How to Invest like Warren Buffett
Who is Warren Buffett?
Warren Buffett is one of the most successful American investors of all time. He is also known as the “Oracle of Ohama,”. Along with Bill Gates in 2010, they launched a charitable cause called the ‘Giving Pledge’, in which they requested their fellow billionaires to pledge to donate half of their wealth to it.
How did Warren Buffet start?
Born on 30th August 1930 to a U.S. congressman, Howard Buffett, Warren bought his first ever stock at the mere age of 11 and started filing taxes at 13.
His father owned a small-scaled brokerage and Warren’s days would be spent watching, listening and observing everything the investors did and said.
In 1962, there was an opportunity for Warren to invest in a New England textile company- Berkshire Hathaway, which he bought stocks of and later bought so many stocks that he took control of the company itself.
Berkshire Hathaway stock.
Berkshire Hathaway is run by Buffett since 1962 and the company owns over 60 other companies such as Duracell, Dairy Queen, and Geico.
How does he select his stocks?
Buffett’s extraordinary ability to select companies to invest in is long praised. He swears by the value investing principles and over the decades he has gathered about $80 bn dollars (according to a Forbes interview).
He has also put his great wealth to much greater use through charities.
How to practice investing like Warren?
Buffett has two rules to investing-
Rule #1: Never lose money.
Rule #2: Never forget rule #1.
So the bright side is, you can use these rules and learn Buffett’s principles when selecting stocks and utilize them in your own investment strategies.
In order to never lose the money, you should rely on stock tips. These share market tips provided by the experts are determined after extensive analysis.
Here are some points that can further help you invest more like Buffet:
•Start by investing in what you already know-
Before investing in stocks, you must have enough knowledge of how business works and makes money. Take a page from his book and avoid investing in new sectors like tech stocks and stick to what you know best.
•Know the fundamentals of value investing-
Buffett says most Americans would be better off investing in low-cost index funds rather than individual stocks because it is safer.
•Recognize cheap stocks-
After determining your value-investing criteria, make a wishlist of stocks. Screeners are often offered by brokerage accounts to make the process of listing these stocks easier.
• Search for businesses that will survive longer –
Finalize your wishlist and then start narrowing down by selecting businesses that will sail through tides of depression in the market. Buffett suggests and loves investing in utilities.
• Good management is a good investment-
Buffett places immense importance on the value of good management. He suggests to only invest in a stock if the management is trustworthy and will act in the shareholder’s best interest constantly. Do your research and find out the history of management before investing in a stock.
•Learn to be stubbornly aggressive in times of hardships –
He often tells people that loving the market corrections in tough times secret of successful long-term investors and it’s important to not stop searching for opportunities while going through challenging economic times.
• Set a mindset for long-term-
Considering Berkshire Hathaway’s stock range of investments, Warren says “our favorite holding period is forever.”
Although that doesn’t actually mean the company is going to hold any of its stocks forever as they sell them regularly.
But what Buffett’s trying to imply is that you should look into investments with a long-term mentality. You can get both, long-term and short-term stock tips or the share market tips.
He says “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”
There you have it, a list of ways you can use to start investing like Warren Buffett; however, the beginner can always opt for stock tips or the share market tips in order to start investing.