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Lessons Learned From the Best Portfolio Managers

November 13, 2019

Hear How They Advise Others to Make Sound Decisions

There are some names that have become synonymous with finance. These are the names of people who are titans of the industry, considered among the smartest and the most revolutionary investors to ever live. Their impact is so significant that every generation of money managers and investment professionals can learn a lot by studying their philosophies, strategies and beliefs.

Portfolio manager meeting with client

Here’s a brief look at four of the best portfolio managers the world has ever known and lessons to be learned from these finance superstars. One message that is clear from studying them is that there is no substitute for sound research.

Benjamin Graham: Invest with a Margin of Safety

If you've ever wondered who mentored famed investment guru Warren Buffett, meet Benjamin Graham. Graham’s legacy goes by many names, but he's often referred to as the "Dean of Wall Street" and the "King of Value Investing." What separated Graham from other value investors was his philosophy that sound investments—those that came without big risk—can still make money over time. Graham helped to pioneer the “margin of safety” investment strategy, which aims to provide high-return opportunities while minimizing risks by buying securities at significant discounts to their intrinsic value. In other words, Graham wanted to buy $1 worth of assets for 50 cents. He made his buys on a solid foundation of research and logic and was very, very successful. His book The Intelligent Investor (1949) remains one of the bestselling books on investing and is still considered a must-read for serious investors.

Sir John Templeton: Seek Out the Best Opportunities in the World 

Anyone who's been knighted for his contributions to investing deserves to be taken seriously. Sir John Templeton made a name for himself by applying “fundamental analysis” to his value-stock selections (versus “technical analysis,” which was favored by many in the industry). Sir John also believed that the only way to succeed as an investor was to do the opposite of what others were doing, which was evident in his pioneering concept to take the old adage “buy low, sell high” and apply it to global investing. In the 1930s, when Templeton began investing globally, there was not as much faith in world markets as there is today. Even still, Sir John’s philosophy helps portfolio managers today seek out the best investment opportunities wherever they can be found.

Peter Lynch: Buy What You Understand

For years, Peter Lynch was the face of Fidelity Investments. During the 1980s and 1990s, he served as the fund manager for Fidelity’s immensely popular Magellan Fund. During this time, the assets in the fund increased from $20 million to $14 billion, and increased at a pace that beat the S&P Index 11 times over 13 years with an average annual return of 29 percent. His most reiterated philosophy is "know what you own." This means never investing in a company without understanding it, and never investing in an idea you can’t easily explain or illustrate. It’s not an earth-shattering concept by any means, but coming from one of the most famous and successful investors in the world, it’s worth putting into practice in your own investment efforts.

T. Rowe Price, Jr.: Invest in Good Companies for the Long Term

The man whose firm bears his own name became famous for growth investing. T. Rowe Price, Jr. believed in long-term investing and, as a businessman, in "selling advice, not securities." His investment philosophy of putting more focus on individual stock-picking for the long term was virtually unheard of at the beginning of his investing career—but by the end, many of his favorite stocks became known as “T. Rowe Price stocks.” Price’s methodology of growth investing in well-managed companies continues to guide portfolio managers to this day.

How can you make your mark?

These famed money managers made names for themselves because they relied on research and analysis. Creighton University’s online Master of Investment Management and Financial Analysis (MIMFA) can give you the quantitative skills necessary to become a practitioner in the world of finance. Contact us to learn more about the program, and be sure to download your free copy of the 2016 Investment Management Career Guide.