Richard Perry

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Investor profile at InvestingByTheBooks: The book The World’s 99 Greatest Investors: The Secret of Success provides a unique opportunity to learn form the most prominent investors globally. In the book they generously share their experiences, advice and insights and we are proud to present these excerpts. Magnus Angenfelt, previously a top ranked sell side analyst and hedge fund manager, will be presenting one investor per month. For those who cannot wait for the monthly columns, we strongly recommend you to buy the book. The investor himself writes the first section below and then Angenfelt describes the background of the investor and comments on his investment philosophy. Enjoy.

Richard Perry’s investment aphorisms:

·       Every investment should be measured on an expected value basis – how much can I make, how much can I lose, and what are the probabilities associated with each outcome.

·       Don’t listen to what people say or write, try to intuit what they mean.

·       Good investors use a combination of brains and gut. To paraphrase Leonardo Da Vinci, one must understand the science of art and the art of science.

·       By the time your analysis is perfected the investment opportunity is probably gone.

·       There are many different investment strategies. Focus on the ones you do best and avoid the ones you do poorly.

·       Value is buying a dollar for 50 cents and having a business plan that turns that 50 cents back into a dollar. Value traps are buying a dollar for 50 cents and a business plan that makes that dollar worth dramatically less than 50 cents.

·       People will behave as they are incented to behave.

·       Translate complex theories into simple statements.

·       Beware of obsolescence.

·       Sales and marketing are critical components of a successful business.

·       Invest like a local.

BORN Los Angeles, USA 1955

EDUCATION Richard Perry has a BA from the University of Pennsylvania’s Wharton School in 1977, and an MBA from New York University’s Stern School of Business in 1980.

CAREER Perry began his career at the options trading desk at the investment bank Goldman Sachs in the mid-1970s. When he left in 1988 to start the hedge fund Perry Capital he was working in equity arbitrage, while lecturing on finance at the Stern School of Business at New York University. He has been CEO of Perry Capital from the start.

INVESTMENT PHILOSOPHY Perry could be described as an event-driven, value-oriented, multi-strategy hedge-fund manager. He controls a number of strategic positions simultaneously, and bases his business model on having several different income streams. One strategy is to seek out companies that have the potential to restructure through acquisitions or disposals, often those in reconstruction after bankruptcy. Another area is investments in distressed loans. However, he also invests in unlisted companies and property, and uses his cash supply to lend money at high returns to investors who are not able to lend from banks. He usually works with a neutral portfolio and with lending. He has called his approach ‘expected value analysis’: it is based on calculating the percentage likelihood of various outcomes and multiplying them by the current bond price, after which he compares the expected value with the current market price to determine whether he should buy or sell. Every now and again he becomes deeply engaged with a particular investment. Recently, he became the principal owner of Barneys New York, a luxury American chain store.

OTHER At present Perry manages $10 billion in assets. For the first 19 years, his hedge fund did not have a single deficit year. Perry was also one of a few on Wall Street to start betting against subprime mortgages as early as 2006. He is the chairman of the board of Barneys New York Inc. and a member of the boards of trustees of Facing History and Ourselves. His mentor at Goldman Sachs was Robert Rubin, US Secretary of the Treasury during the Clinton administration. Perry is an avid collector of pop art and a triathlon runner.

Sources: Richard Perry; Perry Capital.

Ray Dalio

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Investor profile at InvestingByTheBooks: The book The World’s 99 Greatest Investors: The Secret of Success provides a unique opportunity to learn form the most prominent investors globally. In the book they generously share their experiences, advice and insights and we are proud to present these excerpts. Magnus Angenfelt, previously a top ranked sell side analyst and hedge fund manager, will be presenting one investor per month. For those who cannot wait for the monthly columns, we strongly recommend you to buy the book. The investor himself writes the first section below and then Angenfelt describes the background of the investor and comments on his investment philosophy. Enjoy.

While most others seem to believe that mistakes are bad things, I believe mistakes are good things, because I believe that most learning comes via making mistakes and reflecting on them. Blaming bad outcomes on anyone or anything other than oneself is both incorrect and subversive to one’s progress. It is incorrect because bad things come at everyone, and it is your challenge and test to successfully deal with whatever comes at you. Blaming bad outcomes on anyone or anything other than oneself is essentially wishing that reality were different than it is, which is silly. It is also subversive because it diverts one’s attention away from mustering the personal strength and other qualities that are required if one is to produce the best possible outcomes. Remember, Nature is testing you, and it is not sympathetic.

