accomplish this Carl Icahn buys up a vast amount of shares in a company at opportune moments in order to gain voting rights for shareholders.

This can even result in a hostile takeover if not approved by the board of directors or stubborn management who may fear for their jobs. 

Carl Ichan Quotes motivation 2 invest. Credit: www.Motivation2invest.com/Carl-Ichan-Quotes

Carl Ichan Quotes motivation 2 invest. Credit: www.Motivation2invest.com/Carl-Ichan-Quotes

Ironically many shareholders welcome Carl Ichan’s presence as an investor as they know he will hold management accountable for their decisions. 

Fun Fact: Carl Icahn is known for his public fights with another Legendary Activist Investor Bill Ackman. This occurred during the Herbal Life investment, where both activists took opposing positions & argued very personally on public TV!  

Investing Strategy:  Activist Investor, Contrarian, Value Investor

 

Carl Ichan Quotes Gallery

13. Walter Schloss 

Walter Schloss (1916 to 2012) is was of the greatest value investors in History. As a known disciple of Benjamin Graham, Schloss focused on deep value investing. 

Schloss took Ben Graham’s investment courses before going to work for him at the Graham-Newman Partnership, there he met Warren Buffett

Walter Schloss Quotes (1 (7)

Walter Schloss Quotes (1 (7). Credit; www.motivation2invest.com

Investing Returns

In 1955, Walter Schloss started his own fund and for over 45 years he delivered his investors incredible annual returns of 15.3% versus 10% for the S&P 500. 

In 1984, Warren Buffett named him as one of the Superinvestors of Graham-and-Doddsville.

 Warren Buffett stated about Walters Schloss:

 “He knows how to identify securities that sell at considerably less than their value to a private owner; And that’s all he does …

He owns many more stocks than I do and is far less interested in the underlying nature of the business; I don’t seem to have very much influence on Walter.

That is one of his strengths; No one has much influence on him.” 

Walter Schloss closed his fund in the year 2000 and passed away at the age of 95 in February 2012. 

Walter Schloss Quotes Gallery

14 Bill Ruane

Bill Ruane (1925 to 2005) is a famous & historical Value investor who was one of Warren Buffett’s Superinvestors of Graham-and-Doddsville.

When Buffett closed his original fund in 1969 he even referred his investors to Bill Ruane’s Sequoia Fund, this is the ultimate referral!

Bill Ruane’s fund had a Value based strategy of buying “Wonderful Businesses at fair prices” , rather than the strict Ben Graham approach of “Cigar Butt” style, deep value investing.

Bill Ruane investing Quotes (5)

Bill Ruane investing Quotes (5). Credit: www.motivation2invest.com

Investing record

Since Sequoia funds inception in 1970 they have massively outperformed the S&P 500. If you invested just $10,000 into the fund this would have grown to over $4.2 Million today! Compared with “just” $1.3 Million from the S&P 500. 

Bill Ruane Quotes Gallery

15. Jack Bogle

Jack Bogle (1929-2019) was the “Father of Index Fund Investing” as the Billionaire Founder of Vanguard. One of the large Passive investment fund providers in the world.

How Jack Bogle Founded Vanguard?

Jack Bogle started in the mutual fund business in 1951 when his senior thesis caught the eye of Walter L. Morgan, founder of the Wellington Fund.

Bogle started working at the Wellington fund and rose to become Executive Vice President in 1965 & was named one of “The Whiz Kids” by Intuitional Investor Magazine.

However, the good times didn’t last…as the bear market of 1973 led to poor performance by the Wellington Fund & caused a dispute amongst partners. This resulted in Bogles firing in 1974!

Not one to take things lying down, Bogle proposed a new company which would provide admin to the Mutual fund provider at a cost basis. This would be called the Vanguard Group and was also named “The Vanguard Experiment”.

After reading a study on efficient markets & past fund manager performance, Bogle realised that rather than trying to “beat the market” better performance could be achieved by buying the Market. 

“Rather than trying to look for a needle in a haystack, just buy the whole haystack”

Jack Bogle Investing Quotes (13)

Jack Bogle Investing Quotes (13). Credit: www.motivation2invest.com

In 1976, Bogle introduced the first index investment trust which allowed people to buy the market. This was ridiculed in the press as a “sure path to mediocrity” and “un-American”, the firm only managed to collect $11 Million during the release.

However, today index funds are a huge part of Vanguards approximately $5 TRILLION in assets under management!

Passive investing has even become more popular than active investing & this has really changed the entire investment industry.

Jack Bogle Quotes Gallery

16. Ron Baron

Ron Baron is a legendary growth stock investor, who makes big bets on high tech stocks. 

He is most famous for being an early Bull on Tesla stock and publicly placing an astronomical price target of $4,000 per share back in early 2020. This was before Tesla stock rose by over 800% that same year! 

In a 2021 interview with Bloomberg, Baron stated that He thinks Tesla CEO Elon Musk will become a “Trillion Dollar Man”. 

Ron Baron Growth Stock Investing Strategy & Quotes Credit: www.Motivation2invest.com/Ron-Baron-Strategy

Ron Baron Growth Stock Investing Strategy & Quotes
Credit: www.Motivation2invest.com/Ron-Baron-Strategy

Ron Baron invests into growth stocks with high revenue growth and a long term vision. He tends to hold these stocks for a very long term if the fundamentals don’t change.

Baron Looks for unique companies which are “changing or disrupting” an industry. For Example, Tesla is disrupting the auto industry and SpaceX is disrupting the rocket Industry with it’s reusable rockets. 

Ron Baron Quotes Gallery

17. David Dodd

David Dodd (1895 to 1988) is a legendary Value investor, who was one of Warren Buffett’s Super Investors of Graham & Doddsville! 

Dodd was a colleague of Benjamin Graham at Columbia Business School and together they wrote the bible of deep value investing “Security Analysis” in 1934.

David Dodd focuses on Deep Value Investing which involves buying assets below their intrinsic value with a Margin of Safety. The strategy also involves looking for “Net-Nets” these are stocks trading below their net asset value.

David Dodd Value Investing Quotes (

David Dodd Value Investing Quotes. Credit. www.Motivation2invest.com

How Buffett Met Graham & Dodd?

