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Fund manager wisdom: How I’d draw on Warren Buffett, Ray Dalio, and George Soros for my FTSE 100 investments now

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Making investment decisions at times like these is hard. The stock market is still luke-warm and recovering from the crash. The economy’s still quite weak. For every data point indicating improvement, there’s another that’s disappointing. At this time, I’m drawing on investment wisdom from the best known investors and fund managers, with decades of experience. 

Warren Buffett’s fund management style

The first of these, of course, is Warren Buffett of Berkshire Hathaway. This American investor, known as the Sage of Omaha, needs no introduction. He has given some great pieces of advice over the years. One that I think is particularly relevant for these times is this: “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.” 

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A stock market crash sure creates nervousness. But many good businesses will not just survive this time, they will thrive over time as well. For now, some of these FTSE 100 stocks are available at low price-to-earnings (P/E) multiples, even though they are financially healthy. I’d invest in these ones based on Buffett’s advice. I think FTSE 100 retailer NEXT and multi-commodity miner Anglo American are two examples.

Macro-investing is the Dalio way

Ray Dalio is another successful investor, who makes macro calls. Dalio had a recent fall from grace with poor fund performance, but that doesn’t take away from the fact that in the past, at least, he’s been part of an impressive success story. Bridgewater Associates, which he founded, is the biggest global hedge fund. It also claims to have made more money for investors than any other hedge fund ever. 

For that reason, when this fund manager warns of the risks associated with continued US-China friction, I take an even more careful note of developments. I believe that this situation can impact growth, spending, and investments for a long time. This will slow economic recovery. More immediately, I think FTSE 100 banking stocks like HSBC and Standard Chartered are in the line of fire. They have to make hard choices on contentious Hong Kong issues already. They could face a double-whammy from escalation in US-China tensions.  

Soros’s unforgettable currency trade

Last but not the least, is George Soros, another fund manager and macro investor, who is probably still best remembered for his trade on the British pound in 1992 that led to a sharp drop in the currency’s value. Now, speculative currency trades aren’t for anyone, but I think this is one is a good reminder of the importance of big movements in currency. I say this because in July, the US dollar has had its worst month since 2010. FTSE 100 companies with US-based business can be impacted by this dollar decline. Companies like the construction biggie CRH would be one example of this. I’d look out for US dollar forecasts to assess how this and similar companies would be affected. 

These are just three examples of famous investors. I think there are many more to draw upon to help us make smart decisions.

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Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK owns shares of Next. The Motley Fool UK has recommended HSBC Holdings and Standard Chartered. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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