Inspiration for the Brite strategy
Honouring the world’s best investors
Brite prides itself on smart investing. After all, we are there to protect and grow our clients’ assets.
We look to the best to get our investment strategies right and learn from the greatest. The following are the heroes of investing who we look up to and try to emulate.
Probably the world’s most famous investor and certainly the richest. Buffett is famous for quotes such as ‘We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful’ …he has always played a relatively safe hand and avoided hype.
He’s wise, careful but does take calculated risk, his quote ‘Price is what you pay. Value is what you get’ shows that he’s not afraid of risk and always has a strategy that he sticks to.
Buffett has been a supporter of index funds and is sceptical that active management can outperform the market in the long run and has advised investors to use low-cost index funds that track market indices. In 2007, Buffett made a bet with many investment managers that a simple S&P 500 index fund would outperform hedge funds that charged inflated fees. By 2017, the index fund was outperforming every hedge fund that made the bet against Buffett.
Low fees and long term thinking – right up our street.
Ray Dalio is founder Bridgewater Associates, and is the world’s largest hedge fund and made more money for its investors than any other hedge fund ever. He is the world’s 58th richest person and has a very practical understanding of economics.
Dalio is a big proponent of diversification. He is quoted as saying ‘Diversifying well is the most Important thing you need to do in order to invest well’. His overarching principle is: Knowing how to deal well with what you don’t know is much more important than anything you know and diversification can improve your expected return-to-risk ratio by more than anything else you can do.
We wouldn’t argue with this – essentially, don’t put all your eggs in one basket – one of the first rules of investing.
John (Jack) Bogle died in January 2019 and was one of the greats of investing. He was the founder and chief executive of The Vanguard Group and is widely credited for creating the first index fund.
His big idea was instead of trying to beat the index and charging high costs, the index fund would mimic the index performance over the long run, therefore achieving higher returns with lower costs than the costs associated with actively managed funds.
Bogle’s idea of index investing provided distinction between investment and speculation – taking guess work and ego out of the equation. If the market did what it had in the past then over time investments would grow at rate which could be modelled.
He used the principle: the past is the best way to predict the future.
He thought that it was folly to attempt to pick actively managed mutual funds and expect their performance to beat a low-cost index fund over a long period of time, after accounting for the fees that actively managed funds charge.
Bogle’s approach to investing was defined by simplicity and common sense. Below are his basic rules for investors:
- Select low-cost funds
- Consider carefully the added costs of advice
- Do not overrate past fund performance but use it to determine consistency and risk.
In many ways Bogle was the father of modern investment strategies and we certainly never forget his valuable lessons.
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