In 1950, Warren Buffett was turned down from Harvard Business School (the Irony)

Buffett quoted:

“I spent 10 minutes with the Harvard alumnus who was doing the interview, he assessed my capabilities and turned me down.”

Luckily for Buffett he discovered that Benjamin Graham & David Dodd were teaching at Columbia Business School. Having read their books “Security Analysis” & “The Intelligent Investor” cover to cover multiple times.

Buffett called them up “I thought you guys were dead, but if not I would love to come and study at Columbia” . Buffett was their greatest student & top of the class (no surprise)

David Dodd Quotes Gallery

18. Howard Marks

Howard Marks is a legendary Value investor with a specialism in deep value investing & special situations, such as credit & distressed debt investing. Marks is the founder of Oak Tree Capital .

Howard Marks believes everything is governed by cycles, from investor moods to stock market crashes.

Mastering the Market Cycle Howard Marks

Mastering the Market Cycle Howard Marks

Howard Marks even wrote a best selling book on the subject called “Mastering the Market Cycle” & “the most important thing”. The later book lists “the most important things” to do when investing. 

Investing Record

Howard Marks Oaktree capital has a history of exceptional performance. 18.8% IRR (Internal Rate of Return) vs the S&P 500 Annual Return of 10.4%. This is the annualised time weighted return since October 1988.

Investing Strategy:  Value Investor, Contrarian, Small Cap, Large Cap

Howard Marks Quotes Gallery

 

19. Julian Robertson

Julian Robertson is the billionaire former hedge fund manager of Tiger Management.

Now 89 years old, Robertson likes to invest into many so called “Tiger cubs” these are former Tiger Management employees who have since founded their own Hedge Funds

Julian Robertson Hedge Fund Investor Quotes (3)

Julian Robertson Hedge Fund Investor Quotes (3). Credit: www.Motivation2invest.com

Tiger Global

Tiger Global is one of the so called “Tiger Cubs” related to the investment management firm Tiger Management (Julian Robertson).

Tiger Global was founded by Coleman in 2001 with an initial check of $25 million from the great & famous investor Julian Robertson of Tiger Management.

Tiger Global is a leading hedge fund and private investment firm focused on companies in the Technology industry.

Tiger has been nicknamed the “As The World’s Biggest Unicorn Hunter
Fun Fact: A Unicorn” is a privately held startup company with a value of over $1 billion.

Julian Robertson Quotes Gallery

20. Bill Ackman

Bill Ackman is a legendary activist investor & billionaire, he is known for making big bets against the consensus & being right (most of the time, data later on)

His strategy was originally influenced by Warren Buffett & he considers himself value investor at heart. However, it’s clear his strategy is much bolder & more fitting to an activist investor with a specialism in credit.

Bill Ackman is known for his dogged persistence, when he believes he is right which can result in major win’s, but also some very public losses.

BEST BILL ACKMAN QUOTE MOTIVATION 2 INVEST Quotes (54)

BEST BILL ACKMAN TRADES Credit: www.Motivation2invest.com/Bill-Ackman-Trades

Investing Returns

Bill Ackman is one of the greatest investors of all time despite his bold style. Pershing Square holdings (LSE:PSH) has achieved a 1,412.8% return between (2004 to 2021) vs the S&P 500 return of 399.2%. Figures are net of performance fee (20%).

This is a compounded annual return of 17.1% vs the S&P 9.8% (2004 to 20201). Source. Pershing square holdings Annual Report.

Latest Trades 

Bill Ackman is betting big on rising interest rates due to inflation. Unpacking Bill Ackman’s 10 Best & Worst Trades | New Trade 2021 & Downloads |

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Bill Ackman Quotes Gallery

10 Brilliant David Einhorn Quotes | Investing Strategy

10 Brilliant David Einhorn Quotes | Investing Strategy

David Einhorn is one of the worlds most successful Long/Short Hedge Fund Managers. 

As of 2013, David Einhorn’s Greenlight Capital returned an incredible 19.5% since its inception in 1996. With a market volatility beta of around 0.5, this means many of those returns were uncorrelated with the general stock market.

In this post i’m going to reveal the investing strategy of David Einhorn by diving into his top 10 quotes. Enjoy! 

Investing Strategy: Short Seller, Hedge Fund

10. Investing is like Poker

David Einhorn Investor quotes. Credit. www.Motivation2invest.com/David-Einhorn-Quotes

David Einhorn Investor quotes. Credit. www.Motivation2invest.com/David-Einhorn-Quotes

“Texas Hold’em is about folding & waiting for that time every couple of hours when you have an advantage & can press it” – David Einhorn (Legendary Investor). David Einhorn is a big poker player as you can tell from this quote. There are many similarities between Poker and investing.

You are playing against the odds, against other people and emotions play a big part. Einhorn suggests folding until you have a great opportunity.

The Legendary Investor Warren Buffett often states In Investing there are “no called strikes” (baseball), thus you can sit and watch pitch after pitch go by, until one is in your “Sweet Spot”. 

9. Look for High Return on Equity

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

“Great Companies can generate alot of profit without requiring alot of capital, high Return on Equity (ROE)” – David Einhorn (Legendary Investor). For every dollar a company invests you want to ensure they will likely get more dollars back in the future. Thus investing into companies with high Return on Equity (ROC) or Return on Capital (ROC) is usually a good idea.

Legendary Growth Stock investor Nick Sleep suggests putting your investment into the hands of a “Great Capital allocator” .

Examples include Jeff Bezos (Amazon) who is known for doing a variety of “bets” , not all pay off (Fire Phone!) but the ones that do can increase the companies value massively (Amazon Web Services, AWS). 

8. Analysis is the key to success

David Einhorn Investor quotes (7)

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

“The loss was not bad luck, but bad analysis” – David Einhorn (Legendary Investor)

Starting with a solid analysis of the business fundamentals is the key to developing a high conviction investing thesis. A Great investor once suggested if the money you invested was going to support your family, what questions would you ask? 

7. Bubbles & Crashes

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

“What is uncertain is how much further the bubble will expand & what will pop it!  – David Einhorn (Legendary Investor). Bubbles are born out of greed, speculation, FOMO and herd mentality. Asset prices rise to astronomical values before crashing back to earth. From the Tech Bubble  (late 90’s) to the 2008 (Housing Bubble) and even Crypto bubbles previously.

