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A great man once said, “The first rule is not to lose. The second
rule is not to forget the first rule.” That man’s name is Warren Buffett.
Does the name sound familiar? I’m
sure it does for some, but if you haven’t heard that name, Warren Buffett is a
man well known for many reasons.
He is known for his acts of
philanthropy, having pledged to give away 99% of his fortune to philanthropic
causes. Did you hear that? 99% of his fortune? This is a man with a whopping
net worth of $53.5 Billion and the fourth richest man in the world. That makes
you say wow, right? Yeah, even my jaw dropped when I heard that for the first
time.
Buffett was listed among Time’s
100 Most Influential People in the world in 2007 and was named the most
influential global thinker along with Bill Gates in the Foreign Policy’s 2010
report.
The list can go on and on, but
besides all of this, Warren Buffett is widely regarded as one of the most
successful investors in the whole world. He is famous for the successful
Berkshire Hathaway Company where he is the primary shareholder, chairman and
CEO.
His noteworthy savvy in stock
market investments can be viewed as his trademark which has doubtlessly earned
him the nickname, “Wizard of Omaha”.
Almost everyone wants to invest
like the legendary Warren Buffett, but only a few know how to. So here are 4
simple tips you can adopt to get you investing like Warren.
#1:
Invest in Value
Buffett said, “Stop trying to predict the direction of the
stock market, the economy, interest rates , or elections.”
This is where most
people make a mistake. Everyone wants to get rich NOW. PRONTO! This is a method
that can only lead to heartbreak as it is based on speculation and the false
hope that share prices will rise irrespective of their real value.
On the opposite side
of the wall are value investors, the grand-knights of the stock market, who,
unlike “the get rich quick” speculators, demonstrate their aversion to risk by
striving hard to avoid loss.
Summary:
Forget about market direction, look at VALUE!
#2:
When it comes to stocks, buy low and sell high
Buffett said, “Be fearful when others are greedy. Be greedy
when others are fearful.”
A value investor is
always looking for stocks that the market has undervalued. An undervalued stock is just a stock
that is selling at a price below what is assumed to be its real value. The idea
here for making money is to buy low and sell high.
The average person,
on the other hand, buys high and sells low and never becomes very wealthy.
Summary:
Buy low and Sell high.
#3:
Be Patient
Buffett said, “The
stock market is designed to transfer money from the active to the patient.”
Investing, like any
other endeavour in life, requires a huge deal of patience. It isn't unusual to
find cases where an investment which lagged for many many years abruptly turned
around and became a top performer.
To be a successful
investor, you need to invest carefully and sensibly and then have the patience
to let your investment grow. Investors with the ‘get rich quick’ mentality are
generally not successful.
Summary:
Patience is what gets you the big bucks.
#4:
If it’s too complex, then run away
Buffett said, “Never invest in a
business you can’t understand.”
Warren Buffett will
only part with his money when he is convinced he understands the rules of the
game, to ensure that his chances of losing are almost zero. So understanding a
business really well can help you detect warning signs quite early, enabling
you to make sound investment decisions.
Summary:
Only put your money in a business you understand.
Investors who consistently adhere
to these tips can be sure to record good returns sooner or later. Who knows,
you may sometime in the future be called ‘The Wizard of Investment.’
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