Everyone is naturally interested in finding the investment fund or strategy that consistently produces the best annual returns. But while the performance of funds tends to ebb and flow, often with changes in direction of the financial markets, there’s a small, elite group of individuals who have enjoyed almost supernatural investment success.
Below is my list of the top 11 investors of all time. Many are names you probably already know. But others may surprise you. I haven’t attempted to rank these investors in order, but instead to provide a list of individuals who have found exceptional investment success through a wide variety of investment philosophies and strategies.
As an individual investor, it will be worth following and studying several of these people. As much as anything, their success seems to flow from a commitment to their investment convictions. That may be what the rest of us need to focus on.
Benjamin Graham is regarded as the “father of value investing.” At least until the past decade or so, value investing has been considered the most successful investment strategy over the long term. It’s the process of buying shares in companies that are fundamentally strong with promising future prospects, but overlooked by investors. It presents a real opportunity to find top-performing companies ahead of the crowd. Value investing is a strategy employed by several of the other investors on this list.
Though it has largely fallen into disfavor in the past decade or so, value investing proved highly successful for Graham. His investment firm posted annualized returns of about 20% between 1936 and 1956, which is well above returns in the general market.
Jack Bogle is the personification of the term “investment legend.” He was the founder of The Vanguard Group, a $7.1 trillion investment firm that is the world’s largest provider of mutual funds, and the second largest provider of exchange traded funds.
But how Vanguard came to be may have been Bogle’s greatest contribution to the investing world. While an undergraduate at Princeton University, Bogle conducted a study in which he determined most mutual funds didn’t earn any more money than popular stock market indexes. What’s more, he found the fees associated with those mutual funds caused them to often underperform market indexes.
Many years later, Bogle would launch the first index fund, which was tied to the performance of the S&P 500. That was back in 1976, and the fund is now called the Vanguard 500 Index Fund (VFIAX). And with nearly $740 billion in assets under management, it’s the largest S&P 500 index fund in the industry.
Bogle literally revolutionized the investment universe with the development of index funds. Because of their low cost and passive nature, they are now common in the portfolios of individual investors worldwide, and the mainstay of robo-advisor portfolios.
John Templeton may no longer be a household name among investors, but he’s another of the true legends of the industry. He is the founder of the Templeton Growth Fund, where he pioneered global investment diversification. (The fund is now part of the $1.4 trillion Franklin Templeton firm.)
Born in 1912, he began building his fortune during the Great Depression of the 1930s. At a time when stock prices were crashing, Templeton saw it as an opportunity. When World War II began in 1939, he borrowed money and bought 100 shares of each company listed on the New York Stock Exchange that sold for less than $1 per share. He purchased shares in 104 companies in all, including 34 that were in bankruptcy.
As World War II brought an end to the depression and super-low stock prices, Templeton’s wealth multiplied. Only four of the companies Templeton invested in became worthless.
Templeton was a relentless value investor, and a big fan of another investing legend, Benjamin Graham. As a value investor, Templeton preferred fundamental analysis, and even rejected technical analysis for stock valuation.
If this were the 1980s, Peter Lynch would probably win the title of the top investor of all time. That’s when he was at the top of his game as the manager of the Fidelity Investments’ Magellan Fund, the hottest mutual fund at the time.
And it’s no surprise. During his 13 years managing Magellan, Lynch turned in an average annual return of 29%, nearly doubling the return of the S&P 500. The fund outperformed 99.5% of competing funds in his last five years running it. When Lynch took over the fund, it had a mere $18 million in assets under management. But by the time he left in 1990, the fund had grown to $14 billion.
Lynch was a champion of value investing, the popular investment strategy founded by Benjamin Graham. But while Graham may have introduced the concept, Lynch played it out to perfection.
Lynch was also a best-selling author with his 1989 book, One Up on Wall Street, and originated the terms invest in what you know and ten bagger (a stock that produces a return of 10-to-1 or greater).
Like some of the other investment geniuses on this list, Peter Lynch came from humble beginnings. His father died when he was 10, forcing his mother to work to support the family. Lynch himself worked as a golf caddy to help support his family. It was the money earned from that job that enable him to buy his first stock while he was in college. And yes, it turned out to be a ten bagger.
Lynch was on his way.
Warren Buffett may easily be the most popular choice as top investor of all time on many people’s list. After all, it’s hard to argue with a man who went from humble beginnings to a net worth of well over $100 billion. He is currently one of the wealthiest individuals in the world, and at times he has been the wealthiest. He is so popular on Wall Street and in the financial media that he has been dubbed the “Oracle of Omaha.”
