Warren Buffett is one of the richest men in the world, but his reputation for folksy wisdom, frugality and simplicity make him seem like just a regular guy, like he might be the billionaire next door. Fortunately, Buffett’s commentary about his investment decisions provide us with valuable study materials in the school of investing. Here are some of Buffett’s biggest lessons that we can learn from him.
1. Focus on long-term success
“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.” – Warren Buffett
You need a strategy for long-term success in the market. Buffett is always concentrated on finding a company to invest in that he feels will produce long-term results. He is not interested in the latest IPO, or the trendiest stock everyone else is interested in. Buffett possesses a mindset that many investors don’t have – thinking long term.
Find the businesses that you believe have long-term growth potential. It’ll change your mindset, and your success rate.
2. Invest in quality companies
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” – Warren Buffett
Buffett is only focused on discovering worthy companies for investment. He always evaluates the whole company when buying stocks. That make the investment more personal and will lead you to assess the company on a much deeper level. It’s by trying to shift your mindset from that of an ambiguous stockholder to that of a sole owner of the business that’ll help you find truly quality companies.
3. Get in when others are getting out
“Be fearful when others are greedy and greedy when others are fearful.” – Warren Buffett
Whenever there’s a recession you’ll get lots of news about Warren Buffett. In 2008, Buffett invested $25 billion into the market when the rest of the world was getting out. Buffett always believes that a recession is the perfect time to find quality companies whose stock is cheap. He took advantage of this fact in 2008, and profited by nearly $10 billion!
4. Start investing today
“Someone is sitting in the shade today because someone planted a tree a long time ago.” – Warren Buffett
Buffett started at a young age, and this was the main factor that lead him to achieve more success later in life. At age 11, he used to take a paper route, sold chewing gum door-to-door, and even bought his first shares of stock. Starting young allowed him to find his own way to success. Don’t wait for the right time to invest or to get your personal finances in order. It’ll influence your financial success later in life. Don’t procrastinate, start investing today!
5. Invest in what you know
“The stock market is a no-called-strike game. You don’t have to swing at everything – you can wait for your pitch.” – Warren Buffett
The most important thing about investment is that you will find thousands of companies to invest in, and different strategies that can all be successful. But, remember don’t use someone else’s investment strategy, or invest in a stock simply because someone else is doing it. Develop your own strategy that fits your personal financial goals, and always look for the companies whose business model you’re already familiar with.
6. Challenge yourself to be better
“It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.” – Warren Buffett
You can never find success financially, personally or professionally if you don’t challenge yourself and hold yourself accountable. The best way to do this is to associate with smarter and more successful people than yourself. As the saying goes, you’re the sum of the five people you hang around the most – so try to make those five smart people!
7. Do your homework and be disciplined
“Only when you combine sound intellect with emotional discipline do you get rational behavior.” – Warren Buffett
Investors need these two ingredients the most in the investment game. You’ll get sound intellect after doing your homework, your research and an investigation of a company’s value. Discipline, on the other hand, will come with your ability to wait for the best time to enter. Practice both of these and you’ll take your investment to the next level.
8. Be passionate
“Without passion, you don’t have energy. Without energy, you have nothing.” – Warren Buffett
Be passionate about your work and chase what you are passionate about. Passion will enable you to go to the ends of the earth to fulfill your dream. That will be your fuel in your journey to success. It will make you unstoppable. It will make you strong when times get tough, and ultimately it will make life so worth living.
Featured photo credit: BorsheimsJewelry via flickr.com
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