Warren Buffett / Stock Market / Investment / Finacial
Published in Times of India
The 1st one is Understand Investment: The investment community was moving towards IT and Telecom companies in the late 1990s, but Buffett made the decision to avoid them. His reasoning was that technology was too complicated for him to understand, and thus he preferred to avoid it.
2nd is Research: Buffett is a voracious reader and advises all serious investors and fund managers to spend a significant portion of their days reading. The only other approach for learning new trends and acquiring fresh concepts.
3rd is Diversification: Buffett does not contest it, but he believes that diversification is only effective to a certain extent. After that, risk reduction is replaced by risk substitution. That is a crucial lesson for individuals trying to diversify by amassing an irrationally large portfolio of stocks with marginally beneficial incremental gains.
4th is Don’t Follow the Herd: Even if being alone makes you lonely, it’s the perfect situation to make money in the stock market. Acting unconventionally for the sake of being so is not the goal. the notion is that once you have made up your mind, don’t reconsider just because the entire market is moving in the opposite direction.
5th is Long-term Investment: Buffet frequently claims that his investment horizon is “forever”. Even while he may have exaggerated to emphasize his point, some of his preferred stocks, such American Express and Coca-COla, have been part of the Berkshire portfolio for the majority of its existence.
6th is Time in the Market: None has consistently captured the top and bottom of the market, and none ever will! The aim is to invest money after you are certain of its worth. Long-term wealth creation is possible as long as you can purchase reliable equities at fair pricing and fair valuations.
7th is Bargain Sale: Buffett advises investing in stocks when there is a perceived value and treating them like you would a flea market. Find value at cheaper costs!
8th is Explanation: Buffett puts a lot of salespeople through this exam. According to him, a brilliant concept must be able to be explained to a fifth-grader using a piece of chalk. The concept is undoubtedly not worthwhile if you have to conceal yourself behind algorithms and tomes.
9th is Better Equities: The longer you wait to invest in stocks, the longer you have to wait to get a return. Additionally, your returns will generate more money the more time you have. This is known as the power of compounding, and it perfectly applies to stocks.
10th is Loosing Money: Successful Investors fear losing money. That doesn’t mean Buffett hasn’t recorded losses, either, he recently had a poor performance with IBM, but the key is that when something goes wrong, you need to thoroughly consider what went wrong so you can avoid it in the future.