Everyone has weaknesses. The main difference between unsuccessful and successful people is that unsuccessful people don’t find and address them, and successful people do. That is why, as one of our managers has observed, reflective people are much more successful than deflective people.

In order to make money in the market you have to be an independent thinker. And, I think, creative too.

 

BORN Queens, New York USA 1949.

EDUCATION Dalio received a BA from Long Island University and an MBA from Harvard Business School in 1973.

CAREER Dalio worked on the floor of the New York Stock Exchange and invested in commodity futures. After his MBA, he started work as director of commodities at Dominick & Dominick LLC. In 1974, he became a futures trader and broker at Shearson Hayden Stone. In 1975, aged 26, he founded the investment management firm, Bridgewater Associates where he is president, co-CIO and mentor.

INVESTMENT PHILOSOPHY Dalio is a hedge fund investor with macro investments as his specialty. He is a master of the diversification needed to enable him to steer his giant funds. He bets mainly on economic trends, such as changes in exchange rates, inflation, and GDP growth round the globe. He spends most of his time trying to figure out how economic and financial events fit together in a coherent framework. Bond and currency markets, in which Dalio is an expert, are widely believed to represent the greatest bulk of profits historically. But he is also active in other asset classes. Gold was one of the company’s largest contributors in 2010. In stocks Bridgewater tends to make relatively small, but numerous equities investments, sometimes having several hundred equity positions. He regards the consensus as ‘often wrong’, which is why he judges independent thinking to be the main criteria in managing money.

OTHER He is said to be intelligent and idiosyncratic, and manages the world’s largest hedge fund with $140 billion in assets and 1,200 employees. In 2011, Bridgewater was ranked both the largest and the best-performing hedge-fund manager in the world, which is a unique combination. With its 39 billion profit in US dollars for clients Bridgewater has furthermore become the hedge fund with the second highest yield ever in absolute figures. The last 18 years’ performance is estimated to have been 15 % annually before fees. One of the more striking features of Bridgewater Associates is the corporate culture that Dalio has created. Dalio has presented the concept in a 123-page online book, Principles. He bought his first shares at the age of 12, and according to the Forbes he had a net worth of US$12.9 billion as of 2013. Dalio is a practitioner of transcendental meditation; his main hobby is music – jazz, blues, and rock ‘n’ roll (his father was a jazz musician). Recently, he joined a philanthropic campaign, pledging to give away at least half of his money.

Sources: Ray Dalio, Principles; CNBC; Bridgewater Associates; gurufocus.com; The New Yorker, 2011; Wikipedia.

Author interview: Aswath Damodaran - Narrative and Nubers

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Aswath Damodaran is a Professor of Finance at the Stern School of Business at New York University where he teaches corporate finance and valuation courses in the MBA program. He received his MBA and Ph.D degrees from the University of California at Los Angeles. Mr. Damodaran’s research interests lie in valuation, portfolio management and applied corporate finance. His papers have been published in several of the most prestigious academic journals and he has published 10 acclaimed investment and finance books, including the best-selling Damodaran on Valuation.

http://pages.stern.nyu.edu/~adamodar/

http://aswathdamodaran.blogspot.se/

InvestingByTheBooks: Thank you for agreeing to talk to us about your latest book Narratives and Numbers. I very much enjoyed reading it and one thing contributing to this was that you seamed to enjoy writing it. Could you start by discussing this personal journey of yours from being a numbers guy to a more balanced position?

Aswath Damodaran: I am a natural number cruncher and when I first starting doing and teaching valuation, I gravitated towards a purely numbers approach. It was a few years into the process that I realized that while I could work through the mechanics of valuation, I had no faith in my own valuations (partly because I knew how easily I could make them move by changing a few numbers). It was then that I started recognizing that my spreadsheets would become valuations only if I attached stories to them. When I started, it was hard work but I have to tell you that it has become easier over time.

 

IBB: With regards to valuing corporations with a very wide value potential distribution compared to those with a more narrow potential I agree that both are technically possible to value with a DCF. However, while the latter type more rarely gets mispriced, when they occasionally do, you can be relatively more certain about your margin of safety and given our human propensity for over-optimism I’m afraid that a wide distribution simply means a larger outlet for that bias. What is your view on this?

