Who does not aware of the name of Warren Buffett? He is
the mentor for many traders. After all, he has learned his investing principles
from the greatest investors in his lifetime. That why he is so popular in his
field of investing. He is a kind of investor who likes buying and holding for a
long. He does not work in the same way that the popular media depicted it. If you
want to learn investing principles then why do not you learn from him. So, I am
going to share the Top 5 investment principles from Warren Buffett.
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| Warren-Buffett |
Buffett teaches us that
you should hold the stock for a long period of time whether the economy is good
or bad for you. He holds the stock for a specific reason. If his reason is fulfilled
then he continues holding otherwise he sells the stock in the market.
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Here are the lists of Top 5 investment principles from
Warren Buffett
1. Invest in what you know
Before investing in any of the stocks, it is important to understand
the company and how it generates its money. You need to understand the business
model of the company. You should avoid investing in stocks in which you are not
able to understand the business model. That why Warren Buffett never invests in
the tech stocks. He sticks to what he knows.
That why he prefers investing in Berkshire’s stocks. It is the
combination of stocks such as utilities, banking, insurance, and consumer
products. All these business Warren Buffett understand their business easily. It
does not matter he has invested a significant amount of money.
2. List the criteria
It is essential to list the criteria before buying the stocks,
right? All you need to understand that you do not invest in something unfavorable.
You can search for those stocks which set price to earnings ratio. Buffett never
considers the price of the stock as the sole criteria before buying the stocks. The
prices can fall down due to the market situation. However, holding such stocks
could turn out to be favorable for you.
3. Be aggressive during tough times
Generally, it is not recommended you not to challenge the
market. If you are long term investor then it is fine no matter when you buy. This
means that during the tough times, you need not settle down. You need to keep
looking for new opportunities. This is because things will eventually
change after a tough time.
4. Don’t worry about the day to day Market Movements
Warren Buffett also says that if you should buy stocks that
you can hold it for even a decade if it will shut down for a decade. Since you
are holding for a decade or more, then it is no worry to lose mirror amount in
the sake of large amount. You should avoid headlines about the trade wars,
government shutdowns or other news. You should focus on the company’s
potential growth over the course of time. It does not matter the changing price
if the company still has a bright future.
5. Buy Buffett’s Stocks
If you do not want to research and figure out which stock you
buy, you simply buy the stocks that Buffett owns. But make sure you understand
the business. Buffett discloses his holding publicly every quarter. Also, you
can buy the stocks of shares of Berkshire Hathaway itself.
He is not successful by himself. He stills has a team of
advisor network who give him advice about the investments. It is amazing to say
that billionaire like him still listen to others.
Now I know that you can invest like Warren Buffett. These principles
are not hard and fast criteria but simple and discipline to which you stick to.
Before making a decision, you can use fundamental analysis, technical analysis,
math, and even a stock chart. In this, you can avoid losing your money than your
fellows.
Which one of the Top 5 investment principles from Warren
Buffett do you like the most? Let us hear from you via comments.
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