History's most famous financial advisors are a varied lot. They include successful investors who share their knowledge with the masses, television celebrities who write books and swindlers. Ten of them are discussed below.
Benjamin Graham is known as the father of value investing, which involves identifying and buying undervalued stocks that had the potential to grow over time. To calculate a company's intrinsic value, his approach eschews trends and hot ideas and relies instead on diligent research, thorough financial analysis, and patience – standard concepts today, but revolutionary when he introduced it in the 1930s. Graham’s disciples include many of the most successful investors of the last 70 years. His 1949 book The Intelligent Investor remains a must-read for all asset managers and stock traders, whatever their investment approach.
Investor Warren Buffett, the "Oracle of Omaha," is one of Graham’s most famous followers (and his remarkable track record, openly attributed to Graham's principles, has helped keep his mentor's name alive). The one rule of Graham's that Buffett does not always follow is to diversify: He often prefers to concentrate investments in companies. After providing significant profits to his original partners, Buffett went public with the acquisition of Berkshire Hathaway Inc.(BRK-A) in late 1964, making it the holding company for his other investments. A $1,000 investment in Berkshire Hathaway in 1964 is worth more than $20.6 million today, indicating an annual growth rate of close to 20%.
Peter Lynch managed the Fidelity Magellan Fund (FMAGX) from 1977 to 1990. During his tenure, he provided investors with a 29% annual compounded rate of return. After leaving the fund, Lynch wrote three best-selling books detailing his investment philosophy and stressing that small investors are capable of doing better in the stock market than large asset managers.
Dave Ramsey is a radio and television personality who has written six best-selling books. On "The Dave Ramsey Show," a syndicated radio program, he takes calls from people with financial problems and talks them through the solutions. His underlying philosophy is debt-free living. He counsels people on concrete steps to get out of debt and never get into it again.
An Emmy award-winning television host (her "The Suze Orman Show" ran for 13 years on CNBC) and best-selling author of multiple books, Suze Orman is known for a brash and pushy style that she delivers with a smile. One of her trademarks is to explain to people wanting to make a major discretionary purchase that they just can’t afford it. Her appearances on "The Oprah Winfrey Show" and "The Today Show," as well and column in O magazine, have made her one of the most famous and recognizable financial advisors of all time.
Hedge fund manager turned TV host Jim Cramer is known for his ability to have an opinion on any stock or economic matter at a moment’s notice. His CNBC program, "Mad Money," is a loud and very fast-paced show. In the midst of the seeming chaos, Cramer dispenses solid practical information aimed at teaching individuals to think like financial pros. He also has a website, TheStreet.com, which provides Wall Street-related news, commentary and advice.
The author of the best-selling "Rich Dad, Poor Dad" book series (more than 30 million copies sold) also conducts personal finance and real estate seminars (franchised through his Rich Dad company). His basic philosophy: Create passive streams of investment income and grow them until they can support you, without you having to work.
The well-known actor and host of Comedy Central’s "Win Ben Stein’s Money" is a former economist and law professor. His Hollywood persona makes him a sought-after guest on various financial news shows. His advice and opinions are straightforward and to the point.
Charles Ponzi did not invent the pyramid scheme, but his version was so audacious that all subsequent scams of a similar nature bear his name as Ponzi Schemes. In 1919-20, under the heading of a firm called Securities Exchange Company, he promised returns of 50% in 45 days or 100% in 90 days. Due to his reputation for success in the arbitrage of post stamp coupons, investors were immediately attracted. But instead of actually investing the money, Ponzi just redistributed it and told the investors they made a profit – while pocketing a significant portion of the proceeds for himself.
Bernie Madoff is perhaps Charles Ponzi’s most infamous disciple. in the 1970s and '80s, Madoff ran a legitimate securities firm and was chairman of the Nasdaq for three years in the '90s. He used this operation as a front for the creation of a hedge fund division that, while pretending to use sophisticated trading strategies, was a total fiction: He simply deposited new funds into a single bank account that he used to pay existing clients who wanted to cash out. Still, the returns and his reputation seemed so good that thousands of wealthy and famous people, and even other hedge funds, invested with him. It was only when the 2008 financial crisis caused Madoff to be unable to keep up with redemptions that his operation was exposed as a $65 billion Ponzi scheme.