Rules By Warren Buffett (Educational)Hello everybody, today, we are going to talk about Warren Buffett and his rules and advice.
Who is Warren Buffett?
In an abbreviation, he is an american businessman and investor with an property of over 100 billion dollars.
He is an old-school, but in some way, his rules are really impressive and are working.
He also wrote an preface for the best book ever written on investing, The Intelligent Investor by Benjamin Graham.
1. Reinvest Your Profits
When you first make money, you may be tempted to spend it. Don’t. Instead, reinvest the profits.
2. Be Willing to Be Different
Don’t base your decisions upon what everyone is saying or doing. Have your own reason to buy the stock.
3. Limit What You Borrow
Buffett has never borrowed a significant amount — not to invest, not for a mortgage.
In other words, if you can´t buy it twice, you can´t afford it.
4. Be Persistent
A young boy who sold Coca-Cola for a nickel ended up being a majority shareholder of Coca-Cola. This transition does require persistence.
Warren is an Realistic Optimist. He believed they will succeed but with planning, effort, and persistence even when times are tough.
You don´t have to make deals every day, just watch markets and paper trade.
5. Know When to Quit
Once, when Buffett was a teen, he went to the racetrack. He bet on a race and lost. To recoup his funds, he bet on another race. He lost again, leaving him with close to nothing. Buffett never repeated that mistake.
6. Know What Success Really Means
Despite his wealth, Buffett does not measure success by dollars. In 2006, he pledged to give away almost his entire fortune to charities.
7. Stay In Your Circle Of Competence
Imagine Circle with 3 layers. In the smallest layer, inside the circle, are things that you really know. In middle of circle are things that you think you know, but you don´t. And in an outer layer, the biggest one, are things that you don´t know.
Warren recommends to stay in the smallest layer and just buy what you really understand.
Otherwise it doesn´t mean that you have to be closed to every opportunities, but first of all, learn something about it. And this leads us into another topic:
8. Always Learn
This is really important to understand, because you have to learn new things, that´s no rule, it´s an habit that you need to make.
Learn about market every day, read articles, books, papertrade, watch youtube.
In these days is super easy to learn something, all you need to have is good wifi connection and phone or notebook.
Warren reads up to 500 pages every day. Try to beat him :) (good luck)
9. Two Legendary Rules
These 2 rules are good to know, it seems really clear, but someone had to tell you:
1. Never Lose Money
2. Never Forget Rule Number One
And that´s serious guys! Never lose money, that´s not your style.
10. Diversify
When you are buying penny stocks, you have to buy one large-cap stock, because penny stocks are volatile and can drop to 0. It can make you big profits or big losses.
With a large-cap stock, you will protect your portfolio from total crash, because large-cap stocks are not as volatile and as risky as penny stocks.
You should diversify in sectors too. If in your portfolio are only oil companies and price of oil will go rapidly down, well, good luck. When you have money in oil companies, you should buy some stock from another sector, for example real estate or healthcare.
Quotes By Warren Buffett
„Cash was never a good investment."
„I´d rather buy a wonderful business at a fair price, than a fair business with a wonderful price."
„Big oppportunities in life have to be seen."
„No matter how great the talent or efforts, some things just take time. You can´t produce baby in one month by getting nice women pregnant."
End
So, seems like we are at the end. Thanks for your effort to read it all, because my view is that it is really educational and you should know it.
If you agree with me and Warren Buffett, please make sure you liked and i´ll see you again at another post. Have a nice day.
