Warren Buffet
Birth Place: Omaha, Nebraska, United States.
Birth Year: 30th August, 1930.
Net Worth: 61 Billion USD (2015)(2015)
How did Buffet Start:
From childhood itself Buffett had interest in stocks, writing stock prices on the chalk board in his father's office. Legend has it that he told his childhood friend if he wasn't a millionaire by the time he was thirty, he would jump off of the tallest building in Omaha. When Buffett was 11-years-old he visited the New York Stock Exchange and bought his first shares: three shares of Cities Service Preferred (an oil and gas concern) for himself and three for his sister Doris.
In grade school and high school Buffett did many activities like delivering newspapers, running a pinball machine leasing operation, selling stamps, Coca-Cola, golf balls and magazines door-to-door, and editing a horse racing tip sheet called Stable-Boy Selections.
He graduated in 1951 with an MS in Economics. From 1951 to 1956 Buffett was an investment salesman and a securities analyst. In 1956 he started Buffett Partnership Ltd., and in 1960 he became the Chairman and CEO of Berkshire Hathaway Inc.
Acquisition of BERKSHIRE HATHAWAY:
Buffett's first, most famous and formative deal was his acquisition of Berkshire Hathaway in 1964. The company started life in the 1830s as the Valley Falls Company, a textile manufacturer, that became the Berkshire Fine Spinning Associates in 1929 and merged with the Hathaway Manufacturing Company in 1955. After the merger, Berkshire Hathaway was a profitable business with millions in revenue, twelve thousand employees and fifteen factories. Buffett made his first investment in the company in 1962.
Buffet style of investing:
Warren Buffett's investing philosophy is often called "value investing" because it looks at the underlying value of a company rather than at the movements of its stock price. Buffett famously believes that investors should only pick stocks they believe they can hold forever.
Value investing is a highly disciplined practice for Buffett. He has given many succinct but incisive rules of thumb for investing in his famous letters to shareholders, in investing publications and the popular press. Some of his most notable rules are never lose money, and it is better to get a great company at a fair price than a fair company at a great price. Of course, Buffett has broken his own rules on occasion, which shows that his first, most fundamental rule is to look at investing pragmatically rather than programmatically.
In one sense, Buffett breaks with his value investing philosophy by looking not only for returns in dividend income but also in share price growth.Strictly speaking, a value investor doesn't care at all about the share price or market value of a company because the value of owning a company is in the return of profit it gives to its owners, the shareholders. But even Benjamin Graham, the godfather of value investing, acknowledged that profits can be made when an investor buys company that has been undervalued for whatever reason by the stock market on the assumption that the market will eventually realize the discrepancy and the share price will rise.
Buffett has bought companies (Berkshire Hathaway being the most obvious example) that were underperforming and steered them to profitability. Deals like this have convinced some people that Berkshire Hathaway is more like a private equity firm than a mere holding company and that Buffett and the partners at his firm are, in fact, not value investors but very cautious speculators.
Pragmatism and thorough caution are core components of Buffett and Berkshire Hathaway's brand. Though Buffett may not be a value investor in the strict sense, his instincts for a good deal and the rules of engagement he set for himself have not only made Berkshire Hathaway outperform other investing firms, they have also protected him from outsized losses.
Famous Sayings by Buffet:
Buffett is renowned for his wit and wisdom. His annual reports to Berkshire Hathaway shareholders do not contain charts or tables, and they are written in a plain, direct style meant to appeal to common sense rather than impress the reader with Buffett's superior intellect. In his letters, in interviews and in his biographies, Buffett has left many memorable words of wisdom for investors.
- Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
- Only when the tide goes out do you discover who's been swimming naked.
- Price is what you pay. Value is what you get.
- Someone is sitting in the shade today because someone planted a tree a long time ago.
- It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.
- Risk comes from not knowing what you're doing.
- It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction.
- I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.
- We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
- Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.
- We have learned to turn out lots of goods and services, but we haven’t learned as well how to have everybody share in the bounty. The obligation of a society as prosperous as ours is to figure out how nobody gets left too far behind.
