Today we will glance at the the investment methods of the richest investors on earth - How they’ve achieved it, and how they continue to do it.
Most of them are self-made, and many of them built their wealth as hedge fund and money managers.
1)Warren Buffett ( net worth $67 billion): Unsurprisingly Buffet is the worlds richest investor and this richest human on the planet. His publicly traded Berkshire Hathaway investing vehicle has an annual average growth rate of 19% since 1965. That makes Buffet’s track record one of the greatest in the history of investments. Buffet a core believer of pure stock picking build his fortune by following ‘Buffetology’, based on Benjamin Graham’s ( his mentor and a pioneer in the world of investing ) principles of value investing.
2) George Soros (net worth $24.9 billion): He is the most successful hedge fund manager of all time with an annualized return rate of around 30% ; when he was running Quantum Fund. Soros made $1 billion profit in a day by betting against the British pound back in 1992. He Basically made his fortune by betting on on global macro trends.
3) Carl Icahn (net worth $17 billion):Ichan like Buffet has one of the greatest investment record. His track record boasts of an average of more than 30% annualized. Icahn is an activist investor who purchases big stakes in a public company with deep undervalued value stocks with the goal of making a major change; and then exists for, many times , huge profits.Icahn made billions over the years by being an activist investor in Netflix and Apple.
4) Ray Dalio (net worth $15.6 billion): Dalio, an asset allocation specialist and the pioneer of “risk-parity investing” manages the largest hedge fund in the world. He has over $ 150 billion in assets under management. Essentially he believes that over time major asset classes rise in value and generate returns that are better than cash, this is because he believes (like Buffet) that with time the world will grow, improve and become a better place to live in. His top major hedge funds - The All Weather Fund and The Pure Alpha Fund receive smooth and consistent returns because Dalio weights asset classes based on volatility
5) James Simons (net worth $15.5 billion): James Simons, the founder of one of the most successful hedge funds- The Renaissance Medallion Fund is the mayor of quantitative investing. Medallion, since inception has returned more than 30% annualized after fees. His fund uses computer models to profit from short-term market inefficiencies.
6) Steve Cohen (net worth $12.7 billion): SAC capital, one of the most famous and efficiently executed hedge fund, was founded by Cohen in 1992, but it was shut down by federal prosecutors more than four years ago. Since then , Cohen runs his own wealth (14 figures) through 72 Asset Management, which is a family office structure. It generated almost a 16% return in 2015.
7) David Tepper (net worth $11.4 billion): Tepper runs Appaloosa Management, an $18 billion hedge fund. He may be the greatest performing investor over his 23- year career. His career record boats of 30% average annualized returns after his management and incentive fees, which is almost 40% annualized returns before fees! Tepper is different from the others because he combines distressed investing with global macro investing. Last year Tepper placed a big bet against the euro and returned 11% net of fees in a down stock market.
These incredible investors also have losses and drawdown on their investments just like any other individual, but what sets them apart from everyone else is their unique traits and beliefs. Influence being one of them. How they achieve that, is, they tend to take very large stakes when buying stocks to then become the largest shareholder in the company. When they do that, they gain control, and with patience they obtain the ability to influence the outcome for their investment. When investing you ought to have an edge to make outsized returns.(i.e. better performance than the general, long-term rising tide of stocks --and major asset classes- give you).
SEC’s public disclosure rule requires them to disclose their stock holdings
By Ankita Markanda
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