The difficult part is timing the top of these bubbles, As the Legendary Investor Howard Marks states “Tree’s don’t grow to the sky”. 

financial crisis 2008. Collapse of Lehman Brothers

financial crisis 2008. Collapse of Lehman Brothers

6. Being Rational

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

“As an Investor my job is to figure out what will happen, not what should happen” – David Einhorn (Legendary Investor).

Anything can happen in the stock market, a smart strategy is to do a scenario analysis, think about the best case, worst case and most likely case. As the great investor Howard Marks states “Just because something can happen doesn’t mean it will happen”.

5. Have an Edge

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

“You are looking for situations where you have an edge either psychological or statistical” – David Einhorn (Legendary Investor). The key to success in the stock market is having an “Information edge”, this could be a unique insight from your own job, experience or just a different perspective.

The Legendary Investor Peter Lynch believes the average person can beat the guys on Wall Street using their “Edge”. For example, a Mother may no more about a certain baby product selling out rapidly and then could decide to research the stock. 

4. Cut your Losses

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

“If we decide we’re wrong about something in terms of why we did it, we exit period” – David Einhorn (Legendary Investor).

Cutting your losses can be difficult to do, due to “sunk cost fallacy”. This can result in investors pouring more into a poor position rather than cutting losses sooner. 

3. Poker & Investing 

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

“Poker and Investing are both games of incomplete information. You have a set of facts & are looking for situations where you have an edge” – David Einhorn (Legendary Investor)

2. High Conviction Bets

 

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

“We put the biggest amount of money into our highest conviction idea and then view others relative to that” – David Einhorn (Legendary Investor)

Although diversification is heavily touted as the best investment strategy by business school’s, many legendary investors believe the opposite.

Warren Buffett, Bill Ackman, David Einhorn and many more both would prefer to put more money into their best idea where they have real conviction, than in their 2nd and 3rd best.

This goes against conventional wisdom but actually makes sense as your “circle of competence” can only be so large. It is close to impossible to know everything about everything. 

1. Know When to Sell Stocks

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

David Einhorn Investor quotes (7). Credit: www.Motivation2invest.com/David-Einhorn-Quotes

“Never invent new reasons to continue with a position when the old reasons are no longer valid” – David Einhorn (Legendary Investor). Choosing when to sell a stock is a hard decision & unique to every situation.

Here are the only four reasons i sell a stock:

  1. When the Business Fundamentals Change
  2. Opportunity Cost (Better Investment opportunity)
  3. Trim Position for Risk Mitigation. 
  4. Stock is Hugely Overvalued

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David Einhorn Quotes Gallery

Top 10 Daniel Loeb Quotes | Activist Investing Strategy

Top 10 Daniel Loeb Quotes | Activist Investing Strategy

Daniel Loeb is the Billionaire hedge fund manager of an event driven, value investing fund.

Loeb’s Strategy is that of an Activist investor as he likes to buy troubled companies, replace inefficient & bad managers and thus increase value for shareholders, he describes this as his “Key to success”.

Other Famous Activist Investors include, the Legendary Bill Ackman and Carl Ichan.

Investing Strategy: Activist Investor , Hedge Fund

1. From Chaos comes Opportunity

Investor Daniel Loeb Quotes (1). Credit: www.Motivation2invest.com/daniel-loeb-quotes

Investor Daniel Loeb Quotes (1). Credit: www.Motivation2invest.com/daniel-loeb-quotes

“From Chaos Comes Opportunity”Daniel Loeb (Activist Investor) . This is very similar to our saying here at Motivation 2 invest, “Volatility = Opportunity”. When there is a Stock Market Crash and fear reigns in the air. Stocks can be bought cheaper and this can often mean an opportunity. The goal is to find out the situations where the Stock Market has overreacted or misunderstood a business. 

As Warren Buffett states “Be Greedy when others are Fearful and Fearful when others are Greedy”.

2. Be an Opportunist

Investor Daniel Loeb

Investor Daniel Loeb Quotes (1). Credit: www.Motivation2invest.com/daniel-loeb-quotes

“Our Philosophy is to be opportunistic across different assets” – Daniel Loeb (Activist Investor)   As CNBC’s Jim Cramer says “There is always a bull market somewhere” . There is always an opportunity to invest across many different assets this could be stocks, crypto, real estate etc. The trick is identifying the opportunities which others may have not discovered yet and then placing a high conviction bet. Bill Ackman is a master of this.

3. How to start a Hedge Fund?

Investor Daniel Loeb

Investor Daniel Loeb Quotes (1). Credit: www.Motivation2invest.com/daniel-loeb-quotes

“I had five family members, a few friends & $340k in life savings from 10 years working on Wall Street” – Daniel Loeb (Activist Investor) . We all start somewhere and raising the initial capital to start a hedge fund is no easy task. 

But as the Legendary Warren Buffett states “If your investing returns are good, investors will swim through shark infested waters to invest with you” this is very true. I previously interviewed a Former Hedge Fund Manager on my channel and he reveals the steps to starting a Hedge Fund.

4. Invest into the Misunderstood

Investor Daniel Loeb

Investor Daniel Loeb Quotes (1). Credit: www.Motivation2invest.com/daniel-loeb-quotes

“We look for companies which are misunderstood by the market & mispriced” – Daniel Loeb. 

The Stock Market is an auction based system similar to Horse racing a “Pari-mutuel” system. Basically this means you can’t just invest into the “best horse (best company)” because as this information becomes known by the public, the odd’s change.

Thus generally the majority of famous investors look for a “mispricing” in the Stock Market. This is where the Stock Market has got it wrong or potentially overreacted, the volatility can equal an opportunity. 

5. Invest into Special Events

Investor Daniel Loeb

Investor Daniel Loeb Quotes (1). Credit: www.Motivation2invest.com/daniel-loeb-quotes

“We invest when we see a special situation or event” – Daniel Loeb (Activist Investor) . A Special Situation could be a Merger/Acquisition, Stock Split, IPO, Company Default, Spinoff etc. These all offer opportunities from the volatility expected other investors which invest into special situations include: Howard Marks, Carl Ichan,Bill Ackman etc.

