TRADE SECRETS OF HIGH FLYING INVESTORS

Few decisions in an executive’s career are as complex as making multibillion-dollar investments with time-bound returns. A right call can catapult you in the anals of big-time investors, and a bad call can lead to devastating losses for companies and an irreparable reputation loss.

- Anna Domanska

Let us take a look at the processes employed by big-time investors that have turned them into billionaires and economic legends.

WARREN BUFFETT

Warren Buffett is one of the richest men in the world and a widely successful investor. His net worth was listed at $89.1 billion in early 2020

Buffett follows the Benjamin Graham school of value investing. He shops for stocks listed below their value or undervalued by the market, though they are not so. Buffett takes this value investing approach up another level.

Buffett believes in the overall performance of a company and wants to invest for the long-haul and not short-term gains. He believes in ownership of quality companies that make clear profits.

While picking a company for investment, he looks at the company’s performance and how much return on equity it gives compared to others in the same space.

Secondly, he looks at the debt to equity ratio. The higher the liability of the company, the more volatile the returns will be. He believes the company will be spending more money in servicing the debt interest rather than using equity for growth.

He looks at the profit margins of the company for the past five years, at least. And how much it has grown.

Buffett typically considers only companies that have been around for at least 10 years. That means he was initially skeptical of the performance of the tech companies that have come into prominence in the last decade. But Apple and Amazon seem to have changed his mind.