We all know who Warren Buffett is. He’s one of the most successful investors that has ever lived. At the end of the day, if we want to become successful, one of the best moves that we can make is follow others that already have. So, if you want to be successful in the world of investing, who better to follow than Warren Buffett? With that being said, here are some of the biggest lessons that I’ve learned through following one of the best investors that ever lived:
Tip #1: News Is Little More Than Entertainment
When I first started investing, I was glued to the news about the companies that I would invest in. When the market news would lead to moves, I would quickly make a move, hoping to capitalize on the news when it hit. However, I was mixing trading with investing, and as I’ve learned from Warren Buffet, news should be used more as entertainment than an investing tool. Here’s what Buffet once said on the topic:
“If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio’s market value.” – Quote from The Motley Fool
I know, you’re probably wondering, “Where’s the news in this?” Ultimately, using the news as an investing tool causes investors to make knee-jerk reactions in the market. Instead of using the news as an investing tool, it’s better to build a profile of solid companies that have a history of growth and simply letting your investments ride until they mature to become profitable! Sure, it’s fun following market news, but short-term news should not sway your investment decisions.
Tip #2: Quality Investments Are Proven Through The Test Of Time
At the end of the day, making investments in relatively new companies with little to offer but a hope and a dream can be risky business. Instead, you’ll likely find success investing in companies that have withstood the test of time and made investors happy through the process. In fact, Buffett once said:
“Time is the friend of the wonderful company, the enemy of the mediocre.” Quite from Sure Dividend
At the end of the day, Warren Buffett is a strong proponent of choosing quality investments. These are household name type companies that are known for performing over the years. In fact, he has made it clear that if you’re not willing to buy and hold shares for years, chances are that you’d be better off not buying them.
Tip #3: Be A Contrarian
One of the most famous quotes from Warren Buffett reads as follows:
“Be fearful when others are greedy and be greedy when others are fearful.” Quote from Business Insider
The truth of the matter is that the best time to buy stock is when the market is down and the best time to sell is when it’s up. That’s the name of the game isn’t it? Well, the above quote shows that Buffett suggests buying shares when others are selling and selling when others are buying. This makes sense. After all, when others are selling, stock will trade at a discount, and when others are buying, it will trade at a premium!
Share Your Favorite Tips From Warren Buffett
Have you followed Warren Buffett? If so, what are some of the lessons that you’ve learned about investing from him? Share your thoughts in the comments below!