6. Hedge Funds have Changed

Investor Daniel Loeb

Investor Daniel Loeb Quotes (1). Credit: www.Motivation2invest.com/daniel-loeb-quotes

“It took me 5 years to get $100 Million, today people are starting out of the gate with that much” – Daniel Loeb (Legendary Investor). Raising Capital is easier today than it used to be in the past. This is for a few reasons, increased wealth, increased regulation, Low Interest rates etc. 

7. Develop an Investing Instinct

Investor Daniel Loeb

Investor Daniel Loeb Quotes (1). Credit: www.Motivation2invest.com/daniel-loeb-quotes

“Instinct is a type of Pattern Recognition which comes from experience of looking at companies which work” – Daniel Loeb (Activist Investor). As the Legendary Investor Peter Lynch says “The Person who turns over the most rocks wins”.

The More companies you analyse and the more investing experience you have, the more this “Instinct” for “Pattern Recognition” develops.

8. “Timing is Everything”

Investor Daniel Loeb

Investor Daniel Loeb Quotes (1). Credit: www.Motivation2invest.com/daniel-loeb-quotes

“Timing is Everything in Markets” – Daniel Loeb (Activist Investor).  Timing the market is extremely difficult as the old quote says “Time in the Market is better than trying to time the market”.   As Data from CNBC & multiple studies show:

“If an investor sat out the S&P 500’s 10 best days per decade

Then returns would be significantly lower.”

Analysing data going back to the 1930’s , If an investor sat out the S&P 500′s 10 best days each decade, the total return would stand at a measly 28%! However, if an investor held through all the market crashes & volatility total returns would have been a whopping 17,715%!

9. Embrace Capitalism 

Investor Daniel Loeb

Investor Daniel Loeb Quotes (1). Credit: www.Motivation2invest.com/daniel-loeb-quotes

“Capitalism without Bankruptcy is like Christianity without Hell” – Daniel Loeb (Activist investor).  
During the Financial Crisis of 2008 & 2020 Pandemic many banks & businesses were bailed out and stopped from going under. Now although this may have seemed necessary at the time, there is a few risks with this. Firstly, there can be “Zombie companies” running which clogs up the free market.

Secondly, Banks & Businesses which were taking more risk before a recession (over leveraged etc) would not have been punished for their aggressive style. Thus in the future they entire banking system may continue taking more risk, because if they win (they win big) and if they lose they get bailed out. 

financial crisis 2008. Collapse of Lehman Brothers

financial crisis 2008. Collapse of Lehman Brothers.

10. Process is everything

Investor Daniel Loeb

Investor Daniel Loeb Quotes (1). Credit: www.Motivation2invest.com/daniel-loeb-quotes

“Overconfidence in a bad process is like winning at Russian Roulette, then thinking it’s a great strategy…before blowing your brains out!” – Daniel Loeb (Activist investor) . Legendary Investor Howard Marks has a similar quote. Luck plays a big part in every wildly successful outcome, thus you cannot judge your investing success purely on the outcome…the process must be analysed.

Want to Learn How to Invest?

Rather than blindly picking stocks or following rumours, Why not learn how the greatest investors of all time invest? To find out more check out our Ultimate Investing Strategy Course. 

 

 

How to make $1 Billion in a day? | Stanley Druckenmiller Top 10 Trading Quotes |

How to make $1 Billion in a day? | Stanley Druckenmiller Top 10 Trading Quotes |

Stanley Druckenmiller is a legendary trader with an estimated net worth of $6.6 billion.  Investing Strategy:   Contrarian, Economics, Trader, Momentum Trader

How did Stanley Druckenmiller make his money?

Stanley Druckenmiller made his money running hedge funds such as Duquesne Capital which he ran from 1981 to 2010. At the time of closing Duquesne Capital had over $12 billion in assets under management.

Stanley was also the head portfolio manager of the Quantum Fund, founded by the Legendary investor George Soros.  Druckenmiller is reported to have made $260 million in 2008 alone. These days he manages his wealth through Duquesne Family Office, a New York-based investment group which he started with $3 billion in 2010.

What has Stanley Druckenmiller invested into?

Druckenmiller has been bullish on tech stocks recently. He has large investment stakes in Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), and Alphabet Inc. 

Greatest Trade of all Time

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

Druckenmiller is most famous for executing what has been called the “greatest trade of all time” in which he made up $1 Billion in a single day!

This was accomplished by a bold bet against the British pound during the early 90’s when Stanley Druckenmiller was at the Quantum Fund with another Legendary investor George Soros

How to make $1 Billion in a day?

In 1979, Many European countries decided to link their currencies together at a fixed rate. This was called the Exchange Rate Mechanism (“ERM”). This was a band of rates that each currency had to remain within.

The idea was to hedge currencies against exchange rate fluctuations, which could harm European Trade.

The National banks of the various countries were given the job to keep their country’s currency in the allocated band. For example, If selling volume was high and pushed the rate down, the banks had to buy. If buying was strong, they had to sell to keep the rate stable.

In 1990, Britain joined the ERM (despite Prime Minister Margaret Thatcher being strongly opposed). 

Thatcher proceed to resign and John Major (a major advocate ERM) became Prime Minister. Afterwards Britain entered a recession.

The Bank of England needed to cut interest rates it order to lower the cost of borrowing & stimulate the economy…but their hands were tied by the currency peg.

Lowering interest rates would have devalued the British pound and forced the country to exit from the ERM. The Bank of England was forced to continually go into the open market and purchase British pounds to keep the peg in check. 

In 1992, Stanley Druckenmiller & George Soros saw the opportunity. It was obvious at the time the British Pound was in trouble and most believed a devaluation was coming at some point. There was just one issue, no catalyst…thus Soros & Druckenmiller decided they would be the catalyst! 

Stan Druckenmiller and George Soros (Quantum Fund)

Stan Druckenmiller and George Soros (Quantum Fund)

Breaking the Bank of England:

Quantum fund started to short the British pound. This involved selling British pounds which were borrowed from banks and then using the proceeds to buy German marks. The idea was to be able to buy back British pounds cheaper & then return what he borrowed.

Soros & Druckenmiller started with a modest $1.5 billion short, but rates didn’t move.

