Warren Buffett’s 2 Basic Rules For Investing

Warren Buffett Has 2 Rules Of Investing That Investors Keep Ignoring

Warren Buffett, probably the most successful investor of the 20th century, once said, “the only value that stock forecasters provide, is to make fortune tellers look good.”

In other words stock market forecasters don’t add any real value when it comes to predicting what the market is going to do except to let investors hear what they want to believe.

Buffett, also known as the Oracle of Omaha, advises to only invest in companies & industries that you understand.

However, one of his key investment strategies is to buy shares in companies that are undervalued & then hang on to them for a very long time.

So the two basic rules or warnings that Warren Buffet has for investors, that they keep ignoring to their detriment, are:

  1. Do not try to forecast the markets
  2. Do not try to time the markets

he also has two rules for the CEO’s of his companies:

  1. Do not lose any of our shareholders’ money
  2. Never forget rule #1.

More Of This Great Investor’s Timeless Advice

Warren Buffett's 2 Rules For Investing

Warren Buffett’s 2 Rules For Investing

I think I can add another of his pieces of invaluable advice and that is not to panic & sell company shares & stocks too soon.

So if you have good stock the advice is to hold on to it despite the possible gloomy outlook & negative current financial events & forecasts.

He also advises investors to take the emotion out of the decision of which stock to invest in as all the hype over a certain stock may not be a good enough reason to make that investment.

There is no substitute for sticking to industries you are familiar with & to learn as much about the company you are in investing in as you can.

But even more importantly, it is crucial that you remain calm & level headed when choosing a stock especially when the stock market is soaring – making rational calm decisions when everyone else is going crazy is certainly a competitive advantage.

“I’ve been buying all my life. I bought my first stock when I was 11-years old and it was about three months after Pearl Harbor, and Corregidor was falling, and they had the Death March at Bataan and all the news was terrible. It was a great time to buy stocks. And I should have held that stock forever, and I’ve been buying stocks ever since.” – Warren Buffett

However, when it comes to choosing stocks to invest in, Warren Buffett certainly has a significant advantage over ordinary investors which is, due to his reputation & wealth, he is exposed to lucrative opportunities that are unavailable to most people.

For example when Goldman Sachs needed a big investor of Buffett’s stature, they were able to offer him a preferred stock with a 10% earning for his $5 billion investment in 2008.

Notwithstanding the above, no matter who you are, making sensible & well considered investments can be a sure thing when it comes to personal wealth creation.

This Was a First For Warren Buffett

For the first time in his life, after years of turning down offers from authors & publishers, Warren Buffett finally agreed to cooperate on a book that has become a biography of his ideas & essential reading for anyone who is interested in financial independence & wealth creation.

This book has become a perspective that can be applied to personal wealth, business and the day-to-day decisions that dominate our lives.

Whilst there have been many books written on his achievements and his amazing investment genius, The Snowball is the first one that has been written with his full cooperation revealing the principles & philosophies that have guided him on a path to extraordinary success, esteem & stature.

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Posted in Investment Solutions, Wealth Creation