“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
– Warren Buffet
Considered to be one of the wisest investors in the world, Warren Buffet has a net worth of USD 104.4 billion as of August 2021. He is the world’s ninth-wealthiest person! This business school graduate has had an interesting career. Throughout the span of his career, this 91-year-old man has learnt a lot. Over time, he has shared these learnings with people which has benefitted them.
In this article today, we are going to talk about five such lessons that Buffet has shared with the world that may change how you think.
1. Buy a Stock & Stay Invested
After investing in a company, we constantly keep checking its prices — wondering when is the right time to sell it. But Buffet has said, “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.” Think like an owner of a business, not as a trader or a speculator.
2. Also Focus on Your Company’s Intangible Assets
Buffet thinks that a company’s intangible assets like its brand, reputation and more are as important as its capital or real estate are. Because when bad times hit, a company’s goodwill matters. It is extremely important for value investors and inspires trust.
He once wrote, “I was taught to favour tangible assets and to shun businesses whose value depended largely upon economic Goodwill. This bias caused me to make many important business mistakes of omission, although relatively few of commission.”
3. Don’t Invest in What You Don’t Understand
If there is a business that everyone is talking about but you don’t understand what it does or how it functions, stay away from it. Some businesses might also seem too complex. For example, if you don’t understand renewable energy, don’t invest in a company that does that. If you understand pharmaceuticals, invest in them.
4. Slow Investing is Good Investing
“For investors as a whole, returns decrease as motion increases,” Buffet wrote in an annual Berkshire Hathaway letter in 2005. Instead of trying to time the market, investors can do their research and invest long-term. This way investors may own few securities but this will be valuable. It is ideal to look for companies with honest management.
5. Invest in Companies That Make Products People Need
Think of companies that are in the business of making products that people are always going to need. These are the companies you should invest in, even if they are not very cool right now. You can invest in boring companies that will be around for a long time — you don’t always have to invest in something groundbreaking or innovative.
We hope you enjoyed reading this article and it helps you form your own investment and business strategy. Keep watching this space for more!