AD: I think that the margin of safety is one of the most over rated concepts in investing. While there is the notion that having a large MOS is somehow costless, it is worth reframing the trade off in using a MOS. In effect, you are trading off one type of error (that you will buy an over valued stock by mistake) for another type of error (that you will not buy an under valued stock). In my view, that trade off starts to cut against you sooner than you think and as your portfolio gets larger. If you are one of those incredible investors who keep finding stocks that go up 40% a year, by all means have a large margin of safety. When For the most part, when I hear an investor boast about having a 40% MOS, my response is that the investor either is mostly invested in cash or that he or she has no concept of value.

 

IBB: How will we ever persuade sell-side analysts to treat quarterly earnings releases as opportunities to revisit and update their view on the long-term fundamental story instead of playing the “against the consensus-game”?

AD: Why bother? That’s their job. Treat them for what they are… Equity research analysts are traders, not investors, and they play the momentum game. They have only a glancing interest in the value of stocks and have far more incentive to keep track on the mood on a stock. I just wish that they would stop doing their “kabuki” DCFs.

 

IBB: Daniel Kahneman has when it comes to forecasting been discussing what he calls the inside view and the outside view where the latter relates to the more statistical answer to the question: when others in general have been in the same situation, what on average happened? I read your narrative process as a way to improve on the inside view but aren’t you still missing to factor in the outside view?

AD: My step 5 in converting stories to numbers is, keeping the feedback loop open and it, is just my way of saying that the only way that you will improve your stories is by listening people who think least like you and disagree with you the most. So, listen to others when they tell you that you are wrong, don’t be defensive and don’t be afraid to say those words “I was wrong”.That outside view does not necessarily come from other valuation people or analysts but from the world around you.

 

IBB: I liked the notion that exactly as stock market stories can create herding and mispricings on the stock markets, quantitative over-usage of the same type of factors can do the same. You mention somewhere in the book that you think that it is those who can remain flexible in their thinking that will succeed. Could you explain further what you mean?

AD: To the extent that we look at the same data and see the same patterns and follow those patterns, big data is going to create its own form of herding. You see this in almost every aspect of life where data has become a big part of decision making. One reason that I trust multi-disciplinary thinkers more is that they use both the data and common sense. Being flexible requires you to be open to information in every form.

  

IBB: What you call narratives are really the description of the fundamental value creation of the company but how do you prepare your students for the constant cacophony of shorter term stories, rumors, suggestions and emotions on the stock market? Do you for example feel that checklists can help?

AD: I think of your core story as a filing mechanism that allows you to read news about the company as it happens and file into the right folder. In fact, I try to do this with Uber in the book when I explain how I used the hundreds of news stories that came out about Uber between June 2014 and September 2015 to reframe my story.

 

IBB: I think the concept of blending a going concern valuation with a liquidation valuation is very interesting. How would you go about when thinking about the probability of default given the reportedly shortening life span of companies?

AD: Shortening life span does not necessarily translate into default. Most companies just fade away over time or get acquired as going businesses, rather than come to an abrupt end. What causes default is the addition of a triggering mechanism, usually in the form of debt. And with debt, estimating that probability of default becomes easier since you are looking at the likelihood of a firm not being able to make contractual payments.

 

IBB: With regards to the limited success rate of macro forecasting I agree fully. Does this mean that investors should simply stay away from stocks where one or two top-down variables determine the stock price or do you have a solution for how to handle them?

GZS: It is not that they should stay away. You can still find a macro stock at a micro moment. For instance, with banking stocks, it is quite clear that the dominant risks now are regulatory changes and interest rate levels, both macro variables. But in October 2016, I valued and bought Deutsche Bank because I felt that there were enough micro variables that I could focus on to make it a good buy.

 

IBB: Thank you for taking the time and sharing your insights. Lets hope your book unites the two camps of numbers people and storytellers.

InvestingByTheBooks, March 3, 2017

John Neff

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Investor profile at InvestingByTheBooks: The book The World’s 99 Greatest Investors: The Secret of Success provides a unique opportunity to learn form the most prominent investors globally. In the book they generously share their experiences, advice and insights and we are proud to present these excerpts. Magnus Angenfelt, previously a top ranked sell side analyst and hedge fund manager, will be presenting one investor per month. For those who cannot wait for the monthly columns, we strongly recommend you to buy the book. The investor himself writes the first section below and then Angenfelt describes the background of the investor and comments on his investment philosophy. Enjoy.

