All Time Great Investors and their Investment Strategies
Keeping money in your savings accounts will not do you any good. Inflation is more than enough to drain out your wealth at the time of depression! Buckle up, to bring out the Harshad Mehta in you and get ready to invest zestfully, as we, The Blue Chip – Finance and Investment Cell of SVC present you the all-time great investors with their investment strategies!!!
ALL TIME GREAT INVESTORS - RAKESH JHUNJHUNWALA
On our list, the first great investor is Mr. Rakesh Jhunjhunwala. If you are a stock market enthusiast, the likelihood of you not knowing who Rakesh Jhunjhunwala is as slim as a Bollywood buff not knowing who King Khan is. He is an Indian business magnate, Big Bull of Dalal Street, and a Chartered Accountant by profession. He manages his portfolio on his own as a partner in his firm, Rare Enterprises, and was once the Commissioner of Income Tax in Mumbai.
Investment Policy of Rakesh Jhunjhunwala
Being one of the richest persons in India, here are his investment policies which are as follows:
Buy right and hold tight: He asks investors to invest in a company if its revenue model has growth potential and can sail through the harsh trends. He believes in holding for the long term.
Knowledge: Knowledge goes down a long lane and is never bad to have more. The stock market is a very fancy yet cruel place as there is no second chance if things go south. Educate yourself about the workings of the stock market. Read as much as you can, there is no dearth of resources to quell your queries. Having knowledge of the industry and company is the key to become a successful investor.
Patience: You can’t become a Big Bull within a day or two. t takes years of research, perseverance, and enthusiasm. You have to be patient because if your rationale behind the investment is sound and logical, you will make a profit sooner or later.
Jhunjhunwala endorses this very simple yet very helpful rule,” the trend is your friend”.
ALL TIME GREAT INVESTORS - RAY DALIO
The next great investor on our list is the author of the best-selling books of the New York Times, Principles: Life & Work, he was the co-chief investment officer of the world’s largest hedge fund, Bridgewater Associates! He is one of the American Billionaire investors and a hedge fund manager. A believer in capitalism and one of the greatest innovators in the finance world, having popularized many commonly used practices, such as risk parity, currency overlay, portable alpha, and global inflation-indexed bond management.
Investment Policy of Ray Dalio
Dalio divided his policies into two segments: beta investments and alpha investments. He uses the help of computer models and algorithms in predicting macro-economic trends of various markets which included stocks, bonds, commodities, and currencies. Though it's a common practice now, however, he was the first one to use this. He has explained his concept of the ‘economic machine’ to explain the foundation of alpha investments. The beta investments are more balanced, investing in different asset classes depending on the economic environment but the idea is that they can survive in any environment. Beta investments produce returns through passive management and normal market risk. Dalio's risk parity approach allows for both leverage and external diversification when investing, as well as short selling. This allows Dalio to use any asset combination he chooses when investing. Dalio's strategy uses an optimal risk target level as its basis for investing. Dalio's exact investment portfolios are largely kept a secret from the outside world. This includes most employees as well as external investors, and only a dozen people within his firm understand how it trades at a given time. In simple words, Dalio asks us to question ourselves as beginners to:
Decide how much you can sock away
Create a diversified portfolio: Breakdown for what a well-diversified portfolio might look like, according to him, 30 percent is allocated to stocks, 40 percent to long-term U.S. bonds, 15 percent to intermediate U.S. bonds, 7.5 percent to gold, and 7.5 percent to other commodities.
Learn the markets long term cycles: It's crucial to understand the historical patterns of the economy and the stock market.
By understanding historical patterns, investors can avoid missing out on opportunities; these trends are the Holy Grail to start investing in the stock market. Just stick to your decisions based on fundamentals rather than market noise or short-sightedness. Trading in the stock market is the art to know how to buy when everyone else wants to sell, and how to sell when everyone else wants to buy.