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2018 IA 25 Portfolio, Investing & the Market Winners

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Berkshire Hathaway Chairman Warren Buffett garnered more votes than any other member of the 2018 IA 25 and topped the portfolio category. This popularity speaks to Buffett’s incredible investing success and deep sense of integrity.

Berkshire’s per-share book value has a 19% yearly compound growth rate for the last 53 years. In ‘17, its shares rose 21.9% vs. 20.9% for the index, including dividends. Plus, as Buffett points out, the firm’s figures are post-tax, while those of the index are pre-tax.

In business and life, the Oracle of Omaha keeps the right perspective, offering investors unwavering honesty about the ups and downs of the market and the need to avoid greed. “Our aversion to leverage has dampened our returns over the years. But [business partner] Charlie [Munger] and I sleep well. Both of us believe it is insane to risk what you have and need in order to obtain what you don’t need,” Buffett explained in his latest letter to shareholders.

While he unemotionally evaluates potential investments, the investment guru also looks at them as entities run by people for people — rather than just numbers. “Charlie and I view the marketable common stocks that Berkshire owns as interests in businesses, not as ticker symbols to be bought or sold based on their ‘chart’ patterns, the ‘target’ prices of analysts or the opinions of media pundits.”

One investment expert noted that Buffett’s uncanny ability to pick and manage investments is a powerful argument against the view that active management is dead, adding that Berkshire Hathaway’s 20.8% annual returns from 1965-2016 were more than double the annual return of the S&P 500 over that same period.

Buffett has learned what it takes to keep the right market view: “Stocks surge and swoon, seemingly untethered to any year-to-year buildup in their underlying value,” he said. “Over time, however, Ben Graham’s oft-quoted maxim proves true: ‘In the short run, the market is a voting machine; in the long run, however, it becomes a weighing machine.’”

Liz Ann Sonders shares regular and sober market analysis with advisors and investors, keeping them up to date on short-term trends and educated on broader issues. (She has more than 52,300 followers on Twitter.)

The chief investment officer of Charles Schwab says that, generally speaking, female investors and financial professionals benefit from their “intuition, that gut instinct that I know I personally rely on … and more of methodical, thoughtful approach,” according to an interview late last year with The Wall Street Journal. She adds that her most-successful market calls have “had as much to do with my gut instinct and intuition as with anything else.”

Sallie Krawcheck is now CEO and co-founder of the female-focused digital-advice platform Ellevest, after leading Citi and Merrill Lynch’s wealth-management businesses and serving as CEO of Smith Barney and Sanford C. Bernstein. She often speaks about how investing in the advancement of women benefits us all, explaining that money has “the power to drive positive change. The power to start a business, leave a bad job, live our fullest lives… When women thrive — in our communities, in business, in leadership — everyone thrives.”

Allianz Chief Economic Advisor Mohamed El-Erian writes and speaks regularly on economic affairs, and keeps his 178,000 Twitter followers well informed on the world’s economy and markets. His sober, thorough and professorial views aim to give market-watchers a framework for day-to-day changes, while reminding them about historic trends and globalization dynamics.

For instance, writing recently in a Bloomberg View column, he said many investors “wish for a rapid return to calm … but it may not be in their longer-term interest to simply revert to the highly unusual market conditions that prevailed before. Instead, they should hope for a new, less abnormal market paradigm with respect to asset-price volatility, correlations and certain asset class valuations, together with less extreme investor-base conditioning.”

Wharton Finance Professor Jeremy Siegel’s key message is: “For most of us, trying to beat the market leads to disastrous results … Our actions lead much lower returns than can be achieved by just staying in the market.”

Why do many ignore his advice? “Fear has a great grasp on human action than the impressive weight of historical evidence,” explained Siegel, author or “Stocks for the Long Run.”

— Read the profiles of the 2018 IA 25 winners in the other five categories: