Warren Buffet is arguably the best investor in the world. Over the years Buffet has shared his ideas on investing. Most of this ideas are found in his annual letter to Berkshire Hathaway shareholders.
In this article I share some of the investment gems by Warren Buffet.These ideas can used as an investment guide to investing in stocks.
1. Buy and Hold.
This idea of buy and hold is synonymous with Warren Buffet. He buys into company’s and seems to hold the stocks forever.
2. Buy Stocks That You Understand.
Buy into companies which you understand their products and services. Warren Buffet is quoted saying “Stick to what you know. Bill Gates is a good friend, and I think he may be the smartest guy I have ever met. But I don’t know what this little things do. So I didn’t invest in Microsoft.
3. Always Have Spare cash
The reason why Buffet seems to do better then the rest is because he always has spare cash. During periods of crisis, he uses the extra liquidity to take advantage of opportunities.
4. Buy When Everyone is selling and Sell when everyone is buying.
He was quoted in 2009 saying “When it’s raining gold, reach for a bucket, not a thimble.”
5. Don’t Be Fooled By the Media Buzz / Euphoria
Charlie Munger his trusted lieutenant was quoted “avoid businesses whose futures we can’t evaluate, no matter how exciting their products may be.”
6. List down your reasons for buying a stock.
When your force yourself to write down your reasons for buying a stocks it prevents you from making dumb decisions.
7. Understand The Behaviour of the Crowd
A simple rule dictates my buying: Be fearful when others are greed and greedy when others are fearful.
8. Understand The Value in the Business
As he said in 2009 letter to investors, “In the end, what counts in investing is what you pay for a business — through the purchase of a small piece of it in the stock market — and what that business earns in the succeeding decade or two.”
written by Constantine Njeru
\\ tags: Berkshire Hathaway, Berkshire Hathaway Shareholders, Bill Gates, Buy And Hold, Buy Stocks, Charlie Munger, Crowd, Dumb Decisions, Euphoria, Futures, Good Friend, Greed, Investing In Stocks, Investment Gems, Investment Guide, Lieutenant, Liquidity, Media Buzz, Stock Market, Warren Buffet
