9 lessons from the world's greatest investors

When the world's best investors offer investment tips, it pays to listen. While leading money managers often approach stock picking and portfolio construction differently, they tend to share similar views on the fundamentals of sound investing.

If you want to build a solid foundation for your investment journey, here are nine lessons from some of the greatest investors:

1. Warren Buffett: Invest in what you know

"Never invest in a business you cannot understand." — Warren Buffett

Buffett famously avoided technology stocks during the dot-com boom of the late 1990s, not because he thought technology was unimportant, but because he couldn't confidently predict which companies would win. That discipline proved wise when the bubble burst in 2000. His longest-held positions, including Coca-Cola, American Express, and major US banks, are all businesses with models he could assess with confidence. His views have evolved over time though: as he gained a deeper understanding of certain technology businesses, Berkshire Hathaway became one of Apple's largest shareholders, at one point holding over $170 billion worth of stock. His foray into tech wasn't a contradiction of his principle — it was proof of it.

Lesson: How can you evaluate a business you don't understand or know nothing about? If you're familiar with what a company does, how it makes money, and the industry it's in, you'll be in a far better position to figure out whether it's a worthwhile investment.

2. Peter Lynch: Mistakes are inevitable

"In the business of investing, if you're good, you're right six times out of 10. You're never going to be right nine times out of 10." — Peter Lynch

Lynch, who managed the Magellan Fund at Fidelity and delivered returns of around 29% per year between 1977 and 1990, was open about the fact that many of his picks didn't pan out. His edge came not from being perfect but from ensuring that his winners more than compensated for his losers. The practical takeaway is to avoid holding a losing position out of pride or the refusal to admit a mistake — sometimes cutting your losses early and redeploying capital elsewhere is the smartest move you can make.

Lesson: Every investor would benefit from the ability to accept mistakes. Recognising when you've misjudged a stock, the company behind it, or the market itself allows you to respond with the right course of action and move on. Being wrong gives you a chance to learn.

3. Prince Alwaleed Bin Talal: Invest long-term

"We're getting hurt, but I'm a long-term investor." — Prince Alwaleed Bin Talal

Investment capital should be money you can afford to leave invested for years, not funds you'll need soon. History shows that investors who stayed the course through events like the 2008 global financial crisis or the COVID-19 crash of 2020 — rather than panic-selling — were generally rewarded handsomely as markets recovered and moved to new highs.

Lesson: Linked to the previous lesson, being in it for the long haul is another key to success. Prince Alwaleed Bin Tala, the owner of international luxury hotels and a significant investor in Apple, Twitter, Snap, and Citigroup, makes it clear that you can overcome short-term pain by taking a long-term view. It's a reminder that investment capital should be money you can leave invested for an extended period.

4. John Templeton: Diversify

"The only investors who shouldn't diversify are those who are right 100% of the time." — John Templeton

Templeton launched one of the world's first truly international funds in the 1950s and built his reputation on contrarian thinking. His most famous move came in 1939, when he borrowed $10,000 and bought shares in every NYSE-listed company trading below $1 — seeing undervalued assets where others saw crisis. He later invested heavily in Japanese stocks in the 1960s when few Western investors looked to Asia, and sold US tech stocks short at the peak of the dot-com bubble in 2000. His career is a masterclass in why no single market or sector should ever be treated as a sure thing.

Lesson: This is a popular investment strategy when building a portfolio. Diversifying your investments means spreading them across various market sectors and potentially different asset classes. Including assets that thrive in different economic and financial market conditions limits your risk exposure to any specific stock, industry, or asset category. 

5. Ray Dalio: Don't bother with cash

"Cash is trash." — Ray Dalio

Dalio, founder of Bridgewater Associates, one of the world's largest hedge funds, made this point bluntly because many investors default to cash when markets feel uncertain. While savings accounts and term deposits feel safe, their returns rarely keep pace with inflation, meaning your purchasing power quietly erodes over time.

Lesson: For example, if inflation runs at 3% annually and your savings account earns 1.5%, you're effectively losing 1.5% of your real wealth each year. Over a decade, this adds up considerably. Dalio's point is that staying in cash too long is itself a risk, just a less visible one. Long-term investors are generally better served keeping their money working in assets that can grow in real terms.

6. Benjamin Graham: Have a plan

"The best way to measure your investing success is not by whether you're beating the market but by whether you've put in place a financial plan and a behavioural discipline that are likely to get you where you want to go." — Benjamin Graham

Graham, widely regarded as the father of value investing and the mentor who shaped Warren Buffett, understood that most investors fail not because they lack intelligence, but because they lack a clear financial plan and the discipline to stick to it.

Lesson: A solid investment plan should outline your goals (retirement, a house deposit, financial independence), your timeline, your risk tolerance, and a strategy for regular contributions. Without that framework, it's easy to be swayed by short-term market noise, chase recent winners, or abandon your strategy during a downturn. The plan becomes your anchor.

7. Peter Lynch: Control your emotions

"The trick is not to learn to trust your gut feelings, but rather to discipline yourself to ignore them. Stand by your stocks as long as the fundamental story of the company hasn't changed." — Peter Lynch

Lynch's advice draws a crucial distinction: there's a difference between a falling share price and a deteriorating business. If a stock you own drops 20% but the company's earnings, competitive position, and growth prospects remain intact, that may be a buying opportunity rather than a reason to sell. Emotional reactions treat price movements as signals when they're often just noise.

Lesson: While share market returns tend to trend upward over time, share prices fluctuate — sometimes wildly — over the short term. Controlling emotions like fear and greed is crucial to sticking with your long-term investment strategy.

8. Carlos Slim: Put things in perspective

"With a good perspective of history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim

Slim, the Mexican business magnate who at various points has been ranked among the world's wealthiest people, built much of his fortune by investing during Mexico's economic crisis of the 1980s, when most investors were fleeing. His ability to look at historical patterns and recognise that crises tend to be temporary gave him the conviction to act when others panicked.

Lesson: For everyday investors, this means studying how markets have behaved over long periods. The ASX has endured multiple recessions, global financial crises, and geopolitical shocks, yet has trended upward over decades. Understanding that pattern doesn't eliminate fear, but it can make it easier to act rationally when markets are turbulent.

9. Michael Steinhardt: Keep up with change

"The markets are always changing, and the successful trader needs to adapt to these changes." — Michael Steinhardt

Steinhardt, who generated average annual returns of around 24% over nearly three decades managing his hedge fund, built his edge partly through relentless research and a willingness to revise his views as conditions changed. He wasn't loyal to a position if the underlying thesis shifted.

Lesson: This lesson applies to long-term investors as well as traders. Industries that looked unassailable can be disrupted quickly: think of retail being reshaped by e-commerce, or traditional energy being challenged by renewables. Keeping up with interest rate movements, regulatory changes, and major shifts in consumer behaviour helps you assess whether the companies you own are adapting — or being left behind.

Final thoughts

These investment lessons will help you to approach investing with the right mindset, develop resilience to deal with setbacks and establish a blueprint for evaluating investment opportunities. 

By learning from the greatest investors, you'll be more effective in making sound investment decisions and ultimately become a better investor.