5 famous investors of the world and their trading strategies

Have you always wondered what trading strategies the world’s famous investors like Benjamin Graham, Warren Buffet, John Templeton, Peter Lynch and Rakesh Jhunjhunwala recommend? Find out Now!

Sep 18, 2020 07:09 IST India Infoline News Service

With respect to stock trading, there’s no one size-fits-all approach. Each investor is likely to have a different trading strategy of their own. Some have even come up with new and innovative trading strategies, which they’ve then used to beat the market. Over the many years of the stock market’s existence, there have been plenty of investors who became famous for their out-of-the-box and innovative trading strategies. Let’s take a look at 5 such investors and the strategies that they champion.

Benjamin Graham
Benjamin Graham was a well-known and recognized figure in the stock market industry. Many refer to Benjamin Graham as the ‘father of value investing,’ for he was the one who introduced the concept to the world. Value investing was the trading strategy that he employed throughout his life.

According to this style of trading, an investor should ideally focus on fundamental analysis and actively seek companies with strong financials. By effectively utilizing value investing, an investor can accurately gauge the future prospects of the company. Since the strategy involves analyzing a company thoroughly before investing in it, it minimizes most risk factors and allows you to invest safely.

John Templeton
John Templeton was an American-British investor who was the mind behind the creation of the famous Templeton Growth Fund. The contrarian investing approach was one of the main trading strategies that he used for stock trading. In fact, he was quite well-known for his contrarian beliefs and activities.

The contrarian investing strategy requires an investor to go against the prevailing trend. For instance, if the market is trending downwards, an investor who adopts a contrarian approach would buy stocks instead of selling them. And once the investor buys the stocks, he would then be required to hold onto them for a few months or years and then sell them when they’re on a high. 

Peter Lynch
Peter Lynch is a famous American investor who is renowned for beating the S&P 500 Index for around 11 years. He employed a wide range of trading strategies. The two main basic strategies that he employed all throughout his career were as follows.

1. Pick up stocks that you understand: According to this strategy, an investor should invest in a company only if he is able to understand its core business. This way, the investor would be able to accurately analyze where the company stands and what the future growth prospects are.

2. Always do your research: Research is an important part of the trading and investment process. Irrespective of how attractive a company looks on the outside, an investor should always do adequate and in-depth research into the financials and other aspects of a company before investing in it.    

Warren Buffet
Warren Buffet is arguably the most famous, influential, and recognizable investors in the world. Through his company Berkshire Hathaway, Buffet has invested in many companies which have gone on to become multi-billion dollar corporations. One of the many trading strategies he champions involves investing in equity index funds.

According to this strategy, an investor stands to gain in the long-run by investing in mutual funds that closely track the broad market indices. This way, the investor enjoys a portfolio with diversified risk, thereby increasing the chances of earning profits.

Rakesh Jhunjhunwala
Fondly known as the “Warren Buffet of India”, Rakesh Jhunjhunwala is a prolific Indian investor who is currently the nation’s 48th richest person. The main trading strategy that Rakesh Jhunjhunwala employs when picking up a stake in a company is the ‘buy and hold’ approach.

As per this approach, an investor buys a stock and holds it with a long-term view. This approach is a more passive form of investment and doesn’t require the investor to constantly check the performance of his portfolio. Since the stock is held with a long-term view, the price movements and volatility that the share experiences in the short-term would not be much of a concern to the investor.

Conclusion
As you’ve already read before, not every trading strategy works for everybody. While these approaches might have worked for these famous investors, it might not guarantee results. Therefore, it is highly important to conduct a thorough analysis on the various trading strategies to determine the one that fits your needs and requirements. To safeguard your investment capital, it is always a good idea to backtest your stock trading strategies before actually implementing it.  

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