If you want smart investing advice, check out these 7 legendary Wall Street thinkers
The dead sometimes speak louder than the living.
That's especially true when it comes to investing, markets and the economy, topics that generate many opinions from living people, few of which are useful.
I find it's better to ask the deceased what they think. With that in mind, I’ve profiled seven departed legends whose views should always remain at the top of your mind when you want advice about investing. The more you study these people, the better you'll fare.
Neff: Bragging means selling
John Neff, the last of the legendary mutual fund managers, died June 4. His 31 years running the Windsor Fund, part of Vanguard, averaged 13.7% annually to 1995, more than doubling a comparable S&P 500 investment. How did he do it? Neff avoided fads and focused on fundamental firms and value, seeking to buy stocks cheaply compared with their intrinsic worth. That is a timely reminder since value investing is now long out of fashion. It will return someday.
Neff said things like, “When you feel like bragging about a stock, it’s probably time to sell.”
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Graham: Father of value
Neff, like Warren Buffett, derived from the Ben Graham school of value investing. Buffett is often depicted as 85% Ben Graham (the other 15% being Phil Fisher, see below). Graham is often called, “the father of value investing.” If you have time for just one investing book, make sure it's Graham’s classic, "The Intelligent Investor." Graham’s key takeaway? Heeding value provides a margin of safety and higher returns, although those returns are irregular over time. That's because most investors oversell and underappreciate what isn’t faddish and hasn’t worked recently.
T. Rowe Price & Phil Fisher: Growth gurus
The reverse thinking came from the two “fathers” of growth stock investing, Thomas Rowe Price Jr. and Philip Fisher (disclosure: my father). These two are considered the first major voices claiming that a firm’s future growth prospects matter much more than the current perceived “value.” Both deployed rigorous, varied disciplines for verifying small firms that would grow fast longer term. Price is best known for founding mutual fund giant T. Rowe Price Group. Fisher’s legendary book, "Common Stocks and Uncommon Profits," was the first investing book to ever grace The New York Times best-seller list. Price and Fisher, if active now, would both be riding high in this growth-oriented bull market.
Bogle: Passive champion
Vanguard’s Jack Bogle taught the world that most people will do better if they focus on neither growth nor value but instead become passive investors through an S&P 500 Index Fund. Beating the market requires that you know something useful others don’t. Do you?
If not, Bogle provided a ready path: Combine growth and value passively and match the market without trying to beat it or accidentally lag it. He knew most investors lag the market by in-and-outing the wrong things at all the wrong times. Since most money managers have lagged markets for years, Bogle would also ride high right now.
Loeb: Be a skeptic
Gerald Loeb was an early “contrarian investing” voice, believing that if too many investors thought something would happen, it was already priced into the market and wouldn’t happen. He was an active trader, book author, columnist and sometimes called “the most quoted man on Wall Street.” Some of Loeb is usually in my writings.
He also established the gold standard of awards for excellence in financial journalism, the Gerald Loeb Award. Loeb’s key takeaway? Always invest, but be skeptically skittish because nothing endures.
Ponzi: Sounds too good to be true
Charles Ponzi’s legend lives on, quite infamously: the Ponzi scheme is his namesake. Studying his schemes teaches to avoid being a victim of them. When a deal sounds too good to be true, it isn’t true. Risk is real and everywhere. So are fraudsters.
Ken Fisher is founder and executive chairman of Fisher Investments, author of 11 books, four of which were New York Times bestsellers, and is No. 200 on the Forbes 400 list of richest Americans. Follow him on Twitter: @KennethLFisher
The views and opinions expressed in this column are the author’s and do not necessarily reflect those of USA TODAY.
This article originally appeared on USA TODAY: 401(k) investors: 7 Wall St. gurus who offer the best money advice
