- Posted by: Brighter Mind
- Category: Value Investing
Investment is the primary source of creating wealth. Many successful investors have known this fact in their early stages of life and have created fortune for themselves. In this article, we present you case studies of some successful investors and how they fetched maximum out of their investments.
- Warren Buffet
Warren Edward Buffet is a billionaire and a well-known value investor. He is one of the most eminent investor and is an example of how value investing principle works for you. He is the great follower of Benjamin Graham and a long term investor. He strictly follow the idea that the investor should look at the market as the actual entity and the opportunity to become the business owner of the company. This means just as the owner has the faith and confidence in his company, the share-holder being a partial owner should have faith in the company.
According to Buffet, he invests in the stocks that were selling at an extreme discount to its real value, referred by him as intrinsic value. Also, when he does the investment, his intention is to hold the stock for indefinite period of time.
His investing journey was full of thrill and adventure and cannot be summarised in few words. But let’s take one example of one of his investments. He invested $13 million in American Express shares at $35/share in 1963 when the fraud case was investigated against the company. In 1967, its shares hit all-time high of $180 making $20 million in profits for Warren Buffet.
According to him, you should invest in the stocks only if you can hold it for at-least 10 years.
To summarise the learning from his journey is that no matter what the global or internal events are, if we are invested in the quality stock with best management, we will get good returns on the investments. For this, we should be patient and should look for the longer investment horizon.
- Rakesh Jhunjhunwala
He is also known as the big bull of Indian stock market. Everyone knows his success and his journey from Rs.5,000 to Rs.19000 Crore. He always believed in Indian economy and have stood with it no matter what the economic turmoil may be. For him, the focus was always the longer term and he ignored the short term events in his investing journey.
Mr. Jhunjhunwala always said that look at the broader picture. Indian economy is the great emerging economy and will always grow in the future. He always relates his investments with cricket, meaning his investments are like test match rather than trading which is ODI or T-20. He is extremely bullish for Indian stock market and passionate about his investments.
An example from his investing journey – In the year 2002-03, he invested in Titan Company at the price of Rs.3/share and held around 8.45% stake of the company. Today it is trading at Rs.1500 and he still has the holding of the company. This has generated enormous wealth. But at the same time, you can see that he has been holding the shares of Titan for about 18 years.
This shows how patient he is on his investments. For him, there are five factors which powers his investment philosophy – capital, vision, patience, knowledge and right decision.
According to him, “markets are about money, but markets are also about knowledge. Markets are also about egos, markets are also about the satisfaction of having been proved right. It is right, especially when that is from an original thought and not from a guided source or following somebody.”
The greatest learning from Rakesh Jhunjhunwala’s investing journey is that you should focus on the long run and create value. You should buy right stocks and hold your nerves and have confidence for good returns. You should always trust your instincts and the study and never fall prey for short term volatility.
He says markets will be volatile; it’s its nature to be volatile. If the market will not be volatile, no one will make money and there will be no thrill. You cannot stop markets from being volatile. Instead what you can do is invest and sit tightly for long term and look the bigger picture ignoring short term volatility. No matter what, markets will go up.
- Radhakishan Damani
Investing saga and the close friend and mentor of ace investor Rakesh Jhunjhunwala, is a very successful value investor. RK Damani, started his investment journey as a stock broker and use to observe the stock market in order to gain an understanding. During his early stages, he learned a lot about value investing and started investing his money in stock market.
With value investing principle, he made some successful investments like VST Industries, Sundaram Finance and Blue Dart which not only made him the billionaire but also the most successful investor in the history of Indian stock market.
His strategy was to invest in the quality stocks at discounted price and holding them for long term. He believed in investing in the stocks that haven’t been overpriced and have good earning potential. Some few principles he explains, which he learnt in his investing journey are, having long term view, having a mentor, keeping patience, buying fundamentally strong stocks, good portfolio diversification and rebalancing the portfolio on timely basis.
There have been many successful and legendary investors across the globe who had different kind of impact in the investing world. But all of them have some key things in common. They are – invest in good stocks for long term, keep patience and let power of compounding create wealth for you.