Then news broke out, September 16, 1992, the German Bundesbank president said he didn’t rule out some currencies coming under pressure.

Soros & Druckenmiller saw this as sign to turn up the heat. They built their short position to a massive $10 billion! 

With this flood of selling hitting the market, the British pound came under tremendous pressure to “break the Buck” (the currency peg).

The Bank of England entered chaos. They purchased 27 billion on the open market to try and stop the currency change. But the pressure from the $10 Billion short was too much to bear. At 7pm September 17th 1992, Britain announced it would leave the ERM and would allow the devaluation of the British pound.

This date would forever be known in history…as Black Wednesday.

Top 10 Stanley Druckenmiller Quotes

10. “Go for the Jugular”

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

“Soros has taught me that when you have tremendous conviction on a trade you have to go for the jugular” – Stanley Druckenmiller (Billionaire Trader)  . When Druckenmiller originally brought the idea of shorting the British pound to Soros, Soros urged him to bet huge as it was a high conviction bet. 

9. Take Low Risk, High Reward Bets

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

“It’s not about whether your right or wrong but how much you win or lose either way” – Stanley Druckenmiller (Billionaire trader). Investing or Trading is a game of probabilities, we are looking to take bets with a low risk, high reward profile. Billionaire Investor Ray Dalio call this an asymmetric Risk/Reward Ratio. Value investor Mohnish Pabrai calls this Dhando Investing.

8. Hit Home Runs then Preserve capital

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

“The way to build wealth is through preservation of capital and home runs” – Stanley Druckenmiller (Billionaire Trader) . This investing quote is a slight contradiction, as hitting “home runs” usually involves a different strategy then capital preservation.

Perhaps this is similar to the “barbell” investing strategy. One side is very low risk investments (Index funds, Real estate which generates cash flow etc) then the other side is high risk investments. 

7. Bitcoin is worth what people will pay

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

“Bitcoin is like anything else in the world, it’s worth what people will pay for it” – Stanley Druckenmiller . Druckenmiller was previously sceptical of bitcoin but has now flipped and says it’s better than gold! He goes onto say:

“Bitcoin could be an asset class that has a lot of attraction as a store of value to both millennials and the new West Coast money and, as you know, they got a lot of it”.

 Druckenmiller expects bitcoin bet to “work better” than gold. However, he did state his gold position is “many, many more times” larger than his current bitcoin holding.

6. What do people think it will earn?

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

 
“What a company has been earning doesn’t mean anything, you have to look at what people think it can earn” – Stanley Druckenmiller (Billionaire Trader). 
 
Druckenmiller is referring to a “Keynesian Beauty contest” where the judges don’t pick which person is most beautiful personally, but who they think other people will pick. Benjamin Graham calls the stock market a “voting machine” or popularity context in the short term.
 

5. Play Investing Game 

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

Stanley Druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

“I’ve always loved to play games, investing is a game…you need to be decisive, open minded & flexible” – Stanley Druckenmiller (Billionaire Trader) .

4. Good Investing is not about IQ

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

“Good Investors are successful not because of their IQ…but from their discipline & intuition”  – Stanley Druckenmiller (Billionaire Trader) . Surprisingly this is a common trait i’ve noticed from many investing legends, Warren Buffett has a similar quote.

The good news I can tell you is that to be a great investor you don’t have to have a terrific IQ. If you’ve got 160 IQ, sell 30 points to somebody else because you won’t need it in investing. What you do need is the right temperament.”  – Warren Buffett

3. Have Courage in your Convictions

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

“It takes courage to a be pig, to ride profits with huge leverage” – Stanley Druckenmiller (Billionaire Trader). Courage is your convictions is a strong trait of major success.

2. Put all your eggs in ONE Basket! 

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

 The common wisdom from academic finance is to diversify your portfolio across as many stocks and countries as possible.
 
However, many legendary investors such as Stanley Druckenmiller, Warren Buffett and Bill Ackman believe in a more concentrated approach.
 
The reason is simple, it is impossible to know “everything about everything”, thus investing into area’s where you have some special insight or an edge can give you an advantage. Rather than “don’t put all your egg’s in one basket” , “Put all your egg’s in one basket & watch that closely”.

1. Invest with Legends

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

Stanley druckenmiller quotes (1).Credit: www.Motivation2invest.com/Stanley-Druckenmiller-Quotes

Stanley Druckenmiller is now an investing Legend, but he previous invested with another Legend George Soros

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Many members of the Motivation 2 Invest community also have this passion and this drive to learn more each day. If you want to learn how to become a great fundamental investor or just join our thriving VIP Group. Check out the link herehttps://www.motivation2invest.com/product/stock-investing-course/  

 
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Stanley Druckenmiller Quotes gallery x 10 

Top 10 Joel Greenblatt Quotes  | Magic Formula Investing Strategy

Top 10 Joel Greenblatt Quotes | Magic Formula Investing Strategy

Joel Greenblatt is a legendary Value investor with a net worth of approximately $500 Million. Joel is a classic value investor and is style has been widely influenced by the teachings of Benjamin Graham and Warren Buffett.  Investing Strategy:  Value Investor, Long term, Small Cap, Large Cap, Quantitative Investor

How did Joel Greenblatt Make his Money?

Joel Greenblatt is a hedge Fund manager and thus made his money from the fee’s charged to clients, in addition to his own investing gains. Greenblatt started his first hedge fund Gotham Capital with $7 million provided by the “Junk Bond King” Michael Milken. 

Gotham Capital had some incredible investment returns of 50% compounded annually (after most expenses) and 30% (Minus all fee’s) between 1985 and 1994.

Greenblatt’s Hedge Fund specialized in “special situations” such as spinoffs and other corporate restructurings. A “Spinoff” is where a large company will create an independent business from a smaller part of the firm.  For example, Ebay spun off Paypal in 2015. 

Gotham Asset Management:

  • In 1995 Gotham returned all capital of outside partners (approximately $500 million).
  • In 2008 Gotham Asset Management was created as “the successor to Gotham Capital”.
  • In 2010, Gotham started four mutual funds and raised $360 million. By 2014, the mutual funds managed over $1 billion.
  • By 2014, this had increased to $4.8 billion thanks to new money inflows before peaking at around $13.1 billion in March 2015.
  • In 2021 portfolio value stands at $2.36 Billion. 

