Warren Buffet has been one of the global reference points in the world of investments for decades. It is also called “Oracle of Omaha“For his great ability to predict and achieve excellent successes in the financial market.
He has become a real icon because in more than 60 years of career he has transformed Berkshire Hathaway from a failed textile company into a global holding. Today he is one of the richest men on the planet thanks to 3 fundamental principles:
- use the head;
- be patient;
- Long -term thinking.
A recent example can make its forecasting understand: just before Trump’s arrival at the Capitol, he decided to sell equity packages for 134 billion dollars. The choice seems to have been right this time.
What are its own investment strategies To build wealth?
Warren Buffet’s investment strategies
Among the richest men in the world there is Warren Buffet thanks to his patience and vision for a long time. The secret of the Guru of Finance is that he has never tried to get money easily or risking. He simply focused on solid companies, led by serious people, ignoring the trends of the moment. The investment strategies For the magnate they are:
- Don’t miss money;
- Do not forget the first rule;
- do not invest in a company that is not known or that is not clear;
- calm, time and patience;
- Money is the worst investment;
- The company is important.
Don’t miss money
The first rule to follow to learn to invest for the Guru of Finance is that of “Don’t miss money“, While the second is”Don’t forget the first rule“.
Here is an example:
Suppose we have 10,000 euros and to invest them. If 10% of this money should be lost, 9.000auro would remain. To return to having 10,000euro, therefore, you should earn about 11% to return on par. If the loss is greater, however, the figure would also double.
The more money will be lost, Therefore, more difficult it will be to recover it So the first work you have to do if you want to invest is to manage the risks and avoid at any cost of losses in portfolio.
Also the psychological side You will have to keep an eye on since it could happen to fall into panic seeing that you are losing money. In this case, you will have to think carefully and try to remedy by avoiding impulsive or risky choices thinking of being able to recover the amount lost immediately.
In any case, to avoid losses, Warren Buffet learned a trick from his teacher and hero, Benjamin Grahamwhich is called “safety margin“. It is a bumper that helps to protect yourself if you make some mistakes when choosing an investment.
Here is an example:
If you think that a company is worth 100 euros, you will not have to buy it immediately for 100 euros. Instead, the price must be awaited even at 80 or 70 euros so that you can be safe.
It will also be necessary to remember that in the long run it is normal for investments to be fruitful and not to fruit. In fact, there may be moments when the value drops by a little but this is part of the risk. The real problem is another.
If you buy the individual actions of a single company and the latter goes badly, you will lose everything that has invested if you have no other liquidity. For buffet, therefore, actions should never be purchased just to earn quickly. To avoid any risks, you could diversify your wallet.
We must not invest in a company that is not known or that is not understood
Another strategy of the Guru of Finance is that of do not invest in a company that is not known. Before putting your money into play, in fact, it is important to understand what you are investing. It is therefore important to analyze the company thoroughly, to understand what its business model is, to evaluate its financial solidity, the quality of management and the prospects of future growth. Buying an action is like buying a small part of the company. Before taking this step, therefore, it is necessary to ask some questions such as:
- what a business does this company;
- how this company earns;
- which risks could run;
- I would be calm to keep it for years even if the price drops.
Only by knowing the company thoroughly, in fact, can you sleep peacefully even in difficult moments. If it is really solid, in fact, its value will emerge with the passage of time regardless of the fluctuations of the market.
For buffet “The price is simply the figure that I feel at the moment you buy something“. The true valueon the other hand, is this “that you get in exchange in the long run“.
Making an investment with this mentality therefore means privileging quality to quantity and substance apparently, but this requires calm, discipline and ability to look beyond the immediate.
Calm, time and patience
If you want to make safe investments, you will have to have a lot calm, time And patience. For Walter Buffet it is not possible “make a child in one month by putting pregnant nine women“This means that nothing must be forced, especially investments as they will need time to develop. So:
- You will not have to expect to become rich in a few months;
- It will not be necessary to be discouraged if the earnings will not arrive immediately;
- It will be necessary to give your investments the time to grow.
Also for buffet it is important be cautious and cautious When most investors are blinded by enthusiasm and greed and not be afraid of being courageous and enterprising when others are paralyzed by uncertainty and panic.
For the Guru of Finance follow the mass can be reassuring but it is going against the current in the right moments that you can seize good investment opportunities. To do this, however, you need patience, discipline and a good dose of courage.
Money is the worst investment
The worse investment that can also be done is that of Keep the money parked on the current account because then they lose value. The reason is that with the passage of time the prices could increase due to inflation, as is already happening, so the purchasing power of one’s money will drop.
Here is an example:
If today with 10 euros it is possible to buy some things, in ten years with the same money there is the risk that half of them can buy.
It is also true that having preserved savings is important to cope with sudden expenses but a part could be invest in safe products Like the treasure vouchers that at least guarantee a small earnings waiting for the right time to make new investments.
For buffet, then:
- It is not wise to have too many money still;
- Any sum invested you will have to invest with intelligence;
- If you do not immediately find a good opportunity for investments, you could invest the money available in safe products. Better to wait for the right opportunity rather than throwing yourself headlong into unsafe investments.
The company is important
For Warren Buffet, who is the only billionaire to have beaten Trump for his wealth, the latter is not measured only in economic terms.
To be successful, in fact, it is important be rich in good relationships and surround themselves with people of value. It is also essential to build and cultivate solid human relationships.
The success for the guru is not just an individual question, it is built with the positive influence of the people you choose to keep next. Surround yourself with loyal members, honest and capable colleagues and friends for buffet is a long -term investment and perhaps even the most precious.
What Warren Buffet is investing in
The Guru of Finance Meanwhile, it continues to be a supporter of Apple but does not limit itself to the technological sector only as it has recently strengthened its position in a company specialized in IT services related to the security of digital infrastructure, Verisign.
He also increased his participation in a company that is active in the radio and entertainment radio sector, the Sirius XM. Among his investments, however, a strong bank component represented by giants such as Bank of America and American Express cannot be missing.
