Today is Warren Buffett’s 93rd birthday. On August 30, 1930, he was born in Omaha, Nebraska, where he now resides.
Buffett has turned Berkshire Hathaway (BRK.A 0.69%) (BRK.B 0.77%) into one of the world’s largest firms, and he has become one of the world’s wealthiest people.
He is still a wonderful source of advice for investors. In honor of the Oracle of Omaha’s birthday, here is some of his best investing advice gleaned from a tremendous lifetime of expertise.
1. Consider the Long Term
Throughout his career, Buffett has taught the benefits of long-term thinking. “Only buy something that you’d be perfectly happy to hold if the market shut down for ten years,” he famously stated. He has also stated, “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”
This is not to say that Buffett always holds equities for years on end; he does not. But he is constantly thinking in the long run.
2. Before Purchasing a Stock, Learn About the Underlying Firm
The great investor has also often underlined the significance of understanding the underlying business before purchasing stock in it. Buffett said of himself and longstanding business partner Charlie Munger in his most recent letter to Berkshire Hathaway shareholders, “Charlie and I are not stock-pickers; we are business-pickers.”
3. Seek for Long-Term Competitive Advantages
When appraising a company, Buffett encourages investors to search for long-term competitive advantages. Here’s how he stated it once:
The key to investing is not determining how much an industry will effect society or how much it will expand, but rather determining any specific company’s competitive advantage and, more importantly, the sustainability of that advantage. Additionally, you can also read about- How2Invest Strategy Guide: A Low Cost Way to Grow Your Wealth
4. Invest in Great Firms at a Reasonable Price
Buffett was a die-hard value investor in his early days. He is still quite concerned about valuation. However, he feels that the mix of business quality and valuation is much more crucial. He once stated, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
5. Recognize What You Don’t Know
Few investors conduct the amount of research on a company that Buffett does before putting money on the line. Even the Oracle of Omaha realizes that he cannot know everything, and he has stated that “what counts for most people in investing is not how much they know, but rather how realistically they define what they don’t know.”
6. Knowing When to Be Afraid and When to Be Greedy
Buffett famously said, “Be fearful when others are greedy, and greedy only when others are fearful.” He does not believe in mindlessly following the crowd when it comes to investing. When most other investors are afraid to invest, the best possibilities may arise.
7. Make the Most of Opportunities
Buffett is naturally cautious, which has worked to his advantage. But he strongly believes in seizing opportunities, or, as he puts it, “opportunities come infrequently.” Put out the bucket, not the thimble, when it showers gold.”
8. It Is Acceptable to Sit on the Bench
Although Buffett wants to be substantially involved in equities, he believes it is acceptable to stay on the sidelines when great chances are unavailable. He will not acquire many stocks when valuations are excessively high. He once gave an excellent analogy to convey the proper mindset: “An investor should act as if he had a lifetime decision card with only 20 punches on it.”
Read More:Â The Giving Pledge Billionaires Donate Half of their Fortune
9. Don’t Be Concerned if the Market Collapses
Buffett has gone through many stock market downturns in his 93 years. He has given fantastic suggestions on how to interpret market pullbacks:
So smile when you see a news like, “Investors lose as market falls.” Change it to: “Disinvestors lose as the market falls — but investors gain.” Though writers frequently overlook this reality, there is always a buyer for every seller, and what hurts one always helps the other.
10. Recognize When You Have Erred
Buffett emphasizes buying and holding stocks over the long term. However, he doesn’t have any problems selling stocks, especially when he’s made a mistake in evaluating its business prospects. In his words, “The most important thing to do if you find yourself in a hole is to stop digging.”
11. Make an Investment in Yourself
Buffett’s investing advice has not always been about investing. One of his most significant pieces of advice is, “The most important investment you can make is in yourself.”
12. Warren Buffett’s Best Financial Advice of All Time
I couldn’t end this list without including what’s arguably Buffett’s best financial advice of all: “Rule No. 1: Never lose money. Rule No. 2: Don’t forget rule No. 1.” Consistently following this advice, though, is certainly easier said than done.
Just a Few Examples
These 12 pieces of advise from Buffett hardly scrape the surface. Over the years, the famed investor has given a great deal more amazing insight. I know many of us are looking forward to hearing more from him in the coming years. Mr. Buffett, have a wonderful birthday.
Read Also:Â Forbes Billionaires 2023: Elon Musk has Risen to the Top of the List