As value investing has underperformed over the past few years, the fund has gradually seen outflows and now the portfolio value stands at $2.36 Billion as of 2021. 

What is Joel Greenblatt’s Magic Formula?

Joel Greenblatt’s Magic Formula is a quantitative method of investing into the stock market. The Magic Formula was popularised in his best selling investment book “The Little Book which beats the market”.

The formula works by screening for stocks with a low Price to earnings ratio (P/E) but also high returns on capital. Generally these two metrics offer a simplified method of buying “cheap stocks of good companies”.

Here is how the Magic Formula works:

1. Screen Stocks for Low P/E Ratio and High Returns on Capital (For example P/E Ratio less than 10, and Return on capital above 15%.) 

2. Buy the top 20 of these stocks for diversification

3. Hold for one year (no matter what) 

4. Then sell and repeat back to step 1.

The idea behind the Magic Formula is it removes the psychological biases (Greed, Fear, Fomo) etc which often causes investors to buy and sell stocks at the wrong time, for example during a stock market crash.

Multiple studies have shown simply buying cheap stocks with low price to earnings ratio’s & high returns on capital can outperform the market index. 

Joel Greenblatt Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

Joel Greenblatt Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

Does Magic Formula Investing work?

Greenblatt created the world famous “Magic formula” which is a systematic method of buying stocks with a low price to earnings ratio, high returns on capital and a few more metrics.  A back-test of the Magic formula showed it returned an average of 33% compounded over the past 16 years, beating the market! 

Magic_formula_book_Joel Greenblatt

Magic_formula_book_Joel Greenblatt. Credit: The Little Book which beats the market.

However, it is clear to see the Magic formula does not beat the market every year and in recent years Momentum investing strategies have outperformed traditional quantitative value approaches. 

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

Why be a Value Investor?

When asked, why he is a value investor? Greenblatt replied it seems the only logical way to invest. He gave the following example:

“If you were going to invest into a house what would your process look like? Would you buy the most expensive house…where the price had gone up recently? (that is Momentum trading)  Or Would you look for a house which is trading for less than others in the area? (Relative valuation) Or Which had rental cash flows could calculate a payback period? That is Value investing. (Intrinsic Valuation)

Greenblatt & Michael Burry (Big Short):

Gotham Capital helped “Big short’s” Michael Burry create his Legendary hedge fund Scion Capital in the year 2000. Greenblatt purchased 25% of its capital for one million dollars after all taxes.

By October 2006, Gotham’s investment in Scion Capital amounted to $100 million! Now this is where things get interesting…Burry was controversially betting against the US Housing Market (Big Short). However, Greenblatt didn’t like this strategy (even though it did ultimately pay off!).

Thus Greenblatt and other investors wanted their money back. Now in the “Big Short” Movie “Lawrence Fields” (played by Tracy Letts) is meant to represent the investors who were invested with Burry such as Greenblatt.

Although the physical resemblance is not similar to Joel Greenblatt. This character is a fictional version meant to represent him and other disgruntled investors. I suppose Michael Burry doesn’t look like Christian Bale either. 

Lawrence Fields (played by Tracy Letts) Big short. Although the physical resemblance is not similar to Joel Greenblatt. This character is a fictional version meant to represent him and other disgruntled investors. Source: www.motivation2invest.com/Joel-Greenblatt-Trades

Lawrence Fields (played by Tracy Letts) Big short. Although the physical resemblance is not similar to Joel Greenblatt. This character is a fictional version meant to represent him and other disgruntled investors. Source: www.motivation2invest.com/Joel-Greenblatt-Trades

After the dispute with Gotham Capital & Greenblatt, Burry used a special provision in his prospectus to “side pocket” or block withdrawals which amounted to approximately 55% of Greenblatt’s investment!

Not surprisingly this amount corresponded to his “Big short bet” (Credit default swaps) which were then losing money. Gotham Capital even threatened to sue Burry for blocking the withdrawals. Despite the pressure Burry held on until he was in profit on August 31, 2007 as the housing market crashed. 

Scion Capital fund was then up by over 100%. Gotham Capital exited its investments. Joel Greenblatt must be kicking himself at the missed opportunity.

Top 10 Quotes by Joel Greenblatt

10. The Magic Formula

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

A back-test of the Magic formula showed it returned an average of 33% compounded over the past 16 years, beating the market! 

9. Understand Mr Market

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

“In the short term Mr Market sets prices with emotion, in the long term prices revert to value” – Joel Greenblatt (Value Investor)  Benjamin Graham the father of value investing uses the analogy of Mr Market to explain the stock market. Mr Market is like a bipolar person who wakes up every day, either very optimistic or pessimistic.

Each day he knocks onto your house door and gives you a quote to buy your house. When Mr Market is feeling optimistic he will offer alot and when pessimistic he will offer a little. The trick for investing success is to only do business with Mr Market when it benefits you. As Sir John Templeton said “Be a realist, Buy from the pessimists and sell to the optimists”.

8. Stock Prices move faster than business value

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

“Stock Prices move wildly in short periods, this doesn’t mean the value of the business had changed much” – Joel Greenblatt.

7. High Returns on Capital

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

“Companies that achieve a high return on capital have a special advantage of some kind” – Joel Greenblatt (Value Investor) . Return on capital is a metric which measures how well a company reinvests and the return they achieve. For example, for every $1 invested how many dollars does the company get back, $2, $3 etc. 

Generally a companies “competitive advantage, moat” or pricing power can show up in the metrics such as Return on Capital.

For example, Amazon has consistently invested well and achieved a return on capital of 20% historically and 10% now. This is good but a company like Apple has done even better with a Return on Capital of 48.3%!  This reflects Apples strong pricing power and efficiency improvements. 

Formula for Return on Capital

Return on Capital (ROC) = (Net Income-Dividends)/(Debt+Equity)

For Example: A small public company has $100,000 in net income with $600,000 in total debt and $100,000 in shareholder equity. Plugging into the Return on capital formula, ($100,000 Net Income- zero Dividends) divided by ($600,000 + $100,000) = ROC. Thus the Return on Capital is 14.3%.

What is a Good Return on Capital?

