When it comes to the smartest investors to have ever walked this earth, Warren Buffett easily leads the pack.
His path is one that many investors seek to emulate, no wonder people have written books about his investing principles.
These authors are successful entrepreneurs for whom following in Buffett’s footsteps has worked to some degree, although Whitney Tilson, an established businessman himself, admits that Buffett’s strategy has worked best for him and no one else.
At a net worth of $87.3 billion, no one can deny that Buffett deserves all the credit he’s getting. He has been buying stock since before he was a teenager, and at 89, he is still doing it. That’s a really long time to hone your craft, don’t you think?
According to Danielle Town, an author, and investor who adopted Buffett’s strategy, the man is in love with every single company he invests in, and this love ensures that he maintains integrity in his choices.
Ignore the Stock Market
So, are you looking to invest the Warren Buffett way? There are some pointers to get you started, beginning with you ignoring daily movements in the stock market. As the billionaire has revealed time and again, current affairs never influence his investment decisions.
Instead, look for a good company to invest in. As Town puts it, Buffett is always on the lookout for a good company whose shares he can buy at the right price. He is an established value investor, acquiring equity that others would describe as trading below their intrinsic value.
If you know anything about investing, your first question should be how then he avoids value traps. Had that crossed your mind? Well, it most certainly has now, and the answer is simple – Buffett invests in firm quality, rather than buying equity just because they’re selling cheap.
To the investor, price, though still being important, is secondary. Quality is what he goes for, and he has never had to regret it. In fact, his biggest investment regret is selling off Disney stock before the company had realized its full potential. Point is, don’t let the stock price dictate which shares you buy.
One of Buffett’s famous business quotes is that an investor should never invest in something they don’t understand. Earlier in the year, he made a similar statement while on a CNBC interview, telling his host that investors have to be honest with themselves in terms of what they are competent in and what they’re not.
Expert-level Not A Must
But then again, it’s not as if he expects you to be an expert on each and every company you pour your money into. As he said way back in 1996, you just have to know enough to comfortably evaluate the business on your own.
As an investor, are you in it for the short-term gains or are you willing to wait it out? According to Buffett, you should always buy stocks you envision owning in the next decade. As he puts it, buying stocks is like buying land.
It will appreciate in value, but certainly not in a day or a week. He once said that if you don’t see yourself owning that stock in ten years, it isn’t worth owning it for ten minutes either.