Born in Omaha, Nebraska, and still living in the same home he purchased in 1957, Buffett is a follower of Benjamin Graham’s value investing strategy. And in the style of John Templeton, Buffett lives a surprisingly frugal lifestyle, given his immense wealth.
Buffet is the chairman and largest shareholder of Berkshire Hathaway, the $873 billion national conglomerate holding company, also headquartered in Omaha. Unlike traditional investment funds, Berkshire Hathaway takes major equity positions in large companies, along with direct management of operations. Buffett has a 16.45% interest in Berkshire Hathaway.
Buffett started out as an investment salesman but began multiple business partnerships quickly after. He eventually began working at Benjamin Graham’s partnership, but then started his own—Buffett Partnership, LTD—after Graham retired and closed his firm.
Buffett met Charlie Munger (see below) in 1959, and by 1965, he began purchasing shares in Berkshire Hathaway, eventually taking control of the company. Berkshire Hathaway was originally a textile company, but Buffett moved into insurance, including the insurance giant, Geico.
Though Buffett’s annual returns have been falling in recent years, there’s no arguing with the long-term track record. According to MarketWatch, Buffett’s Berkshire Hathaway stock has returned an average of 18.3% per year—compared to 10.2% for the S&P 500—going all the way back to 1965.
Charlie Munger is Warren Buffett’s partner in crime in Berkshire Hathaway. At the tender age of 97, he remains vice chairman of the company, and is considered to be Buffett’s closest partner. He also serves as the director of Costco and chairman of the Daily Journal Corporation.
Like Buffett, Charlie Munger is a proud product of the state of Nebraska. Born and raised in Omaha, Munger came to Berkshire Hathaway in an indirect way. He was serving as chairman of Westco Financial Corporation, which eventually became a Berkshire Hathaway subsidiary.
Apart from Berkshire Hathaway, Monger is an investment legend in his own right. During the period from 1962 to 1975, when the average annual return on the Dow Jones industrial average was 5%, Monger’s own investment partnership had compound average annual returns of 19.8%.
Munger’s name is hardly mentioned apart from Buffett’s. But had he continued his investment partnership as an independent entity until today, it’s likely he would be considered a standalone investment genius of the first order.
Despite his affiliation with the more popular Warren Buffett, and his stunning investment success over the years, Charlie Munger’s estimated net worth is nonetheless estimated at less than $2 billion. That may owe in part to the fact that Monger is a big giver to various charities and, by his own admission, has already transferred to significant amount of wealth to his children.
Nassim Taleb is something of an unusual candidate for this list like this, because in addition to being one of the most unconventional investors in history, he’s also a mathematical statistician and essayist. But on the investment side, one of his biggest contributions is his advocacy of what’s known as the “barbell investment strategy.”
The barbell strategy is the opposite of the typical balanced portfolio. Instead of maintaining 100% exposure to medium risk/reward investments like stocks and bonds, the strategy promotes holding 90% of your portfolio in super-safe investments like cash and short-term U.S. Treasury securities, and the remaining 10% in high-risk/reward assets.
You would keep most of your portfolio safe while committing only a sliver to the type of investments that seem unlikely to pay off, but will pay off big if and when they do. The strategy isn’t universally accepted, but there is plenty of evidence of its success.
A former hedge fund manager and derivatives trader, Taleb started his risk management firm, Universa Investments, in December 2007, and returned an incredible 115% by late 2008—which was one of the very worst years in stock market history since World War II. (Taleb is the scientific advisor to the fund, which is managed by Mark Spitznagel). That return was possible because the portfolio was designed on the bet that the stock market would take a major plunge.
Taleb’s book, The Black Swan, focuses on the extreme impact of rare and unpredictable events, and taking advantage of those events to produce big investment profits. The book has been described as one of the most influential investment books in modern history. Still another of his popular books is Antifragile: Things That Gain from Disorder, emphasizing the need to prepare a portfolio for the very disasters the investment community prefers to ignore.
I’m mixing up this lineup by adding a couple of contrarian investors. Ray Dalio is one, and best-known for being the co-chief investment officer of Bridgewater Associates. That’s notable, because Bridgewater Associates is the third largest hedge fund in the world, with more than $154 billion in assets under management. At various times, it has been ranked as the biggest hedge fund in the world.