Generally a return on capital over 10% consistently is good, 15% to 20%+ is great. Apple has historically had a return on capital of over 39% which is incredible! 

6. Be a Value Investor

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

“The secret to investing is to figure out the value of something then pay alot less” – Joel Greenblatt (Value Investor).

This is obvious secret of value investing. As the father of Value Investing Benjamin Graham once said, a stock is a portion of a company. Thus the strategy with value investing is to value a company then buy below that fair value with a margin of safety.

Want to learn how to Value Stocks?

If you want to learn how to value stocks like Buffett, but with a growth twist check out our: Investing Strategy Course

 

5. Assess Risk First

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

“Look down not up when making your initial investment decision, focus on not losing money then let the upside take care of itself” – Joel Greenblatt (Value Investor) It is very easy to focus on the upside when making an investment decision, thinking about all the money you could make.

However, that is usually the most dangerous way to invest. Great Value Investors assess the risk first and aim to mitigate that. If the worst case is you lose 1x and the best case is a 4x then that is usually a great bet to take. This is an asymmetric risk/reward ratio, as Billionaire Hedge Fund manager Ray Dalio would call it. 

4. Value always prevails

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

When speaking to his MBA students during an investment class, Greenblatt stated: “I Guarantee a stock will revert to it’s value at some point…but I can’t guarantee when” .

This is one of the most difficult parts of value investing, even if you know a stock is undervalued or overvalued, there is no way of knowing when the stock market fundamentals will correct.

Thus it’s generally best to look for some kind of “catalyst” which could cause the stock to correct to fundamentals this could be a news update, financial update or business update. 

3. Know what you own

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

“Putting all your eggs in one basket and watching that basket closely is less risky than you may think” – Joel Greenblatt (Value Investor) . Many business schools teach “Diversification” as a key fundamental investing strategy.

However, Many Legendary investors including, Warren Buffett, Charlie Munger, Mohnish Pabrai, Seth Klarman and of course Joel Greenblatt believe the opposite. It’s not that diversification doesn’t work, it’s just difficult to diversify and also know everything about each investment.

A focused portfolio allows you to gain deep insight into one area and make decisions to “load up the truck” when the odd’s are in your favour. (This is not financial advice)

  2. Invest Long Term

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

“Having a 3 to 5 year horizon for your stock investments should give you an advantage over most others” – Joel Greenblatt (Value Investor). Most people are too short term focused especially when stocks crash.

Despite many stock market crashes from the great depression in the 1930’s, to Black Monday in 1987, Dot Com Bubble (2000), Financial Crisis (2008), Pandemic Crash (2020). The stock market has crashed and risen once again. 

History of Stock Market Crashes

History of Stock Market Crashes

1. Learn to Invest, don’t gamble

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

Joel Greenblatt Quotes Magic Formula for Investing. Credit: www.Motivation2invest.com/Joel-Greenblatt-Quotes

“Picking stocks randomly is like running through a dynamite factory with  burning match…you may live, but your still an idiot!” – Joel Greenblatt (Value Investor). This is a classic case of “Survivorship bias” lets say somebody invests randomly into a crazy crypto token because they heard someone talking about it on mainstream news and it 10X’s in price and makes them a Millionaire.

Does that mean it was a good strategy? Not so as if they continued their strategy of investing blindly then in the end it would fail. Luck plays a role in every investment outcome so it’s best to focus on having a solid process.

Want to learn how to Value Stocks?

If you want to learn how to value stocks like Buffett, but with a growth twist check out our: Stock Research Platform    

Joel Greenblatt Quotes Gallery x 10 | Magic Formula 

Top 10 Trader Quotes by Jim Simons | Worlds Most Secretive Hedge Fund

Top 10 Trader Quotes by Jim Simons | Worlds Most Secretive Hedge Fund

Jim Simons is a Billionaire Hedge Fund Manager & Legendary Mathematician. Simons is the greatest “Quant investor” in the world.  He uses quantitative analysis & computer models with complex algorithms to spot inefficiencies in the stock market & trade daily. 

Jim Simons is the MOST SUCCESSFUL INVESTOR of all time, with an average annual return of 71.4% before fee’s. This is an incredible return.

Renaissance Technologies winning strategies have been notoriously secret which has led to the nickname “the worlds most secretive hedge fund”, this truly is the smartest money in the market. 

Who is the Smartest Billionaire?

Jim Simons was nicknamed “The Worlds Smartest Billionaire” by Forbes. However, it wasn’t always obvious he would be. As a Teenager in Massachusetts he worked in the basement of a garden supply store and was terrible at the job. Simons Stated “I was terrible I couldn’t remember where anything went”.

The owners of the store asked him what he wanted to do in the future, he said “I want to study Math at MIT” of course they laughed at him and thought he was crazy. 

At the age of 17 (1955) Simons joined MIT and finished a four-year program in just three years before heading for UC Berkeley for his Ph.D. in mathematics in 1962, at the age of just 23.

A couple of years later he was hired (and then fired) as a code breaker for the Pentagon’s secret Institute for Defense Analysis (IDA) at Princeton. Simons next became the chair of the Math Department at Stony Brook University where he and a colleague (Shiing-Shen Chern) published a paper which had a major influence on theoretical physics. Afterwhich Simons Started the worlds most successful and secretive hedge fund Renaissance technologies. 

When did Jim Simons start Renaissance Technologies?

Simons started Renaissance technologies 1978, this was one the first quantitative funds, which used algorithms & model-based trading. Simons originally focused on trading in commodities and currencies. before expanding his criteria to anything which is “Publicly Traded, Liquid and Amenable to modelling”. 

The Medallion Fund became the world’s most successful hedge fund producing a compounded annual return of 71.4% (1994 to 2014). 

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

Who is the richest Mathematician?

Jim Simons is the richest Mathematician in the world with a net worth according to Forbes of $24.4 Billion (2022). Simons made his fortune as the founder of Renaissance technologies the worlds most successful and secretive hedge fund. This fund averaged a 71.4% compounded return annually between (1994 and 2014). If you invested $10k with Simons you would have made an incredible $2.2 million in 10 years. 

What is Jim Simons Algorithm?

Jim Simons algorithm is a combination of historical, Real time, Fundamental, Technical and Economic Data. The algorithm is part of a quantitative model and although very secret it is thought to involve modelling of various assets, identifying trends and trading on market inefficiencies, which may only last a split second.

