How does Warren Buffett, Peter Lynch and George Soros invest
Warren Buffett is not a new name in the field of investment. He is globally known as an investment guruand a top investor till date. Same goes for peter Lynch and George Soros. Peter Lynch as well as warren. Buffet has written books regarding investment strategies and ideas to help new entrepreneurs in the field of investment. With that being said, let’s look at the investing style of Warren Buffet and others.
Like any other strategies, Buffett strategy looks simple but simple always is not easy; Buffet’s way is viewed in a traditional way which is being open to adaptation. Normal investors may need a specific devotion to the formula but successful investors are willing to adapt their mental models to the present environment. Buffett limits himself in his circle of competence, only in the business he can understand and analyze.
He analyzes the business, not the market and he looks at the operating history and uses the data to analyze if the company has long term prospects, amount of risk and return involved. Buffett focuses on return on equity than on earnings per share and prefers low leverage companies and also looks at the profit margins. He closely looks at the cashflow statements of the business he is going to invest and takes decision accordingly.
In terms of Peter Lynch, he suggests not to invest in bonds as they are the most inferior form of investment. He also says not to invest in the business which you have no idea of. Not all the common stocks are actually common; you never know what may happen in the future. People search for different shares with high potential but the reality may be that it may be the share that they already own. This may sound awkward but he also suggests his investor to invest in the company which has least color photographs in its annual report, since they are not wasting their money uselessly.
George Soros follows the rule of reflexivity, which is a set of ideas that seeks to explain how a normal feedback mechanism can tilt how investors value assets in the market. He also applies the scientific methods for his financial strategies. His first step in deciding what to trade depends upon what he believes is going to happen. He mostly relies on hints and intuition.