Follow by Example: Learn from Experienced Investors

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There is no set method as to how one should invest. However, based on the recent decline in market prices, why not take a page out of the more experienced investors book?

What would they do in this situation?

Investors such as Ben Graham, Peter Lynch and Warren Buffett have been around for a while. They have experienced market crashes before but have also made significant wealth from investing.

The Conservative Investor

Ben Graham made his investment decisions mostly on the financial analysis of stocks. Graham focused on safe investments and was not much of a risk taker. He preferred to invest in stocks when the market price is below the company valuation to gain significantly if the market price should increase but in the case where the prices fell there would be some cushion for the stock.

The Aggressive Investor

Peter Lynch, on the other hand, is the complete opposite. His investment decisions are based on market sentiment. Additionally, he was a long-term investor and was not bothered by market corrections.

Lynch lived by several investment principles, namely:

(a)    Be aware of the stocks in your portfolio

(b)   Do not predict interest rates or the economy

(c)   Give yourself time to realise which companies are exceptional and which are not

(d)   Identify and purchase stocks where the company’s management is strong

(e)   Adapt to changes and do not make the same mistake twice

(f)    Know why you hold, sell or buy a stock

The Moderate Investor

With a net worth of US$89 billion over a career spanning over 70 years, Warren Buffett is one of the most respected and well-known investor in the US. Buffett prefers to invest in stocks with moats. Meaning the company’s ability to stay ahead of its competitors to continue making profits and increasing market shares. Buffett describes events in the market such as market correction as a positive for investors as it is a perfect opportunity to stock pick and takes advantage of low stock prices.

Which one are you?

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

If you want to start investing with SSL but don’t have the time to monitor the market or to conduct the trades yourself then you can choose one of SSL’s managed Financial Planning products. We offer a variety of products for every type of investor and if you are interested in managing online trades yourself and having complete control over your investment portfolio then you can try SSL’s Brokerage account.

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