Warren Buffett is one of the most successful investors of all time nicknamed “Oracle of Omaha “. He runs Berkshire Hathaway which owns more than 60 companies including Duracell, Dairy Queen, Geico and owns significant shareholdings in companies it does not control like Coca-Cola and Apple. At the young age of 11, he bought his first stock, and at 13, he filed taxes for the first time. He was rejected from Harvard and did his Masters’s in Economics from Columbia University.
He is famous for defying prevailing investment trends and has managed to amass a personal fortune of more than $100 billion. He is against lavish spending and criticizes the government for its policies and taxation that favors the rich over the middle and lower classes.
His guiding principle for stock investment is to buy stocks at bargain-basement prices and hold them. He says – ” Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results. “
He also says “There are no called strikes in investing. Strikes occur only when you swing and miss. When you’re at bat, you shouldn’t concern yourself with every pitch, nor regret good pitches that you don’t swing at”. Meaning one does not need to have an opinion on each stock in the market but invest in only a few stocks in their lifetime, after doing careful homework. Buffet himself pores over all available annual reports of a company, its progression, and future strategy. Only after a careful investigation does he invest and then, doesn’t sell as he focuses on long-term investment. This is also in tune with his ” Don’t follow the crowd ” philosophy by focusing on finding value on your own. One needs a temperament that neither gets great pleasure from being with the crowd nor against it.
He advises avoiding debt and getting interested to work for you and not against you. He is wary of credit cards and the high-interest rate, sometimes up to 20%, they charge.”Someone’s sitting in the shade today because someone planted a tree a long time ago “. He advises keeping a long-term view of money, to focus on attaining significant gains in purchasing power over the investing lifetime. Building financial security and true wealth takes time but seeing finances from a long-term perspective help to give a strong financial foundation.
People should also learn the basics of investing in value. Value investors seek out and invest in companies with intrinsic value that are currently undervalued, and when there is a rise in its stock price, they make a profit. He also focuses on buying a cheap quality stock, not just any struggling business whose stocks are currently cheap. The focus is on buying valuable quality stocks at significantly undervalued prices.
“The most important thing to do if you find yourself in a hole is to stop digging” If a company is presently consistently making risky business moves that may result in its decline in the long term, one should consider selling it even if it had great potential at the time of purchase.