Lessons From the Greatest Investors of All Time (and How to Use Them)
Updated: 5 hours ago
The greatest investors of all time agree on a short list of lessons: buy businesses, not tickers; insist on a margin of safety; favour high-return companies with durable moats run by honest managers; avoid debt that can sink you; and act when others are fearful. Graham, Fisher, Buffett, Munger, Lynch, Templeton, Greenblatt, Marks and Klarman each emphasised one of these ideas. Together they form the backbone of the Five Criteria.
Where this fits: this article shows where each part of the Five Criteria comes from. Every criterion is borrowed from investors who tested it with real money over decades.
Why Learn From the Great Investors?
Thousands of investing books are published, and millions of opinions are shared every year. A small group of investors stands apart because their records are long, well documented and built on ideas they explained in writing.
These were practitioners, not theorists. They made mistakes, wrote about them and refined their methods. Reading them is the fastest way to borrow decades of experience without paying for every lesson yourself.
Below is one key lesson from each, the book or source to read, and the Five Criteria question it answers.
At a Glance: Nine Investors, Nine Lessons
Investor | Key lesson | Five Criteria link | Start with |
Benjamin Graham | Always demand a margin of safety | 5. Reasonable price | The Intelligent Investor |
Philip Fisher | Research the people and hold great companies | 3. Aligned management | Common Stocks and Uncommon Profits |
Warren Buffett | Buy wonderful businesses protected by moats | 2. Durable moat | Berkshire shareholder letters |
Charlie Munger | Returns on capital drive long-term results | 1. Great business | Poor Charlie's Almanack |
Peter Lynch | Know what you own, and why | 1. Great business | One Up on Wall Street |
John Templeton | Buy at the point of maximum pessimism | 5. Reasonable price | Investing the Templeton Way |
Joel Greenblatt | Good business plus cheap price, systematically | 1 and 5 together | The Little Book That Beats the Market |
Howard Marks | Risk is permanent loss, and price drives risk | 5. Reasonable price | The Most Important Thing |
Seth Klarman | Avoid losses first; survival comes before returns | 4. Sound balance sheet | Margin of Safety |
Benjamin Graham: Demand a Margin of Safety
Benjamin Graham (1894–1976) is the father of value investing. He wrote Security Analysis (1934, with David Dodd) and The Intelligent Investor (1949), ran the Graham-Newman partnership and taught at Columbia, where Warren Buffett was his student.
His central idea is the margin of safety. Your estimate of a company's value will always be uncertain, so only buy at a meaningful discount to it. Then, even if you are partly wrong, you have not overpaid. The final chapter of The Intelligent Investor calls margin of safety "the central concept of investment".
Graham also gave us Mr. Market, the moody partner who offers a new price every day. You can ignore him, or deal with him only when his price suits you. We explain the parable in how to use short-term price movements.
Five Criteria link: Criterion 5. Our threshold is a free cash flow yield of 5% or more, or a price at least 25% below a conservative intrinsic value. Read margin of safety explained.
Philip Fisher: Research the People, Then Hold
Philip Fisher (1907–2004) ran an investment firm in San Francisco for decades and wrote Common Stocks and Uncommon Profits (1958). Buffett has credited him as one of his two major influences, alongside Graham.
Fisher believed the most important facts about a company are not in the financial statements. He used "scuttlebutt": talking to customers, suppliers, competitors and former employees. Many of his famous 15 points are about management: its depth, its integrity, and whether it is candid with shareholders when things go wrong.
He also argued for long holding periods. In his words, if the job has been done correctly when a stock is bought, "the time to sell it is — almost never." Motorola was one of his best-known long-term holdings.
Five Criteria link: Criterion 3. Fisher's focus on integrity and candour is why we check insider ownership, share count and capital allocation. See how to identify great management.
Warren Buffett: Buy Wonderful Businesses With Moats
Warren Buffett (born 1930) ran Berkshire Hathaway from 1965 until he handed the CEO role to Greg Abel at the start of 2026. His annual shareholder letters are free on Berkshire's website and are some of the best business writing available.
