Warren Buffet Exposed: 5 of His Investment Tips
In spite of a lifelong experience in investing and net worth amassing over $100 billion, Warren Buffett still commits errors.
However, you can turn the tables on him.
The well-known investor and chairperson/CEO of Berkshire Hathaway took time out during his firm’s 2021 annual shareholder meeting on May 1st to respond to questions as well as give advice to young investors based on his own experiences from the past year that he has earned by himself.
From the event, there are five important lessons that investors at all levels of experience can take home for them to improve their portfolios.
Investing tips from Warren Buffett
And one thing to remember before going all into investment is to first pay off all your debts; Buffett would insist upon it.
Mostly though, this year’s guidance by him revolves around staying true to oneself, trusting one’s instinct and never getting caught up in fads.
1. Investment is not a game.
Buffett has expressed his thoughts on the popularity of investing apps following the GameStop/Robinhood scandal. He doesn’t have a problem with the applications themselves but rather with encouraging new investors to look at trading as though it was any other game.
The correct approach can make you wealthy using free dealing stock apps as long as you remember that it is never a sport.
2. S&P 500 index fund will beat you
Buffet advises most people simply to buy an S&P Index Fund instead of individual stocks even in his own company.
Putting money in an index fund means one owns shares in some of America’s biggest companies; thus; many investors including Buffett would advise those who want to invest for a lifetime to choose this move.
3. Trust yourself
Buffett has been wary of the tech industry for a long time but he began investing in Apple on 2016 and now it is one of his most valuable investments.
However, last year saw him sell some of Berkshire Hathaway’s Apple shares.
“That was probably a mistake,” he said about it.
But she doesn’t regret one sale–all his airline shares. He “doesn’t consider it a great moment in Berkshire’s history” but the company has more net worth than any other business in the U.S. — and the airlines are better for it too.
“I think we sold airline business which I wish them well as they have done better but still would not like to buy that business,”
4. The future defies present
It is uncertain if what is popular today will still be relevant tomorrow even though this should not be your main objective when it comes to investment according to Buffett.
“There’s more to picking stocks than trying to identify what will be the next great industries?” Said Warren Buffet.
To demonstrate his point he put up a slide of all the auto companies from decades ago that started with the letter “M.” The list was so long it wouldn’t fit on one slide.
That’s due to the 1900s when cars began to be very popular, and as Buffett says, about 2,000 companies rushed into it like a flood believing it would have been “a marvelous future.”
However, by 2009, he observed that only three automakers remained with two of them having gone through bankruptcy.
Considering this, do not put everything into what is new and exciting. Instead, shape a small portfolio based on “needs.”
5. Don’t lose some sense of caution
Buffet is concerned about excessive speculation in the marketplace as witnessed by special purpose acquisition companies (SPACs) or “blank check companies” which are created to raise funds for buying an existing company.
“They have to spend the money in 2 years. If you had to buy a business in 2 years; I’d say put a gun to my head and I’d buy but not much,” he said.
He’s also concerned about inflation which has started to show up in some parts of the supply chain.”
I think this is because higher prices eat into future earnings: “We won’t get much done on acquisitions while this is going on,” he said.
Who Is Warren Buffet?
Warren Buffett is known as the “Oracle of Omaha” and is one of the greatest investors of all time. His success in finance and investing is the stuff of legend and he’s a hero to investors around the world.
He started in 1965 when he took over Berkshire Hathaway, a failing textile company. He turned it into a multinational conglomerate holding company, one of the largest and most successful in the world. Under his leadership Berkshire Hathaway’s stock has gone from $19 to over $400,000. Unbeatable.
One of Buffett’s big wins is his ability to find and invest in undervalued companies with good fundamentals. His investment philosophy is value investing, a strategy he learned from his mentor Benjamin Graham. His notable investments include American Express, Coca-Cola, Wells Fargo and Apple. His Coca-Cola investment in 1988 is one of Berkshire’s best investments.
Buffett’s disciplined approach to investing, patience, long-term vision and deep understanding of the companies he invests in has been his secret sauce. His famous quote “Our favorite holding period is forever” sums it up.
In addition to being a great investor, Buffett is a philanthropist. In 2006 he pledged to give away 99% of his wealth to charitable causes, mostly through the Bill & Melinda Gates Foundation. This is one of the largest charitable commitments in history and shows he intends to use his wealth to make a positive impact on the world.
His annual letters to Berkshire Hathaway shareholders are read and revered by millions. They’re full of investment wisdom, business insights and life lessons. He’s a regular guy.
He’s a legend. Period.