When asked for more details on the algorithmic model Simons stated: 

“Of course we can’t show you our model, that would be like Buffett telling you what stocks he’s about to buy” – Jim Simons (Billionaire Trader). 

Is Jim Simons Better Than Warren Buffett?

In terms of pure investment returns, Jim Simons is better than Warren Buffett. Jim Simons Medallion Fund averaged an incredible 71.4% compounded return annually between (1994 and 2014). Whereas Warren Buffett’s investment conglomerate earned “only” over 20% per year compounded. Both are incredible returns massively outperforming the S&P 500 index which averaged a 10.2% annual return.

However, it must be stated both Jim Simons & Warren Buffett have very different investing strategies, they are really complete opposites. Buffett focuses on the “Value Investing” strategy pioneered by Legendary investors like Benjamin Graham . In value investing a business is valued (a stock is a portion of a company), then the goal is to buy below that fair value (ideally with a margin of safety). Buffett has often stated he buys “stocks which wouldn’t bother him if the stock market closed for 10 years.”

Whereas, Jim Simons is the complete opposite, Simons uses advanced algorithms and computer models to detect market trends and mispricing’s then trades daily on these. 

INVESTING LEGENDS GREATEST INVESTORS RETURNS STOCK MARKET JIM SIMONS OUTLIER

INVESTING LEGENDS GREATEST INVESTORS RETURNS STOCK MARKET JIM SIMONS OUTLIER. Jim Simons (renaissance technologies) Vs Warren Buffett (Berkshire Hathaway) Credit: www.motivation2invest.com/Jim-Simons-quotes

The graph above shows greatest investing Legends of all time, by what percentage they have outperformed the index (X axis) vs the Number of years (Y Axis).

We can see Jim Simons is a true outlier with over 60% compounded returns (above the S&P 500 Index) for over 20 years. 

This was calculated till when the fund closed to outside capital. But the fund is still producing returns. Warren Buffett has show fantastic returns of approximately 13% (Above the S&P 500 Index) for nearly 60 years! 

Can I invest into Renaissance Technologies?  

Not exactly, Jim Simons secretive hedge fund is NOT ACCEPTING any new money and is mostly owned by employees such as leading Nobel prize winning scientists.

However, by being a Member of a platform like Invest with Legends you can view the past investments of Renaissance technologies, to access Simons full portfolio & quarterly trades.


9. Bring Smart People Together

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

When Jim Simons was asked the secret of the worlds most successful hedge Fund (71.4% Annual Returns), Simons stated: “Good Atmosphere and Smart People can accomplish alot” – Jim Simons (Renaissance Technologies)

8. Learn from History

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

“Past Performance is the best indicator of success” – Jim Simons (Renaissance Technologies) . Simons uses a vast amount of historical stock & economic data in order to help make predictions of the future. Now although History doesn’t always repeat it does rhyme. At Renaissance they are looking for trends & patterns which may only last a few seconds, to trade with their edge. 

7. Which Stocks to Trade?

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

“We have three criteria, if it’s publicly traded, liquid and amenable to modelling, we trade it” – Jim Simons (Renaissance Technologies). Basically from Jim Simons criteria this is almost every publicly traded stock above a small market cap.

Thus they have over 2,900 stocks to choose from on the NYSE and 3,300 on the Nasdaq. If they invest internationally also the possibilities are even greater. 

6. Predicting the Future

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

“One can predict the course of a comet easier than Citigroups stock, but you can make more money on the later” – Jim Simons (Billionaire Trader) . At Renaissance Technologies they are really trying to predict the future! But this is no easy task.

In fact although phrased as a joke, Simons is correct in saying it’s easier to the predict the course of a comet or even the movement of planets than a stock. Planets and Comets tend to follow orbits and are quite easily predictable from the gravitational fields. However, the stock market is “close” to random, I say “close” to random as there are small patterns which Renaissance exploits to make billions of dollars. 

5. The Role of Luck

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

“Luck plays a meaningful role in everyone’s lives” – Jim Simons (Billionaire Trader) . Luck is apart of life and like it or not all great success to some extent. From the studies of success here on this website I have come to the conclusion, it is best to do everything you can control then let luck play out with the rest. 

4. Luck & Investing Success

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

“In Business it’s easy to confuse luck with brains” – Jim Simons (Billionaire Trader) . There is a phenomenon called “Survivorship Bias” for example, if somebody does a risky illogical trade and makes millions (lets say investing into a crazy crypto token on whim).

They may “look” like a genius but really they were just immensely lucky.  The trick is not to confuse the too as that can be very dangerous, if the person does believe they are a trading genius they may continue the risky strategy until they go to zero. Just like gambling in a Casino. 

3. Good Things don’t last forever

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

“There is no such thing as the goose which lays the golden egg forever” – Jim Simons (Billionaire Trader).Good things (or even bad things) for that matter tend not to last forever, things tend to revert to the mean. This could be stock price, a successful business or even a relationship! The positive of this is continuous improvement can help to adapt and keep the golden goose strong. 

2. Continuous Improvement (Kaizen)

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes.

“The System is always leaking & we keep adding water to stay ahead of the game” – Jim Simons (Billionaire Trader) .  As mentioned previously the golden goose doesn’t lay egg’s forever, continuous improvement is the key to stay ahead of the game. There is a Japanese Manufacturing philosophy called “Kaizen” which pioneered the art of continuous improvement. 

1. The Secret Trading Model

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

Jim Simons Trader Quotes (10). Credit: www.Motivation2invest.com/Jim-Simons-Quotes

“Of course we can’t show you our model, that would be like Buffett telling you what stocks he’s about to buy” – Jim Simons (Billionaire Trader).

The secret trading model used at renaissance technologies is thought to be a combination of Historical Data, Real Time data, complex algorithms and more. Of course, Simons will not reveal this model and the firm is kept notoriously secret. Partly to protect their golden goosem but also so the technology doesn’t fall into the wrong hands.

Luckily for you guys we track the trades on a quarterly basis by Renaissance Technologies and more! To stay up to date join our Investing VIP Group or Stock Research Platform. 

Jim Simons Quotes Gallery