Conventional wisdom suggests that, for investors, more information these days is blessing and more competition is a curse. I’d say the opposite is true. Copying with so much information runs the risk of distracting attention from the few variables that really matter. Because sound evaluations call for assembling information in a logical and careful manner, my odds improve, thanks to proliferating numbers of traders motivated by tips and superficial knowledge. By failing to perform rigorous, fundamental analyses of companies, industries, or economic trends, these investors become prospectors who only chase gold where everyone else is already looking. Mutual fund investors who think they can make money by chasing the hottest fund are panning the same overworked streams.

Many circumstances and yardsticks have changed. Companies cited have grown, merged, or, in some cases, closed their doors. Dividend yields are not so lavish nowadays, and erstwhile P/E ratios seem almost quaint. Brief security analyses are not intended as current recommendations, but as testimony to the thought processes that shaped Windsor’s fortunes. Are they still valid? I think so. The relationship of total return to the P/E ratio still governs my investment decisions, and the returns meet my high standards.

If a lesson emerges besides the merits of low P/E ratios, it should be that successful, long-term investment strategies need not rest on a few very risky glamour stocks. The record will show that we painted our canvas using a broad palette. At various times, Windsor owned representatives of all but two industries, and many were revisited more than once. Some payoffs were of the championship variety; others were nothing to be proud of. Now and then, we hit home runs, but our scoring relied chiefly on base hits. To go home winners, that’s all investors need.

BORN Wauseon, Ohio, USA 1931.

EDUCATION Neff graduated summa cum laude with a BA from the University of Toledo in 1955. He obtained his MBA from Case Western Reserve University in 1958.

CAREER Neff started as a securities analyst with the National City Bank of Cleveland 1955. He joined the Wellington Management Co. in 1964, becoming the portfolio manager of the Windsor, Gemini and Qualified Dividend Funds. He retired in 1995 after more than three decades.

INVESTMENT PHILOSOPHY Neff’s investment strategy was in reality a blend of contrarian, growth and value investing. He calls himself a low price–earnings investor. He focused on the least popular stocks, but they needed to have an organic growth in excess of 7 %, yield protection, and be a solid company. Investments were always based on rigorous fundamental analysis, examining both management and the books in detail. Future earnings were everything and he regards ROE (return on equity) as the most important single yardstick of what management has accomplished for shareholders. On average, Neff’s stocks had a P/E ratio that was half that of the rest of the market. The number of holdings was rarely under 100. He was known for his discipline and his long working days, and for being highly knowledgeable about the companies he invested in.

OTHER The Windsor Fund was the best performing mutual fund during his tenure and became the largest fund, closing to new investors in the 1980s. Of the 31 years he managed the fund, he beat the market in 22 years. He was said to take the week’s entire Wall Street Journal copies home for a second read over the weekend.

Sources: John Neff, John Neff on Investing (2001); CFA Institute; Wikipedia.

Robert Maple-Brown

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Investor profile at InvestingByTheBooks: The book The World’s 99 Greatest Investors: The Secret of Success provides a unique opportunity to learn form the most prominent investors globally. In the book they generously share their experiences, advice and insights and we are proud to present these excerpts. Magnus Angenfelt, previously a top ranked sell side analyst and hedge fund manager, will be presenting one investor per month. For those who cannot wait for the monthly columns, we strongly recommend you to buy the book. The investor himself writes the first section below and then Angenfelt describes the background of the investor and comments on his investment philosophy. Enjoy.

§  Firstly, I am a ‘value’ investor and I believe that extensive fundamental analysis of each investment is very important.

§  Secondly, although I believe that diversification is important, I believe Australian equity portfolios should only have about thirty individual investments.

§  Thirdly, ‘value’ is not the same as ‘cheap’, and so the industry in which the company operates and the quality of its management are all-important in determining ‘value’.

BORN New South Wales, Australia 1940. Died 2012.

EDUCATION Maple-Brown graduated from the University of New South Wales in 1965 with a degree in Commerce, and become a Chartered Accountant five years later.

CAREER Maple-Brown joined the merchant bank International Pacific Corporation, which later became Rothschild Australia. After being responsible for the investment management division, he left in 1984 to form Maple-Brown Abbott Ltd. aged 44. He was CEO until 2000 and was non-executive chairman until his death.