- On trading out of a bad investment: That may seem easy to do when one looks through an always-clean, rear-view mirror. Unfortunately, however, it's the windshield through which investors must peer, and that glass is invariably fogged.
- You only have to do a very few things right in your life so long as you don't do too many things wrong.
Birth Place: Budapest, Hungary.
Birth Year: 12th August, 1930.
Net Worth: 24.5 Billion USD (2015)
Most famous for:
George Soros gained international notoriety when, in September of 1992, he risked $10 billion on a single currency speculation when he shorted the British pound. He turned out to be right, and in a single day the trade generated a profit of $1 billion – ultimately, it was reported that his profit on the transaction almost reached $2 billion. As a result, he is famously known as the "the man who broke the Bank of England". Soros is also famous for running the Quantum Fund, which generated an average annual return of more than 30% while he was at the helm. Along with the famous pound trade, Soros was also cited by some as the "trigger" behind the Asian financial crisis in 1997, as he had a large bet against the Thai baht.
Soros fled Hungary in 1947 for England, where he graduated from the London School of Economics in 1952 and then obtained an entry-level position with an investment bank in London. In 1956, he immigrated to the United States and held analyst and investment management positions at the New York firms of F.M. Mayer (1956-59), Wertheim & Co. (1959-63) and Arnhold & S. Bleichroeder (1963-73).
Soros went off on his own in 1973, founding the hedge fund company of Soros Fund Management, which eventually evolved into the well-known and respected Quantum Fund. For almost two decades, he ran this aggressive and successful hedge fund, reportedly racking up returns in excess of 30% per year and, on two occasions, posting annual returns of more than 100%.
In the late 1980s, he gave up the day-to-day management of the Quantum Fund and, as one of the wealthiest people in the world, became a substantial philanthropist, donating huge sums worldwide through his Open Society Foundation.
In recent years, political activism has also become important to Soros. He has written and lectured extensively on the role of the U.S. in world affairs as well as issues dealing with, among others, human rights, political freedom and education.
Soros style of investing:
George Soros was a master at translating broad-brush economic trends into highly leveraged, killer plays in bonds and currencies. As an investor, Soros was a short-term speculator, making huge bets on the directions of financial markets. He believed that financial markets can best be described as chaotic. The prices of securities and currencies depend on human beings, or the traders - both professional and non-professional - who buy and sell these assets. These persons often act out based on emotion, rather than logical considerations.
He also believed that market participants influenced one another and moved in herds. He said that most of the time he moved with the herd, but always watched for an opportunity to get out in front and "make a killing." How could he tell when the time was right? Soros has said that he would have an instinctive physical reaction about when to buy and sell, making is strategy a difficult model to emulate.
When he fully retired in 2000, he had spent almost 20 years speculating with billions of other people's money, making him - and them - very wealthy through his highly successful Quantum Fund. He made some mistakes along the way, but his net results made him one of the world's wealthiest investors in history.
When he fully retired in 2000, he had spent almost 20 years speculating with billions of other people's money, making him - and them - very wealthy through his highly successful Quantum Fund. He made some mistakes along the way, but his net results made him one of the world's wealthiest investors in history.
Carl Icahn
Birth Place: New York City, United States.
Birth Year: 16th February,1936.
Net Worth: 21.3 Billion USD (2015)
Most famous for:
The "Icahn Lift." This is the Wall Street catchphrase that describes the upward bounce in a company\'s stock price that typically happens when Carl Icahn starts buying the stock of a company he believes is poorly managed. Since the mid-1980s, Icahn has had titanic battles with multiple U. S. corporations resulting, most of the time, in significant capital gains for these companies\' shareholders and, of course, making Icahn a multibillionaire, whom Forbes ranked as the 46th richest in the world in 2008.Icahn is viewed either as one of history\'s most ruthless corporate raiders or as a positive force for increased shareholder activism, who seeks to correct the abuses of greedy and/or incompetent corporate management.
Icahn grew up in a middle-class family in the Far Rockaway section of Queens in New York City. He went to Princeton University on a scholarship and graduated in 1957 with a degree in philosophy. He attended New York University's School of Medicine, but dropped out before graduation, reportedly because he didn't like corpses.
