One important factor that separates great investors from regular investors is studying and emulating other great investors.
You may have already read up on investing legends like Warren Buffett and Peter Lynch. But there are a stack of other excellent, highly accomplished investors we can look to for improvement.
Two of my favourite right now are Joshua Kennon and Howard Marks, who have been the inspiration for much of my thinking lately.
1. Joshua Kennon
Joshua Kennon authors the money section for About.com, and runs the Kennon-Green & Company Global Asset Management firm.
His investing style could be described as traditional value, focusing on company fundamentals and he is a strong advocate for the incredible power of compounding returns.
It's this style which draws his analysis towards consumer staple companies like Colgate-Palmolive and Nestlé. Aussie investors can gain access to both companies through the iShares Global Consumer Staples ETF (ASX: IXI).
A local alternative however is Retail Food Group Limited (ASX: RFG). The company owns a number of franchise brands including Gloria Jean's and Brumby's Bakery. In my view the company looks conservatively priced, selling for 21 times trailing earnings, and offers an attractive 4.5% dividend yield, which can be reinvested back into the company to compound for years to come.
2. Howard Marks
Howard Marks is chairman and co-founder of Oaktree Capital Management which manages almost US$100 billion of assets. He also wrote the book 'The Most Important Thing', but is often overlooked as a role model because of his traditionally contrarian investing perspective.
His company memos in particular are a valuable resource, in part because of his well reasoned view that investors often misjudge risk.
Marks notes that companies that are commonly thought to be low risk (because of their perceived high quality) can actually harbour increasingly high risks as investors relentlessly drive up the company's share price.
An example of this could well be Sydney Airport Holdings Ltd (ASX: SYD). The company's share price continues to march upwards as investors seek safe alternatives to low savings returns which compounds potential risk if an unexpected event prevents the company from achieving the anticipated 'consensus' earnings.
