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Follow a Super Investor Like This to Multiply Your Wealth

Jan 4, 2019

Radhika Pandit, Research Analyst

There is one common factor that binds super investors across the world - Warren Buffett, Charlie Munger, Peter Lynch - all of them have built enormous wealth for themselves since they began investing.

Who would not want to be like them?

Who would not want to emulate their success?

Clearly, there is a secret to their success.

It is a secret formula that everyone would like to know.

So, what is it?

What differentiates these investors from the rest?

First, they all follow a disciplined approach to investing.

That means they have developed a well-defined investing strategies they are comfortable with...

...and importantly, they have the wherewithal to stick to their strategies even when market forces moves against them.

Now there are many ways to make money in the market.

Different super investors follow different strategies but...

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The key is to find a strategy keeping in mind the amount of risk you can tolerate as well as your knowledge and experience (i.e. your circle of competence).

Also, do not abandon your strategy at the first hint of trouble, especially if you have done your homework. This is critical.

Take the biggest super investor of them all - Warren Buffett - and his company Berkshire Hathaway.

By investing in the stocks of companies such as Coca Cola, American Express, Wells Fargo, to name a few, Berkshire Hathaway's book value has grown at 19.1% on a compounded annual basis.

This is for the period 1965-2017 - 52 years.

By contrast, the S&P 500 (even with dividends included) has lagged behind with compounded annual gains of 10% during the same period.

Buffett's success is a result of the classic principles of value investing - strong businesses, quality managements, and reasonable valuations.

And he has patiently stuck to this is strategy all these years amidst all the upheavals.

Indeed, an investor who would have put Rs 10,000 into Berkshire shares in 1965 would have seen it grow to Rs 90 million in 2017.

Identifying a super investor and following his strategy does yield results. But it does not mean you should follow them blindly. You need to do your own homework too.

Warren Buffett releases his famous letters to his shareholders every year. These are an integral part of the Berkshire Hathaway annual report. It is where you will most find his snippets of wisdom of investing.

But all super investors may not necessarily be that communicative. You need to have your own thought process while picking stocks.

For instance, Sarvajeet and I track a list of 40 super investors in India. These are literally, the best equity investors of our country.

We keep an eye out for any bulk or block deals they may have entered or if they have increased their stake in any company.

But we do not tell our subscribers to blindly invest in these stocks.

We do our own in-depth analysis and filter out stocks using our proprietary Equitymaster Smart Money ScoreTM.

This gives us a highly curated list of the best quality stocks in the market that the smart money is betting on.

Then we wait patiently for these stocks to enter the buy zone.

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When that happens, we promptly recommend them in Smart Money Secrets. Subscribers can see the full list of recommended stocks here.

It goes without saying that super investors will always have that extra appeal which fascinates us all.

Even if you don't necessarily invest in the same stocks they do, you can apply their strategies to create your own portfolio and build wealth for yourself.

Sarvajeet and I can show you how to do just that...

Chart of the Day

Speaking of Buffett and his value investing principles, we have a service built around this style of investing - ValuePro.

I was the Editor of ValuePro some years ago, which is now led by my colleague Tanushree Banerjee.

I wrote to you last week about some of my successful recommendations - Rallis India (gains of 328.4% in 8 years), Container Corp (gains of 180.5% in 3 years and 2 months) to name a couple.

Here is one more - HDFC Bank - I recommended in 2012 and going great guns even now.

It is a stock that Buffett would certainly have bought were he to invest in India.

HDFC Bank Still Going Strong

For the latest update of this stock, and others like it, you can sign up for ValuePro here.

Warm regards,

Radhika Pandit
Radhika Pandit (Research Analyst)
Co-Editor, Smart Money Secrets

PS: Radhika Pandit and Sarvajeet Bodas, co-editors of Smart Money Secrets, are finalising their next stock recommendation. Subscribers can expect the full report on this company later this month. If you haven't subscribed to Smart Money Secrets yet... you can do so here.

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1 Responses to "Follow a Super Investor Like This to Multiply Your Wealth"

BISWANATH DEY

Jan 4, 2019

Buffett runs a concentrated portfolio. Not like one stock every month. So there should not be any comparison.

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