INVESTMENT PHILOSOPHY Long-term bottom-up value stock picking is probably the best description of Maple-Brown’s investment style. Confident that markets are inherently inefficient, he took advantage of inevitable periods of excess pessimism by buying when valuations were depressed and selling when valuations became extended during periods of excess optimism – a contrarian approach. Maple-Brown’s investments in general had lower price–earnings ratios, lower valuations of book value, stronger balance sheets, and a higher dividend yield than the market.

The focus was on balance sheet strength and by reconciling reported profits with underlying cash flow. He invested in all asset classes, but was famous for his stock market investments and did not back off in case of pushing for changes in management when necessary.

OTHER Maple-Brown’s value-based investment philosophy started the tradition of value investing in the Australian market. Adjusted for having around 20 % in cash on average, the fund has beaten the benchmark substantially since its inception, and currently manages in excess of $9 billion. He had the long-term performance record in managing Australian equity portfolios and balanced funds. Maple-Brown was inspired by Benjamin Graham in the 1960s.

Sources: Robert Maple-Brown; Maple-Brown Abbott Pooled Superannuation Trust; Wikipedia.

Neil Woodford

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Investor profile at InvestingByTheBooks: The book The World’s 99 Greatest Investors: The Secret of Success provides a unique opportunity to learn form the most prominent investors globally. In the book they generously share their experiences, advice and insights and we are proud to present these excerpts. Magnus Angenfelt, previously a top ranked sell side analyst and hedge fund manager, will be presenting one investor per month. For those who cannot wait for the monthly columns, we strongly recommend you to buy the book. The investor himself writes the first section below and then Angenfelt describes the background of the investor and comments on his investment philosophy. Enjoy. 


Long term. Taking a long-term view is an increasingly unfashionable approach in today’s environment. In recent years, average holding periods for equities have shortened dramatically, reflecting a trading rather than an investing mentality. For me, investing in a company is an ongoing process: it starts with meeting the management team and undertaking in depth research of the business and typically I will build a holding over a period of time. While clearly things can change, my intention is to be a long-term owner of that company; I am not simply seeking a quick return. Many of the companies that are in my portfolios have been there for more than ten years and they continue to deliver the earnings and dividend growth that attracted me to them at the outset. As I alluded to above, markets can be driven by a number of things, and during those periods stocks can be mispriced for a considerable length of time. We saw this in the late 1990s with the TMT bubble and we have also seen it more recently in the postfinancial crisis period. However, sooner or later, markets return to valuing companies according to their fundamental characteristics, and so maintaining conviction during these times and focusing on the long-term is essential to fully participate in the returns that selected companies can provide.


Valuation. My second key element is fundamentals. Simply put, earnings and dividend growth drive share prices in the long term, and so these are the key metrics on which to focus. Dividends are one of the best ways to gauge the health of a business, as well as providing a good insight into the management’s capital discipline and recognition of shareholder returns. Research also indicates that those companies with the strongest dividend growth provide the best capital returns in the long term. Therefore, a company’s ability to consistently grow its earnings and dividends is a prime consideration in my investment approach. At the same time, a company fulfilling these requirements is not necessarily a good investment. Valuation is critical, and it is where I believe a company’s growth potential is not reflected in its valuation that will I consider investing.

Risk. This brings us to the final core element of my investment approach, which is the management of risk. I have an unconstrained approach within the portfolios that I manage and so I do not view risk as being relative to a benchmark index. To me, risk is the permanent loss of capital, and in that sense I have an absolute return mentality. Risk can never be completely eliminated from equity market investment, but there are steps that can help to reduce it. Understanding risk means understanding the underlying business: what it does, how it earns its profits, and how sustainable are those returns. Gaining this level of insight and knowledge of a company enables me to form an opinion on how that company should be valued. If the conclusion is that the company is undervalued then it represents a lower-risk investment—in other words, valuation is, in itself, an effective risk management tool.

BORN Berkshire, UK 1960.
EDUCATION Woodford holds a BA in Economics and Agricultural Economics from the University of Exeter; he later studied Finance at the London Business School.
CAREER He commenced his investment career in 1981 with the Dominion Insurance Company, and subsequently joined Eagle Star as a fund manager in 1987. One year later he joined Invesco Perpetual as a fund manager in the UK equities team, and is currently the company’s head of investments. He recently announced his departure from Invesco Perpetual to take place in 2014.
INVESTMENT PHILOSOPHY Woodford is a fundamental long-term bottom-up stock market value investor. He invests mainly in the UK. As follows of his extensive description above, his preference is for resilient companies whose growth and earnings he sees as stable, yet are underappreciated by the market. Not surprisingly he shows the best relative performance in turbulent market conditions. Woodford is something of an activist, pressing managers at companies to pursue share buybacks when the intrinsic value of a company well exceeds its share price.
OTHER As head of investments at Invesco Perpetual, Woodford controls over £30 billion of assets. He has been awarded several prizes. His hobbies include wildlife and horses.

