We hear it all the time in finance and tech: you need to "stand on the shoulders of giants." It sounds wise, almost like a free pass to success. But what does it actually mean? Is it just about reading old books by dead white men? Not even close. For an investor, it's the most practical skill you can develop. It means strategically building your knowledge and strategy on the proven, time-tested frameworks of those who came before you, so you can see further and avoid the cliffs they already mapped out. It’s the opposite of starting from scratch every time the market hiccups.
What You'll Discover
The Origin and Real Meaning (It's Not What You Think)
Most people credit Isaac Newton with the phrase. In a 1676 letter, he wrote, "If I have seen further it is by standing on the shoulders of Giants." He was acknowledging the work of earlier scientists like Descartes and Galileo. But the idea is much older, tracing back to the 12th century. The core isn't about humility, though that's part of it. It's about leverage.
Think about it. Newton didn't spend his life re-proving the Earth orbits the Sun. He accepted that established truth (from giants like Copernicus and Kepler) and used it as a stable platform to probe the laws of gravity. In investing, this is crucial. You don't need to personally experience every bubble and crash to understand market cycles. That knowledge is already documented, often painfully, by giants who lived through them.
How This Wisdom Applies to Investing (Your Secret Weapon)
So how do you actually stand on giants' shoulders with your portfolio? It's not about blind mimicry. It's a three-step process: Learn, Adapt, Synthesize.
1. Learn the Foundational Frameworks
This is your base layer. You need to understand the core principles that have weathered multiple market cycles. This isn't just about Warren Buffett. It's about the people he stood on.
Benjamin Graham (The Father of Value Investing): His book Security Analysis (co-authored with David Dodd) is the bedrock. Concepts like "Mr. Market" (the emotional, manic-depressive metaphor for the market) and the "margin of safety" (buying at a significant discount to intrinsic value) are giant-sized ideas. You don't have to follow them slavishly, but not knowing them is like an architect ignoring gravity.
Philip Fisher (Growth Investing): While Graham focused on numbers and cheap assets, Fisher, in Common Stocks and Uncommon Profits, emphasized qualitative factors: superior management, sustainable competitive advantages ("moats"), and long-term growth potential. Buffett later merged Graham's quantitative safety with Fisher's qualitative excellence.
John Bogle (The Index Revolution): His giant contribution was demonstrating the crushing impact of fees and the difficulty of consistent outperformance. His shoulder offers the view that for most people, a low-cost, broad-market index fund is the most rational long-term choice. The Vanguard Group's research library is a direct repository of this giant's work.
2. Adapt Their Principles to Your Context
Graham hunted for "net-nets" (companies trading below their net current asset value) in the 1930s. Those are exceedingly rare today. The giant's principle was "margin of safety." The specific tactic is outdated. Your job is to ask: What does a 'margin of safety' look like in a software-as-a-service (SaaS) company that has no physical assets? Maybe it's in the lifetime value of customers, the burn rate, or the competitive moat. You're using Graham's shoulder to see the principle, but you're focusing your own eyes on the modern landscape.
3. Synthesize Your Own View
This is the "seeing further" part. Once you have a firm footing on several giants' work, you can combine insights to form your own, more nuanced perspective. Maybe you blend Bogle's cost-awareness with a selective, Fisher-like approach to picking a few high-conviction growth stocks for a small portion of your portfolio. You're not a pure indexer or a pure stock picker; you've created a hybrid strategy informed by, but not dictated by, the giants.
How to Identify Modern "Giants" in Investing
Not all famous investors are giants in the Newtonian sense. A giant provides a stable, reusable framework, not just a hot streak of performance. Here’s how to spot one:
Their work is principle-based, not tip-based. They talk about "how to think" not "what to buy." Look for investors who publish their logic, their mistakes, and their philosophy in detail. Howard Marks' memos from Oaktree Capital are a masterclass here. He discusses market cycles, risk, and investor psychology in a way that's applicable decades from now.
Their ideas are testable and have endured. The core of Graham's value investing has been stress-tested for nearly a century. While its application evolves, the central idea of buying value over price remains sound. Be wary of "giants" whose entire philosophy is less than 10 years old and hasn't seen a major bear market.
They focus on process over outcome. Anyone can get lucky. A giant emphasizes a repeatable, disciplined process that manages risk. This is the shoulder that won't collapse under you when the market gets volatile.
A Real-World Case Study: Warren Buffett's Shoulders
Let's make this concrete. Warren Buffett is often called a giant himself. But his genius was explicitly in choosing whose shoulders to stand on. In his early years, he was a pure Graham disciple, buying statistically cheap "cigar butt" companies. It worked.
Then, through his partner Charlie Munger, he was hoisted onto the shoulders of Philip Fisher. Munger famously said, "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." This was Fisher's qualitative influence.
Buffett didn't abandon Graham. He merged them. He used Graham's "margin of safety" as a non-negotiable foundation (the shoulder of stability) and Fisher's focus on wonderful businesses as the lens to look through (the height to see further). The result? He shifted from buying cheap textile mills (Berkshire Hathaway's original business) to buying phenomenal brands with pricing power like See's Candies, Coca-Cola, and later Apple.
He saw further because his platform was two giants wide. An investor who only reads Graham might have missed Apple in 2016 because the P/E ratio wasn't in the classic "value" range. An investor standing on both Graham and Fisher could appreciate its immense moat, loyal customer base, and recurring revenue (Fisher) while still seeking a price that offered some margin of safety (Graham) relative to its future cash flows.
Your Burning Questions Answered
The phrase "standing on the shoulders of giants" isn't a polite nod to the past. It's an active, demanding strategy. It requires you to seek out the sturdiest foundations, climb up, and then do the hard work of looking for yourself with the better vantage point you've earned. In investing, those shoulders are the books, the memos, the research, and the documented philosophies of those who have navigated fear and greed before you. Start climbing. The view from up there is where the real opportunities become clear.