Buffett began as a pure Graham investor, buying statistically cheap stocks. Influenced by Fisher and Munger, he shifted towards quality. In his 1989 letter he wrote: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
He popularised the idea of the economic moat: a durable advantage that protects a business, like a moat around a castle. Coca-Cola, first bought by Berkshire in 1988, is the textbook example of a brand moat that has lasted decades.
Five Criteria link: Criterion 2. A moat must come from a real source, such as intangibles, switching costs, network effects, cost advantage or efficient scale, and must have held up through a downturn. Learn more in how to spot a competitive advantage.
Charlie Munger: Returns on Capital Drive Results
Charlie Munger (1924–2023) was Buffett's partner and Berkshire's vice chairman for decades. He is often credited with pushing Buffett to pay fair prices for great businesses. The 1972 purchase of See's Candies for $25 million is the classic example: a small, capital-light business that went on to generate large amounts of cash for Berkshire.
In a 1994 talk at USC Business School, Munger explained that over the long term a stock's return tends to track the return on capital of the underlying business. A company earning 6% on capital for 40 years will not give you much more than 6%, even if you buy cheaply. A company earning 18% can reward you well, even if it looked expensive.
Munger was also famous for "invert, always invert" and for his line on incentives: "Show me the incentive and I will show you the outcome."
Five Criteria link: Criterion 1. Our threshold is ROIC of 15% or more for at least five years. See return on invested capital.
Peter Lynch: Know What You Own
Peter Lynch managed Fidelity's Magellan Fund from 1977 to 1990, one of the best records of any mutual fund manager of his era. His books One Up on Wall Street (1989) and Beating the Street (1993) were written for individual investors.
Lynch's key lesson is to know what you own and why. He urged investors to be able to explain, in a couple of minutes, why a company will grow and what could go wrong. He believed everyday experience as a customer or employee can give you a head start, but only if you then do the homework on the numbers.
He also classified stocks into types, such as slow growers, stalwarts, fast growers, cyclicals and turnarounds, so that your expectations match the business.
Five Criteria link: Criterion 1, and your circle of competence. If you cannot explain how the business earns its returns, you cannot judge whether it passes. See different business models explained.
John Templeton: Buy at Maximum Pessimism
Sir John Templeton (1912–2008) was a pioneer of global investing. In 1939, as war spread in Europe, he bought 100 shares of each NYSE-listed company trading below $1, 104 companies in total, including dozens in bankruptcy. Most turned out to be profitable. He founded the Templeton Growth Fund in 1954 and was knighted in 1987.
His best-known maxim: "Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria." He looked for the moment when sellers were most desperate, because that is when prices are furthest below value.
Five Criteria link: Criterion 5. Templeton shows that the best prices usually appear when the news is worst. That only works if Criteria 1 to 4 tell you the business will survive.
Joel Greenblatt: Quality Plus Price, Systematically
Joel Greenblatt founded Gotham Capital in 1985 and has taught at Columbia Business School. In The Little Book That Beats the Market (2005), he described the "magic formula": rank companies by return on capital and by earnings yield, then buy those that score well on both.
The lesson is powerful in its simplicity. A good business at a cheap price beats either one alone. He also stressed that the approach can underperform for years, and that most people abandon it at exactly the wrong time.
Five Criteria link: Criteria 1 and 5 together. His two factors are essentially our first and last criteria. The Five Criteria adds moat, management and balance sheet checks to screen out traps.
Howard Marks: Risk Is the Chance of Permanent Loss
Howard Marks co-founded Oaktree Capital Management in 1995. His client memos, published free on Oaktree's website since 1990, and his book The Most Important Thing (2011) are essential reading on risk and cycles.
Marks argues that risk is not volatility but the probability of losing money permanently. He also stresses "second-level thinking": not asking "is this a good company?" but "is it better than the price already assumes?" A great business bought at too high a price can be a poor investment.
Five Criteria link: Criterion 5, and our definition of risk. Read what investment risk really is and the danger of overpaying for stocks.
