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Investment philosophies : successful strategies and the investors who made them work
Who wants to be an average investor? We all dream of beating the market
and being super investors, and we spend an inordinate amount of time
and resources in this endeavor. Consequently, we are easy prey for the magic
bullets and the secret formulas offered by salespeople pushing their wares.
In spite of our best efforts, though, most of us fail in our attempts to be
more than average. Nonetheless, we keep trying, hoping that we can be
more like the investing legends—another Warren Buffett, George Soros, or
Peter Lynch. We read the words written by and about successful investors,
hoping to find in them the key to their stock-picking abilities, so that we can
replicate them and become like them.
In our search, though, we are whipsawed by contradictions and anomalies.
On one corner of the investment town square stands an adviser, yelling
to us to buy businesses with solid cash flows and liquid assets because that’s
what worked for Buffett. On another corner, another investment expert
cautions us that this approach worked only in the old world, and that in the
new world of technology we have to bet on companies with great growth
prospects. On yet another corner stands a silver-tongued salesperson with
vivid charts who presents you with evidence of the charts’ capacity to get
you in and out of markets at exactly the right times. It is not surprising that
facing this cacophony of claims and counterclaims we end up more confused
than ever.
In this chapter, we present the argument that to be successful with any
investment strategy, you have to begin with an investment philosophy that is
consistent at its core and matches not only the markets you choose to invest
in but your individual characteristics. In other words, the key to success in
investing may lie not in knowing what makes others successful but in finding
out more about yourself.
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