Sources: Neil Woodford; Invesco Perpetual High Income Fund; Wikipedia.

Peter Lynch

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Investor profile at InvestingByTheBooks: The book The World’s 99 Greatest Investors: The Secret of Success provides a unique opportunity to learn form the most prominent investors globally. In the book they generously share their experiences, advice and insights and we are proud to present these excerpts. Magnus Angenfelt, previously a top ranked sell side analyst and hedge fund manager, will be presenting one investor per month. For those who cannot wait for the monthly columns, we strongly recommend you to buy the book. The investor himself writes the first section below and then Angenfelt describes the background of the investor and comments on his investment philosophy. Enjoy.

The basic story remains simple and never-ending. Stocks aren’t lottery tickets. There’s a company attached to every share. Companies do better or they do worse. If a company does worse than before, its stock will fall. If a company does better, its stock will rise. If you own good companies that continue to increase their earnings, you’ll do well. Corporate profits are up fifty-five fold since World War II, and the stocks market is up sixtyfold. Four wars, nine recessions, eight presidents, and one impeachment didn’t change that.

You don’t need to make money on every stock you pick. In my experience, six out of ten winners in a portfolio can produce satisfying result. Why is this? Your losses are limited to the amount you invest in each stock (it can’t go lower than zero) while your gains have no absolute limit. All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out.

Nothing has occurred to shake my conviction that the typical amateur has advantage over the typical professional fund jockey.

BORN Newton, Massachusetts, USA 1944.

EDUCATION Lynch graduated from Boston College in 1965 and took an MBA at the Wharton School of the University of Pennsylvania in 1968.

CAREER Lynch started as an intern with Fidelity Investments in 1966, partly because he had been caddying for Fidelity’s president, became an analyst, and in 1974 director of research. In 1977, Lynch was named head of the then small and obscure Magellan Fund. Lynch resigned as a fund manager in 1990 to spend more time with his family. Lynch has since taken different positions in Fidelity. At present he is vice chairman.

INVESTMENT PHILOSOPHY Lynch is one of history’s most illustrious growth-oriented stock investors. Lynch has invented several new approaches to investing. His most famous investment principle is simply ‘Invest in what you know’, popularizing the economic concept of ‘local knowledge’ – investors learn more from visiting the local grocery shop than staring at charts. Another key innovation was PEG (price–earnings ratio compared to growth). Lynch is also considered one of the foremost advocates of GARP (growth at reasonable price), but in well-managed companies with sound balance sheets. He does not care about liquidity in the stock, and prefers small and mid-size companies. He also favors turnaround cases and asset plays. Overall he has a very flexible investment strategy, to the extent of being known as ‘The Chameleon’. Companies, which invest in luxury head offices at the cost of returns to shareholders, are never admitted to the portfolio.

OTHER Outperforming the benchmark by over 13 percentage points in 13 years without leverage is probably a record for a mutual fund, especially when value stock performed better than growth stock during the period, and Lynch didn’t invest in tech stocks such as Microsoft and Cisco, which were two of the best performing stocks in the market. The Magellan Fund increased from $18 million to $14 billion during his management. When he resigned, Magellan had more than 1,000 individual positions. Lynch recommends investors to stay in the stock market even when times are bad, as the risk of missing the next rally is worse. The only time to prefer other investments is when bonds give more than 6 % higher interest than dividend yield. Lynch is also the inventor of ‘ten-baggers’–companies whose value increases tenfold. When managing the fund he read 700 annual reports yearly. He has written three books. Since his retirement, he has been an active participant in a variety of philanthropic endeavors.

Sources: Peter Lynch, One up on Wall Street (2000); Fidelity Investments; Magellan Fund; Investopedia.

Author interview: Tren Griffin "Charlie Munger - The Complete Investor"

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Tren Griffin spends his days at Microsoft. Previously, he was a partner at Eagle River, a private equity firm established by Craig McCaw. On nights and weekends he writes blog posts, most under the heading “A dozen things I learned from….” For those of us who follow him religiously... Further reading... Link to Amazon...