Learning Investment Law from 5 of the Greatest Investors – Buffett, Soros, Thiel and others
Let’s introduce the greatest investors who have carved their names into investment history: Warren Buffett, who turned Berkshire Hathaway into the world’s largest shareholding company, George Soros who fearlessly challenged and triumphed over the central bank of England and Peter Thiel, who allows one to experience the tides of new investment trends. What is interesting is that each of their investment styles can be seen as reflections of their childhood and disposition.
Perhaps the most common trait among these five great investors is the confidence they have in their own judgment. They also share positive character traits and believe that failures are learning experiences for future investments rather than fearing their past mistakes.
Warren Buffett (USA) – The “Oracle of Omaha” who bought his first share at the age of 11
Warren Buffett, also known as the “Oracle of Omaha”, is still highly regarded around the world as one of the “greatest investors ever”, even at the age of 87.
Buffett had a talent for making money even in his childhood. His father, who operated a stock brokerage firm, influenced him and he bought his first share at the early age of 11. After studying investment at Columbia University’s Business School, he joined Graham-Newman, an asset management company operated by Benjamin Graham, another great investor who has stamped his name in the history annals of investment.
The company dissolved after Graham’s retirement and Buffet returned to his hometown of Omaha. There, he bought the stock of a textile industry Berkshire that was being sold and became the majority shareholder. The rest is history – Berkshire Hathaway has prospered significantly and now Mr. Buffett’s net worth is $85.1 billion (Forbes magazine December 20, 2017 data). He is a high-ranking regular of the “world’s richest people” list.
Many investors respect Buffett not only for his achievements as an investor, but also due to his down to earth personality. He prefers to lead a simple life, his favorite food being a meal from McDonald’s and Coca-Cola. He also lives in the same house he purchased 40 years ago.
His personality is also reflected in his investment style. Instead of simply investing in short-term stocks, he practices making long term investments to obtain value from shares while acquiring other companies. His strategy involves using his skills to rebuild the management of the companies he has purchased.
At the time of the pre-financial crisis, he saved companies like the Bank of America, Goldman Sachs, and General Electric by repeatedly investing more than $25 billion into them during their most difficult times. Making these investments and being the “last person to lend” and bail out these companies later became a huge profit for him.
George Soros (USA) – The man who broke the bank of England and finds profits in market distortion
George Soros stands in line with Buffet as one of the great investors. He is the Chairman and founder of Soros Fund Management and funds his philanthropic agency, Open Society Foundations. Soros remains very active socially and in the investment world at the age of 87.
Soros is a Jewish Hungarian-American who was accepted into the London School of Economics. However, he could not find an entry job in his desired field of finance, and began selling jewelry while living an ordinary life after graduating.
However, moving to the USA marked a turning point in his life when he launched the Quantum fund with Jim Rogers. It later became the world’s largest hedge fund. In 1992, he made profits of more than $1 billion by heavy shorting the pound and became a legend in investment history.
Soros was able to do this by judging that the pound’s link to the European currencies was overrated. He short sold the pound through the Quantum Fund while the Bank of England competed by buying the pound. However the momentum gained from the selling of the pound could not be stopped and ultimately, the Bank of England was forced to withdraw from the ERM (the European exchange rate mechanism – a transition period during introduction of the euro, with a principle currency fluctuation of 2.25% among member countries).
Soros has said that his investments are based on “recursion theory”. He is famous for saying that the “market is always wrong”. To paraphrase him roughly, “due to the differences of human interpretations of social events, misunderstandings and conceits tend to occur “.
As can be seen from his short selling of the pound, Soros found distortions in the world market and is highly skilled at profiting from short-term investment probabilities. His current net worth is $8 billion.
Jim Rogers (USA) – “The investor who worked harder than any other” with a mind for details
Jim Rogers built a hedge fund with Soros that made history. He is a super elite investor who graduated from Yale and Oxford Universities. He has said that he had little investment knowledge until he began working at Wall Street.
In addition to the establishment of the Quantum Fund, he also launched the Rogers International Commodity Index (RICI) in 1989. He has currently moved from New York to Singapore and is the chairman of Rogers Holdings and Beeland Interests. His current net assets amount to $3 billion (data from Richest, December 2017).
