YOUR PORTFOLIO
/ LEGENDS /
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HALL
of
LEGENDS
Anthony Luzio takes a look at three investment pioneers
to find out how they made their fortune
O
NE OF THE WISEST PIECES OF
INVESTMENT ADVICE is to forget all
thoughts of getting rich quickly and instead
aim to generate small but reliable returns
that will compound every year.
There is one school of thought that suggests you
shouldn’t even bother trying to beat the market,
but should instead aim to replicate its performance
through the use of an index tracker.
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However, before every stock was analysed to
within an inch of its life, it was possible for industry
professionals to develop a novel style of investing that
would give them an unfair advantage over their peers
– and get rich quick was exactly what they did.
Here we look back at three investors whose money-
making prowess has reached near mythical status –
and find out who their closest equivalents would be in
the current market.
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NATHAN MAYER ROTHSCHILD
IN 1812, THE FIVE SONS
OF MAYER AMSCHEL
ROTHSCHILD relied on each
other for up-to-date information on
markets and prices they had garnered
from their travels across Europe.
However, with early postal
systems across the continent slow
and inconsistent, they needed to
find a more efficient method of
communication – and Nathan Mayer
Rothschild took inspiration from the
carrier pigeons stationed at his farm
in Kent.
A letter written in August 1846
by his son Nathaniel said: “I hope
our feathered messengers will have
brought you in due time our good
prices,” and, “A B in our pigeon
dispatches means: buy stock, the
news is good; C D means sell stock,
the news is bad.”
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On 19 June 1815, a courier
arrived at Rothschild’s New Court
headquarters bearing news of the
Duke of Wellington’s victory at the
Battle of Waterloo, a full 48 hours
before the government’s own riders
brought the news to Downing
Street.
Legend has it that Rothschild
made £1m from this early
information, although the
Rothschild archive says that the
structure of the market at the time
meant it was unlikely to have been
anywhere near this amount.
All we know is that a Rothschild
courier, John Roworth, sent him
a letter saying: “I am informed by
Commissary White that you have
done well by the early information
which you had of the victory gained
at Waterloo.”
A MODERN EQUIVALENT
You can gain access to the
investment prowess of one of
Rothschild’s descendants through
RIT Capital Partners, where
Lord Jacob Rothschild remains a
chairman. However, the trust now
has more of a focus on preserving
wealth than making a killing as the
family did in the early 1800s.
Instead, modern investors may
wish to consider Alex Wright of the
Fidelity Special Values trust and
Special Situations fund. Wright
believes the market can be slow to
react to changing situations and
therefore searches for unloved firms
that are entering a period of positive
change. He aims to buy these
companies before the market has
recognised their improving growth
prospects.
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