'Great' Investors

I'm doing a 3 week summer program at Columbia University. We have watched a few videos which provide an insight into the investment principles of some of the world's most respected investors. I am attaching the videos of the first two, and my thoughts...

1. Warren Buffett - The Oracle of Omaha.

Have a concentrated portfolio, and only invest in businesses you understand. Buffett says that investing is a very advantageous game, because you don’t need to hit each ball; instead you can wait for a ball to come into your sweet spot.

2. George Soros.

I agree with his thought process that when you think you are right, you should bet big. Overall, however, I disagree with Soros’ philosophy as presented by this video, because he was willing to take on a large amount of leverage, and essentially ‘bet the ranch’. This seems to ignore the fact that leverage magnifies both upside and downside. Soros’ risk-tolerance appears to be bigger than mine! 

3. Ray Dalio. (Unable to find exact video)
In order to make money you have to have a different view to that of the consensus AND be right. When you take on such a contrarian point of view, there is a high risk of being wrong. In order to reduce this risk, you have to stress-test your investment thesis. At Bridgewater this is achieved through discussion. In Dalio's opinion, you learn more this way. Overall, I agree with Dalio that it is important to engage in debates with smart people, who a different point of view, and that we have to learn to love mistakes.

4. Paul Tudor Jones. (Unable to find exact video)

• FOCUS ON THE DOWNSIDE: If you spend 90% of your time figuring out how much you can lose, and how you might come to lose it, you are unlikely to lose a lot of money in the long run. In investing, though, you still have to be willing to catch a falling knife.
• It's good to have some hard boundaries at which you will almost certainly exit a position.
• A CONFIRMATION for me: As traders you are trying to predict what’s going to happen on the market in the next five minutes. I do not think anyone is good enough to do that.

5. Guest Speaker: 

• "There are no good or bad assets, only good or bad prices." This statement is true. However, if you want to invest in companies which you will never sell, you also have to focus on the fundamentals of the business. That being said, anything is a good investment at a low enough price.
• "Spend 99% of the time thinking about what you don't know, and other risks." This statement essentially tells you to be humble and risk-aware. However, to invest, one must be an optimist.
• "When the facts change, you must change; new information may well change your thesis, or significantly impact a business' fundamentals." This essentially is something to be aware of, so that you change your thesis when there is a significant change. On the flip-side, however, letting one insignificant thing completely change your view would also be a bad thing.

6. Howard Marks.

• We pay a high price for certainty. At a time of certainty and confidence, a value investor should be uncomfortable; you will find better bargains in uncertain times.
• It takes an insight to feel better when the share price of a company goes down temporarily.
• Companies which will endure, but most importantly, which are selling below their worth.
• Look for things people think are improper(e.g. Junk bonds); you are likely to make more money here.
• Emotional Control; be cautious, conservative, risk-averse and stick to your strategy even when you are tempted to deviate from it.

7. Peter Lynch.

• Invest in an industry which you know a lot about; Buy ONLY what you know and understand.
• Buying just because it has fallen is stupid; you can’t call the bottom. Relatively low [prices] doesn’t mean low [prices]. So, you do NOT have to react just because there has been a correction.
• When things look high - and there is too much confidence - that’s when it MAY turn.
• You must be patient and take a long-term view, to make money in this business.

8. Stanley Drucken Miller.

• Put your eggs in a few baskets and monitor it carefully; don’t diversify.
• Think out of the box; the present is already priced into the market valuation.
• The obvious is obviously wrong.
• Think about status quo. Why is this going to change? What will this mean?