A hedge fund is a type of alternative investment employing various strategies to minimize losses during market downturns. Techniques employed include short-selling, leveraged derivatives, and options.
Dalio founded Bridgewater Associates back in 1975, and he’s now considered one of the greatest financial innovators of our time. He and the company gained fame by turning a profit during the 1987 stock market crash, and later by turning a 9.5% profit during the disastrous financial year of 2008. The company provides services to pension funds, foreign governments, central banks, university endowments, charitable foundations, and other large organizations.
Dalio’s personal wealth is listed at $20.3 billion, making him the 88th richest person in the world, according to Forbes. What makes that wealth level astounding is that Dalio is listed as “self-made,” meaning he built a fortune working from the bottom up. He started investing at age 12, getting investment tips from golfers at a club where he caddied. In fact, he’s rumored to have started Bridgewater Associates from his two-bedroom New York apartment.
This is another top investor you’ve probably never heard of, but his story is a compelling one. Born in Germany in 1967, his family moved to South Africa for a time, and then to the U.S. in 1977. Thiel himself emigrated to New Zealand in 2011. A Stanford Law School graduate, he started out working in the legal field for several years.
That’s not exactly the kind of background you’d expect for a future superstar investor. An article in Propublica, describing Thiel as “The Lord of the Roths,” reports in detail how he turned a $2,000 investment in a Roth account in 1999 into $5 billion. As a big fan and promoter of Roth IRAs, this story guarantees Thiel a cherished spot on my list of the top 11 investors of all time.
Talk about tax shelters! Thiel is 53 years old, which means he’ll have access to fully tax-free withdrawals from his $5 billion Roth IRA in only about six years.
Of course, not everyone can do what Peter Thiel accomplished with a Roth IRA or any other investment account. As a cofounder of PayPal, he was able to purchase shares in the company before it went public, including some through his Roth IRA.
That wasn’t Thiel’s only accomplishment. He was also the founder of Clarium Capital, Palantir Technologies, and Founders Fund. Like at least some of the most successful investors, Thiel is a combination of investor and entrepreneur.
Carl Icahn is a bit of a controversial figure. Part investor, part corporate raider, it’s his skills in the latter that has enabled his success in the former. He’s the founder and principal shareholder of Icahn Enterprises, a holding company that purchases companies in distress and turns them around for big profits.
In this way, he operates in much the same way as Warren Buffett. He doesn’t merely invest in companies, but also manages them.
Icahn began his career as a stockbroker in 1961 and bought a seat on the New York Stock Exchange in 1968. It was then that he formed his own company, a securities firm engaged in risk arbitrage and options trading. But it wasn’t until 1978 that he began buying controlling interest in companies.
Perhaps his most famous acquisition was the troubled airline, TWA. He purchased the company in 1985 and began selling off its assets to repay the money borrowed to buy the company. Thereafter, he took the company private, which netted him nearly a half billion dollars.
Other acquisitions included US Steel, King Pharmaceuticals, Motorola, and many others. He has—or has had—major investments in several large companies, including PayPal, Yahoo, Lyft, Xerox, Clorox, Netflix, and Hertz. His personal net worth is estimated at $16.7 billion.
George Soros’s personal net worth is estimated to be $8.6 billion. But that’s after making a donation of over $32 billion to the Open Society Foundations. If Carl Icahn is part investor, part corporate raider, Soros is part investor, part philanthropist.
On a more practical level, he’s a hedge fund manager, and started a fund called Quantum Fund. When it was founded in 1969, it had $12 million in assets under management. But that had grown to $25 billion by 2011, taking Soros’s net worth with it.
But what Soros may be is the world’s greatest speculator. He’s perhaps best known as “The man who broke the Bank of England.” That stems from his 1992 short sale of $10 billion worth of British pounds, creating a currency crisis for the UK that netted Soros a $1 billion profit.
Soros’s primary success as an investor has come from the Quantum Fund. Since 1973, the fund has produced net gains of $43.9 billion. In 2018, the fund was ranked as the second highest earning hedge fund of all time, behind Ray Dalio’s Bridgewater Associates.
How great would it be if you could invest equal allocations in 11 funds run by each of these investors? Unfortunately, they don’t usually offer funds to the public, concentrating instead on institutions and large investors.
That’s largely because the type of investing they do also involves high risk. If you’re like most investors, high risk is something you want to avoid. But maybe—just maybe—you want to consider investing a small slice of your portfolio the way some of these investment geniuses have.
Are you up to it?