Lessons From History’s Greatest Investing Minds

What lessons can history’s best investment gurus teach us? Be resilient, unemotional, and cautious, to name three, says author William Green, who interviewed nearly three dozen investing legends for his new book.

Green’s book, “The Great Minds of Investing,” includes profiles on such investing luminaries as Warren Buffett, Charlie Munger and Bill Ackman, and in a column for CNBC.com he recently offered a peak at lessons he learned from a few of those who he profiled. One was Irving Kahn, who was once a teaching assistant to Benjamin Graham at Columbia University. Graham’s conservative value approach rubbed off on Kahn, who offered this as his best investing advice: “Safety. Considering the downside is the single most important thing an investor must do. This task must be dealt with before any consideration can be made for gains. The problem is that people nowadays think they’re pretty smart because they can do something quite rapidly. You can make the horse gallop. But are you on the right path? Can you see where you’re going?”

Another guru Green discusses is Bill Miller, who beat the market for a record 15 consecutive years but was pounded in the 2008 financial crisis. “Yet what stands out most is Miller’s emotional resilience in the face of adversity,” writes Green. “As the market imploded, he didn’t hide in a corner, nursing his wounds. He gathered all of the cash he could muster and invested it in cheap stocks that have since surged. Miller didn’t find it difficult to buy while others ran for cover.” Miller told him that he doesn’t get perturbed by paper losses, seeing them as opportunities rather than reasons for panic.

“Intriguingly, Miller surmises that the best value investors are ‘wired differently’ so that the part of their brain that registers financial loss doesn’t react in the same way as it would for the average investor,” Green says. “Miller describes himself as ‘very emotionless,’ and he sees a similar lack of emotion in investors like Buffett.”