He took an entry level stockbroker's job in New York with Dreyfus & Company in 1961. Seven years later, he bought a seat on the New York Stock Exchange and began his finance career, mostly trading options. However, it didn't take long for Icahn to develop into an activist, pugnacious investor and to begin using ownership positions in publicly held companies to force changes to increase the value of his shares.
Icahn started his corporate raiding activities in earnest in the late 1970s and hit the big leagues with his hostile takeover of TWA in 1985. He was known as an extremely tough negotiator and a clever strategist, whose persistence and personality quirks often distracted his opponents. A string of corporate battles included such names as RJR Nabisco, Texaco, Phillips Petroleum, Western Union, Gulf & Western, Viacom, Revlon, Kerr-McGee, Time Warner and Motorola.
Time Magazine interviewed Icahn on the occasion of his 71st birthday in February 2007. When he was asked about retirement, he answered, "Well, a number of CEOs have offered to host my retirement party. But I'm just a competitive guy that grew up in Queens. I can't see myself spending the rest of my life in Florida playing golf."
It's reported that Icahn has built a team of two dozen associates to help him find targets and mount his corporate crusades and will likely continue to pursue his investor activism.
Renowned investor Wilbur Ross, Icahn's longtime friend and frequent adversary, referred to Icahn in a May 2007 Fortune Magazine article as "the most competitive person I know … he's especially good at terrorizing people and wearing down their defenses." For many corporate executives, that pretty much sums up Carl Icahn's business and investing style.
Icahn's strategy involves targeting a company he thinks is poorly run and whose stock price is trading below value. He thrives when the markets are on a downtrend; when everyone else is selling, he starts buying. He accumulates enough of an ownership position to lobby for a position on the company's board of directors. Usually his first demand is to dump the CEO and, oftentimes, to consider breaking up the company into separate parts and selling them off. Wall Street professionals say that most of the time he is successful because he's intimidating and relentless. He's viewed as such a surefire moneymaker that investment managers typically start buying up the company's stock, which, whether Icahn is successful or not, leaves him with healthy stock price gains.
Birth Place: New York City, United States.
Birth Year: 1st August, 1949.
Net Worth: 15.4 Billion USD (2015)
Most famous for:
Ray Dalio is an American businessman and founder of the investment firm Bridgewater Associates. In 2012, Dalio appeared on the annual Time 100 list of the 100 most influential people in the world. In 2011 and 2012 he was listed by Bloomberg Markets as one of the 50 Most Influential people.
In 2007, Ray Dalio predicted the global financial crisis. In 2008 published an essay, "How the Economic Machine Works; A Template for Understanding What is Happening Now", which explained his model for the economic crisis. In 2011, he self-published a 123-page volume called Principles, which outlined his logic and personal philosophy for investments and corporate management based on a lifetime of observation, analysis and practical application through his hedge fund. In 2013 Dalio began sharing his "investment secrets" and economic theories on YouTube via a 30-minute animated video which he narrates, called How The Economic Machine Works; the video has since been viewed over 2.1 million times, and has been translated and made available in Japanese, Chinese, Russian, Spanish, German, Italian and French.
How did Dalio start:
Dalio began investing at age 12 when he bought shares of Northeast Airlines for $300 and tripled his investment after the airline merged with another company. Dalio received his BA from Long Island University and an MBA from Harvard Business School.
After completing his education, Dalio worked on the floor of the New York Stock Exchange and invested in commodity futures. He later worked as the Director of Commodities at Dominick & Dominick LLC. In 1974, he became a futures trader and broker at Shearson Hayden Stone. In 1975, he founded the Westport, Connecticut based investment management firm, Bridgewater Associates which in 2012 became the largest hedge fund in the world, as it is today with over $160 billion in assets under management, as of October 2014.
Dalio style of investing:
Dalio has become one of the best investors in the world, and he implements a strategy that is very different from people like Warren Buffett. Dalio got his start as a commodities trader, and his strategy has evolved significantly through the years. Dalio says that diversification is the Holy Grail to investing. What Dalio tries to do is take uncorrelated bets in numerous markets around the world. Additionally, Dalio uses a Macro approach that focuses on two critical variables: Inflation and GDP Growth. By using these two variables, Dalio is able to categorize the securities into 4 quadrants.
As you can see from the picture, Dalio is determining whether inflation or GDP growth is increasing or decreasing. Once the magnitude of those variables are determined, Dalio selects a security or commodity based on those factors. For example, if inflation and GDP growth were both decreasing at a high magnitude, Dalio would prefer owning gold over an equity.
The beauty of this approach is that Dalio also tries to balance the assets he owns in these four categories equally. He believes that the world economy is a zero sum game that is constantly balancing itself and as a result, having a dynamic system that rebalances his portfolio in each of these quadrants mitigates risk and maximizes returns. As a result, 25% of his portfolio is evenly distributed in each of the four quadrants. This means Dalio is looking to place 25% of his money in an economy that has a growing GDP and growing inflation. The remaining 75% of his portfolio is evenly distributed in the other 3 quadrants.
The advantage of using inflation and growth as indicators has helped Dalio "swim with the current" opposed to into the current. Depending on the direction that the capital current is flowing (measured by inflation and growth), Ray has determined that certain securities and commodities perform well in each of these different environments. As the currents lose momentum and prepare for a change (meaning inflation and growth are flat), he gradually moves into a liquid position. This is how Dalio has been able to circumnavigate major economic collapses in the past. For example in 2008-9 Dalio's Alpha fund actually had a positive return. This can be attributed to the fact that he wasn't heavily exposed to any particular security and also that he recognized a shift in momentum before the rest of the market. He was able to do that by closely managing his capital allocation based on inflation and growth indicators.
James Simons
Birth Place: Newton, Massachusetts, United States.
Birth Year: 1938.
Net Worth: 14 Billion USD (2015)
Most famous for:
Simons is an American mathematician, hedge fund manager, and philanthropist. He is a code breaker and studies pattern recognition. In 2006, Simons was named Financial Engineer of the Year by the International Association of Financial Engineers. In 2007, he was estimated to have personally earned $2.8 billion, $1.7 billion in 2006, $1.5 billion in 2005, (the largest compensation among hedge fund managers that year) and $670 million in 2004.
How did Simons start:
Simons received a Bachelor of Science in mathematics from the Massachusetts Institute of Technology in 1958 and a Ph.D., also in mathematics, from the University of California, Berkeley, under supervision of Bertram Kostant in 1961, at the age of 23.
In 1982, Simons founded Renaissance Technologies, a private hedge fund investment company based in New York with over $25 billion under management. For more than two decades, Simons' Renaissance Technologies' hedge funds, which trade in markets around the world, have employed mathematical models to analyze and execute trades, many automated. Renaissance uses computer-based models to predict price changes in financial instruments. These models are based on analyzing as much data as can be gathered, then looking for non-random movements to make predictions.
Renaissance employs specialists with non-financial backgrounds, including mathematicians, physicists, signal processing experts and statisticians. The firm's latest fund is the Renaissance Institutional Equities Fund (RIEF). RIEF has historically trailed the firm's better-known Medallion fund, a separate fund that only contains the personal money of the firm's executives.
Simons retired at the end of 2009 as CEO of one of the world's most successful hedge fund companies.
Simons style of investing:
For more than twenty years, Simons' Renaissance Technologies hedge fund, which trades in markets around the world, has employed complex mathematical models to analyze and execute trades, many of them automated. Renaissance uses computer-based models to predict price changes in easily traded financial instruments. These models are based on analyzing as much data as can be gathered, then looking for non-random movements to make predictions. Some also attribute Renaissance performance to employing financial signal processing techniques such as pattern recognition. The Quants describes the hiring of speech recognition experts, many from IBM, including the current leaders of the firm.
Renaissance employs staff with non-financial backgrounds, including mathematicians, physicists, astrophysicists and statisticians. About a third of the 275 employees at the East Setauket office have Ph.Ds.
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