Seth Klarman: Avoid Losses First
Seth Klarman founded the Baupost Group in 1982. His 1991 book Margin of Safety is long out of print and famous for its scarcity. Its message is that avoiding loss should come before seeking gain.
Klarman is known for holding cash when bargains are scarce, rather than forcing money into mediocre ideas. He focuses on the downside first: what happens to this investment if things go wrong? A business that cannot survive a bad year never gets a chance to compound.
Five Criteria link: Criterion 4. Our threshold is net debt of 2x EBITDA or less and interest coverage of at least 5x, so a company can survive a bad year without diluting or defaulting. See how much debt is too much.
What the Great Investors Agree On
Their styles differ. Graham bought statistical bargains. Fisher bought growth companies. Templeton bought globally. Greenblatt used a formula. Yet the shared principles are clear:
A stock is part of a business. Every one of them analysed the business, not the chart.
Price matters. Even Fisher, the most growth-oriented, avoided paying for hype.
Avoid permanent loss. Survival comes before returns.
Temperament beats IQ. They all acted differently from the crowd at the extremes.
Stay within your competence. Each concentrated on what they understood.
Worked Example: Company A Through Nine Lenses
Company A is a hypothetical industrial business. It earns ROIC of 18% for eight years, holds a strong position thanks to high switching costs, and has management owning 10% of the shares. Net debt is 1.2x EBITDA. At $80 a share it trades on a 6% free cash flow yield.
Munger and Lynch would like the returns and the simple story: passes Criterion 1.
Buffett would point to switching costs as the moat: passes Criterion 2.
Fisher would want to talk to customers to confirm, and would like the insider stake: passes Criterion 3.
Klarman would be comfortable with modest debt: passes Criterion 4.
Graham, Templeton, Marks and Greenblatt would all note the 6% FCF yield leaves a margin of safety: passes Criterion 5.
Now raise the price to $160. The FCF yield falls to 3%. Nothing about the business changed, but Graham, Marks and Klarman would now decline to buy. That is the Five Criteria in action.
Common Mistakes When Learning From Great Investors
Copying trades instead of thinking. A famous investor's purchase is not your thesis. Their price, time horizon and portfolio differ from yours.
Using quotes out of context. "Hold forever" applies only to businesses that keep passing every criterion.
Picking one hero and ignoring the rest. Graham alone can lead to value traps; Fisher alone can lead to overpaying.
Trusting unsourced quotes. Many lines online are misattributed. Go to the letters and books.
Ignoring their mistakes. Buffett's letters discuss his errors openly. Those sections teach as much as the successes.
Frequently Asked Questions
Who is the greatest investor of all time? Warren Buffett is most often named because of his long record at Berkshire Hathaway. Graham, Lynch, Templeton and others also have strong claims depending on the style you value.
Which investing book should a beginner read first? The Intelligent Investor by Benjamin Graham is the classic starting point, especially chapters 8 and 20. One Up on Wall Street by Peter Lynch is more accessible for many beginners. See our book recommendations.
What do all great investors have in common? They treat stocks as businesses, insist on paying sensible prices, focus on avoiding permanent loss, and keep their emotions in check when markets swing.
Can ordinary investors apply these lessons? Yes. Individual investors can be patient, concentrate on businesses they understand and ignore quarterly pressure that many professionals face.
Your Next Step
Pick one investor from the table and read their primary source this month. Then apply what you learn with the Five Criteria framework and the habits in what it means to think like an investor.
About the author: Cameron Hayes is a senior investor relations and finance professional who has worked in IR at Nasdaq Copenhagen-listed companies including Nilfisk and Maersk Drilling. He holds an MSc from Copenhagen Business School and a BCom from the University of Ottawa, and founded Gingernomics to teach individual investors the Five Criteria framework. More about Gingernomics.
The content on Gingernomics is for educational and informational purposes only and does not constitute financial advice. Always do your own research and consult a licensed financial advisor before making any investment decisions. Past performance is not indicative of future results.
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