Both individuals and institutions want to achieve successful long-term investing, but often there are many investors who have difficulty getting started because they lack the relevant theoretical foundation. But in fact the key element for successful long-term investing is to have a correct investment philosophy that fits your needs and realities. Therefore, this article introduces the investment philosophy of experts, hoping to give some inspiration to begin investing and lay the foundation for people to build their own investment philosophy.
The investment gurus with the highest long-term returns in history all have their own unique and special investment philosophy. There is no one absolutely correct investment philosophy, and each investment guru has come up with a set of investment philosophy that can yield good returns in the long run by combining a lot of theory and practice. Therefore, the following is an introduction to the basic investment philosophy of some of the world's most famous investment gurus.
(1) Value-based investment philosophy
The representative of value-based investment philosophy is Benjamin Graham and his disciple Warren E. Buffett, of which Benjamin Graham is the founder of the value-based investment philosophy, which focuses on selecting assets that are undervalued and companies that can return their capital in a short period of time. Warren E. Buffett is the person who carried this investment philosophy forward. Many of the companies he invests in will be more profitable, and Warren E. Buffett will patiently wait for the opportunity to buy a lot of these companies when they appear to be undervalued by the market. In addition, Warren E. Buffett has many other investment concepts that deserve further study.
(2) Balanced-based investment philosophy
Peter Lynch is the representative of balanced investment philosophy, which focuses on both valuation and growth, and chooses companies that are not too extreme in both. Usually the performance in a given year is not usually very good, but in fact, this style of company, easy to invest in the long term, to earn the most profit. Because simply buying low valuations may buy companies with no long-term growth prospects, or even regression, while buying high growth, but buying expensive, will also greatly increase the risk. It was Peter Lynch's application of this investment philosophy that allowed him to generate an annualized return of up to 29% during his 13 years as a fund manager.
(3) Investment philosophy based on index funds
The investment philosophy of investing mainly in index funds was introduced by John C. Bogle, who is known as the father of index funds. Index-based funds are funds that operate according to the weighting of the constituent stocks of the selected index (e.g., the U.S. Standard & Poor's 500 Index, Japan's Nikkei 225 Index, Taiwan's weighted stock price index, etc.) in the index, and choose the same asset allocation pattern to invest in order to obtain profits in sync with the broad market. Compared to other investment methods, purchasing an index requires relatively low operational skills and can effectively reduce costs, and index funds can reduce and prevent risks through diversification, making it a more stable investment method in the long run.
In general, different investment concepts each have their own unique characteristics. Building your own investment philosophy based on your own reality and referring to the methods of investment gurus is an important way to profit.
