If I could give you only 2 tips on investing it would be: invest in quality and over the long term.
Now, what is quality? What is long-term? In today’s day and age, we are overloaded with information but where to get the correct information so that you can build your portfolio? The biggest buildings in the world take the longest to build their base.
Why? Because the bigger the building the better prepared the base needs to be. That’s what we want for our portfolio. Build to last and to reach its full potential. You must have so many questions: tips on investing, investing money tips, investing tips, tips for investing. Investing, investing, investing.
In this post, that’s what will provide you young padawan, with the perfect tips on investing that you could ever imagine, just keep reading and you will see!
I know you already saw this picture when we started the post, but look at how long Warren Buffett is on the market… 60 years!
Learn From The 1%.
When you have a problem with your car, you don’t ask your friend or neighbor how could you fix it. You go to an expert and you pay for their help.
Investing is even nicer because there are multiple people that have amazing track records, been followed for years and years, and you can copy their fundamentals. Give a man a fish, you feed him for a day. Teach a man to fish, you feed him for a lifetime.
Who Could Give Us Investing Tips?
To teach I researched for 100s of hours and found the dream team. I will give you their Top 5 positions and their investing philosophy.
Terry Smith, the founder of Fundsmith, is considered one of the best-quality investors in the world. Since the launch of the fund in 2010, it has compounded at a remarkable CAGR of 15.6%.
Smith’s investment philosophy is straightforward: buy good companies, don’t overpay, and do nothing.
Top 5 holdings of Terry Smith:
- Microsoft (8.9%)
- Novo Nordisk (6.3%)
- L’Oréal (5.8%)
- Philip Morris (5.7%)
- LVMH (5.1%)
Often referred to as the Chinese Warren Buffett, Li Lu’s investment strategy is to find undervalued securities and invest heavily in them. Since 1998, Li Lu has returned an average of around 30% per year to shareholders with his investment vehicle Himalaya Capital Management.
Top 5 holdings of Li Lu in the United States:
- Micron (29.8%)
- Alphabet (25.6%)
- Bank of America (25.1%)
- Berkshire Hathaway (14.4%)
- Apple (5.1%)
Howard Marks, the founder of Oaktree Capital Management, is the world’s largest investor in distressed securities. His book “The Memo” is a must-read for every investor, and Warren Buffett has mentioned multiple times that he drops everything he’s doing when Marks publishes a new letter.
Top 5 holdings of Howard Marks:
- Torm PLC (20.3%)
- Chesapeake Energy (10.8%)
- Vistra (7.8%)
- Star Bulk Carriers (6.6%)
- Sitio Royalties (4.9%)
Bill Ackman is an activist investor who looks for large companies with great potential but financial difficulties, which he tries to solve. Over the past 18 years, Ackman has generated an annualized return of 17.1%, compared to 10.2% for the S&P 500.
Top 5 holdings of Bill Ackman:
- Lowe’s (23.5%)
- Restaurant Brands International (17.8%)
- Chipotle (17.5%)
- Hilton Worldwide (14.4%)
- Howard Hughes Corp (13.8%)
And Of Course… Warren Buffet
The king of value investing does not need an introduction. The oracle of Omaha Managed to compound Berkshire by 20% per year since 1965!
That would turn $100.000 into $8 billion (!) today.
Top 5 positions of Berkshire Hathaway:
- Apple (38.9%)
- Bank of America (11.2%)
- Chevron (9.8%)
- Coca-Cola (8.5%)
- American Express (7.5%)
How Can We Replicate Those Results?
You need to invest in Quality companies and have a long-term perspective. Pretty simple right? All we got to do is buy good companies and wait. Buying, waiting, and quality are the 3 best tips for investing that you can possibly get, and the numbers that I showed do not lie. They will win long term and patience will reward you.
What is Quality and Long Term?
Now that we know what we need how to find it? Well, quality is profitability, safety, and quality of earnings. You can learn more about quality in here. Forbes also made a nice article about it. Read Forbes here.
Now the long term is basically a far enough vision. Will they be around in 10 years? 20? 30? Warren Buffet started Berkshire in 1965! And he is still around. That shows you true long-term.
What we learned today is that anyone can become a great investor and achieve numbers of returns beyond what we could possibly imagine. Now those returns don’t come easy. When you are 50% down but still trusting your thesis and the long-term life will be easy. I am telling you because even Mr. Buffet had a couple of huge losses in the short term. It takes a lot of strength to focus on what is tangible and not look at your neighbor’s grass.
Before You Go
I would really recommend you to read the Wealth Manager post, this will show you one of the best ways of earning income, and as you know 10% return on $1 Million is better than 100% return on $10,000. This will show you how much they make, and how they grow their income year after year! Click here.