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Berkshire Hathaway Inc. (BRK.B): How to Invest Like Buffett, Lynch and Soros

Lynch writes that he likes fast growers that “duplicate the winning formula mall by mall, city by city … the expansion into new markets results in the phenomenal acceleration on earnings.”

Chipotle Mexican Grill, Inc. (NYSE:CMG) can still add many more stores domestically and is expanding into the new ShopHouse market. With just a handful of international locations there is a huge opportunity for growth overseas. Lynch would love it.


The Hungarian Seer

George Soros fled the Nazis and started a career as a stock broker in London, later moving to Wall Street. His reputation was made when he made billions betting against the Pound, forcing the United Kingdom to exit the European Monetary System at a massive cost to the British tax payer.

The tussle with the UK gave him a somewhat sinister reputation, as he was perceived as seeking personal gains without regard to the wider damage caused. But Soros did not create the economic climate; he was just smart enough to take advantage of a situation before the rest of the market.

Soros’ style is the antithesis of that employed by Buffett and Lynch. Whereas they look at long term investments in great businesses, Soros likes to trade on momentum shifts in the market, using a system he calls Reflexivity.

Soros has a massive collection of highly placed contacts widely spread around the world. He uses his informed global viewpoint to make uncannily accurate predictions of market changes. Then Soros makes huge bets on currencies, interest rates and securities.

Soros is famous for his huge investing coups, but he has also had massive disasters. He shrugs these off with a cool detachment, cuts his losses and waits for the next opportunity. In other circumstances, Soros could easily have been wiped out and would never have risen to fame.

Unless you have knowledge of the occult and global connections at the highest level of government, I would not advise you to emulate George Soros.

The Bottom Line

Peter Lynch and Warren Buffett have both been extremely successful following a simple approach that any investor can emulate – stick to the fundamentals and treat your investment as ownership of a business. George Soros has become successful using an approach that is impossible to emulate – predicting market moves and trading aggressively.

Curiously, many amateur investors appear to be taking the ‘impossible’ route, by trying to predict the market and making frequent trades.

Perhaps we should pay more attention to the simple lessons of Buffett and Lynch.

The article How to Invest Like Buffett, Lynch and Soros originally appeared on Fool.com and is written by Ian Richards.

Ian Richards owns shares of Berkshire Hathaway, Apple, and Chipotle Mexican Grill. The Motley Fool recommends Apple, Berkshire Hathaway, and Chipotle Mexican Grill. The Motley Fool owns shares of Apple, Berkshire Hathaway, and Chipotle Mexican Grill. Ian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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