I have met my fair share of shrewd and successful investors.
Some are highly capable, with their personal wealth exceeding hundreds of millions — if not billions — of dollars. Many, however, are under appreciated and due to their less 'salesy' personalities have gone unnoticed by your average investor.
While most of them can be difficult to tolerate, are aloof or downright obnoxious, they are willing tell you their story and how to develop a respectable investment strategy of your own.
Here are five of the best kept investing secrets I have gained from meeting some of Australia's most respected investors:
1. They know what they own
The best investors don't just 'buy' stocks — they own businesses. Taking a leaf from famed investor Peter Lynch, successful investors know their businesses inside and out — sometimes better than the CEOs do!
Moreover, they know their own limitations and use them to their advantage, deploying capital only where they have a defined opportunity set.
2. They buy at a good price
Successful investors know history will not repeat itself, but it does rhyme. When expectations run ahead of value, they know that it is not different this time.
Phillip Fisher summed it up best when he said, "The stock market is filled with individuals who know the price of everything, but the value of nothing."
3. They are avid learners
The best investors take nothing for granted. They know the best investment is in oneself because knowledge compounds over an investing career — and it pays the best dividends. Their mind is a blank canvas, ready to soak in the thoughts and ideas of those around them.
However, they are sceptical.
4. They don't conform
The best investors let their actions do the talking. They have a variant perception. Cool, calm and collected, they know if they do the same thing as everyone else, they are certain to get the same results.
The best investors challenge conventional thinking and rely almost entirely on facts. Second-level thinking, as Howard Marks puts it, is the ability to think ahead of the first-level thinkers – those who will eventually buy the shares from you.
5. They are not as smart as you think
Sure, some of the most successful investors have IQs which are three standard deviations above average, but most do not. They are not mathematical geniuses who recite Pi to the 100th place over their morning Weet-Bix. Many of the best investors I have met are humble, yet critical. They have conviction, but are wise not to let it misguide them. For the most part, they are simply hard workers.
Investing with Australia's Best
In my opinion, there are two ways you can be successful in the sharemarket: let someone else do the investing for you, or take control of your own finances and buy shares directly.
Indeed, some of Australia's best investors are accessible via the ASX, so you can easily share in their success.
For example, you can buy shares directly in Hamish Douglass' Magellan Financial Group Ltd (ASX: MFG), or Kerr Neilson's Platinum Asset Management Limited (ASX: PTM). They are two of the most prominent names in Australian finance.
However, Jacob Mitchell's Antipodes Global Investment Company Ltd (ASX: APL) and Geoff Wilson's WAM Capital Limited (ASX: WAM) are two equally compelling Listed Investment Companies (LIC) that also deserve your attention.
And for those who want to buy the best ASX shares directly? I hear you ask.
Well, I know where you can find them…
