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Investment & Finance

How to Apply Iconic Investors Strategies All at Once

By
Jessica Cutter
Updated
December 4, 2023
5 minute read
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Undoubtedly, the best way to learn about investing is from the best investors, which is precisely why MasterClass highlighted the iconic current experts Ray Dalio, Meredith Whitney, Joel Greenblatt, and Seth Klarman. Each person has their own approach, experiences, history, and strategies to engage with the market. Their philosophies are diverse but with one underlying correlation: success! 

The best way to be the best is to learn from the best. Is it possible to take pieces from every investor’s philosophy and merge them into one approach? Let’s find out!

The Investors’ Philosophies

Although detailing every process and step can be helpful, a quick summary of each investor’s perspective can provide the necessary background. Each investor’s approach is different, but all found success with the following strategies;

Ray Dalio: An all-weather portfolio with diversification at the center through a risk-parity approach to find assets you want, group them into varying risk levels, sort based on risk and not potential return, and then rebalance your portfolio to maintain your original criteria.

Meredith Whitney: Look into the market from the top-down and bottom-up; the strategy emphasizes the details and the big picture. After looking through financial statements and company movements, key performance analysis will allow the assertion of opinions based on those movements, debt, and other incurred liabilities. 

Joel Greenblatt: The Magic Formula is to find cheap stocks, cheap stocks that perform well, and cheap stocks that perform well that are also diversified.  

Seth Klarman: A long-term, value investing approach focused on unknown stocks for long-term picks that, through fundamental analysis, can be predicted to perform well in the future while remaining unswayed by media or outside opinions. 

Now, do you apply every single one, get more directions, or fall hopelessly into a pit of knowing you’ll never be quite as good as Ray Dalio? Hold on to the falling part for now.

Technical Truths About Applying Strategies 

You can go full-throttle into one of these strategies and find success if you’re accurately approaching it—for example, Seth Klarman’s long-term investing strategy contains these steps. 

  1. Remind yourself that a stock (asset) can be mispriced/undervalued.
  2. The aim of a value investor is NEVER to lose money.
  3. Fundamental analysis of a particular company can identify an opportunity. 
  4. The gap in the undervalued stock (asset) could be an advantageous long-term investment. 
  5. Invest when prudent and applicable for the long-term growth of your portfolio.
  6. Step #1 should be revisited if the market conditions shift. 

Simple enough, and the remarkable aspect is the affiliation with Warren Buffet. He made his name through this strategy as a value investor. Maybe you want the rewards of value investing, but your weakness is fundamental analysis, or you want to diversify your portfolio through a risk-parity approach, but you’re unsure where to begin. 

The problem? Full dedication to one strategy requires time and expertise to execute it accurately. This will eliminate the opportunity to explore other approaches; there’s only so much time, and it can only be split in many ways. 

The solution? Take away lessons from the varying strategies and find the happy medium for your investment style. 

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How to Apply Every Strategy

It may be impossible to truly apply every strategy at once to the fullest (especially if, on a technical basis, they conflict), but you can have these main takeaways;

  • Diversify your portfolio across asset classes
  • Look into the details of a company
  • Analyze major market movements in history
  • Search for undervalued stocks that perform well
  • Play the long-term game of investing for the future 

There are fundamental truths engrained in successful strategies, often reflecting the takeaways listed above. 

alphaAI’s Philosophy 

If the strategies are appealing, but there's a tinge of fear in the application, alphaAI is here to provide a fifth philosophy. As an investment management company, alphaAI uses artificial intelligence to manage your portfolio based on your preferences as an investor. 

What is alphaAI’s philosophy? To deliver better risk-adjusted returns than the market during any condition through evaluating key performance indicators. 

Regardless of your expertise in finance, a baseline of analysis and indicators is required to be successful, but it can often be overwhelming regardless of the strategy.  This is exactly why AI can do the heavy lifting regarding predictions, calculations, and adaption. The tools utilized for the key performance indicators (KPIs) are Sharpe ratio, Alpha, Beta, R2, and volatility, with the balance of risk management automation to adjust to market conditions. 

alphaAI aims to make strategies that have typically only been available to sophisticated investors available to everyone. Any investor philosophy should be available and actionable for the everyday individual.

Takeaways 

You can’t apply every philosophy to the fullest at once, but you can apply the underlying lessons from each one to your investment strategy. Even with just the underlying lessons, executing your goals with the data thrown your way can be complex. Maybe it’s time to try and invest through alphaAI.

The strategies detailed by the successful investors are not only for certain investors, and AI technology available on the market that amplifies trading isn’t just for Wall Street. Be sure to know your stuff, explore your investment strategy, and take action through platforms that empower you to build your portfolio.

What about alphaAI?

In any investment endeavor, the key to success lies in making informed decisions. Whether you're building a recession-resistant portfolio, diversifying your assets, or simply exploring new opportunities, your journey should be guided by knowledge and insight. At alphaAI, we are dedicated to helping you invest intelligently with AI-powered strategies. Our roboadvisor adapts to market shifts, offering dynamic wealth management tailored to your risk level and portfolio preferences. We're your trusted partner in the complex world of finance, working with you to make smarter investments and pursue your financial goals with confidence. Your journey to financial success begins here, with alphaAI by your side.

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