Rogers worked at Wall Street as an analyst apprentice and was also a pioneer of “global macro”. Global macro is a hedge fund operation method that investigates and analyzes things like monetary policies, social situations and the macroeconomics of each country or region carefully in order to make global investments with flexibility. This is how Rogers became successful with the original investment method of “buying stocks with the potential to increase when they are low, and selling them when an opportunity arises.”
Despite his amazing intellect he seems to have a very humble character. When asked about the secret of his success, he replied, “As I was not smarter than most people, I was willing to work harder than most.” (From the Financial Times) Mr. Rogers grew up in Alabama in the southern United States. He started a business when he was 5 years old at which he would collect empty soda bottles from the nearby baseball field. It seems that he had started working harder than the average person since childhood.
Carl Icahn (USA) – The Investor who pushed Apple’s stock price up 5% by using Twitter”
Carl Icahn is known for his greedy investment style and has a reputation for being a corporate raider. His self-launched hedge fund, Icahn Enterprises, makes use of its huge capital to acquire the management rights of one company after another.
In 2017 alone he acquired US Precision Auto Care and the Federal Mogul Corporation. He is also famous for actively seeking out management roles for shareholders.
Through its subsidiaries, Icahn Enterprises is able to provide a wide range of services through investment, automobile, mining, gaming and real estate industries and is an energetic company that operates businesses throughout the world.
Until recently, in contrast to Buffett who has said that he “will not touch things he doesn’t know” and is deeply cautious of IT stocks, Icahn acquired shares of Netflix and Yahoo during their early stages.
In 2013 Icahn revealed that he holds a large amount of Apple shares, and tweeted that “because it was undervalued, Tim Cook told me to buy a large share buyback”. As a result of this, the option to trade Apple shares rose significantly, boosting the price by about 5%.
Icahn was in the spotlight not only as an investor, but also during his appointment and resignation as a member of President Trump’s special counsel after the birth of the Trump regime. In November, he was convinced that the stock prices would rise due to the victory of President Trump, and made a $1 billion investment on instinct while leaving the party that won the election.
Peter Lynch (USA) – From golf caddy to company vice president, the “chameleon” who increased assets 700 fold with effective management.
Peter Lynch was a golf caddy who worked his way up to become the vice president of the leading international investment company Fidelity. During the 13-year period from 1977 to 1990, he worked as an analyst managing the Magellan Fund, which recorded an average annual return of 29%. He also raised the fund’s assets from $20 million to $14 billion.
After majoring in psychology, philosophy and history at Boston University, Lynch received an MBA from the Wharton School of Business at the University of Pennsylvania. His investment style has lead to him being referred to as the “chameleon” as it changes based on the circumstances of the moment as well as his own judgment.
However, when it comes to focusing on long-term investments, Lynch’s style is similar to Buffet’s. He has spoken of his investment strategy at conferences and lectures and teaches principles like “know what you own (and why)”, “avoid long shots” and “be flexible and humble, and learn from mistakes” (From Investopedia).
Peter Thiel (USA) – A Contemporary investor who changed the history of payment accounts and money transfers with PayPal
Peter Thiel, a representative of great young investors, is known for having established PayPal, a high achievement that rewrote the history of account settlement and money transfers. He has been attracting the attention of investors from all over the world and has very strong influence in Silicon Valley. As he develops investments in advanced businesses one after another, he possesses a dignified style as a contemporary investor.
After obtaining a Doctorate in Philosophy and Law at Stanford University, he lived a strait-laced life working as a legal clerk and securities attorney. Two years after establishing Theil Capital Management in 1996, with Tesla CEO Elon Musk, together they established PayPal’s predecessor Confinity.
After the sale of PayPal to eBay in 2002, he has established numerous venture companies in a short period of time, including the Clarium Capital hedge fund, the big data analysis service Palantir, the Founders Fund, Valar Ventures, and Mithril Capital. He is also a director at Facebook and a partner of Y combinatory. His vivaciousness may seem frightening at times.
“New technology creates the world”. This is the root of Thiel’s extreme investment style beliefs as an entrepreneur.