Warren Buffett’s Investment Strategies
Every single person knows who “Warren Buffett ” is and each person wants to invest by following Buffett’s Strategy. And to do so you never need to do any extraordinary research because Buffett’s strategies are very simple.
In simple words, Buffett invests in great businesses and holds that particular stock until they remain great Business. Warren Buffett is known for being the best investor to ever live. If you invested only $1000 in his investment Company Berkshire Hathaway INC, When he took over you will approximately have $21.2 million.
According to the “thestrive.co” here is the estimated net worth data of “Warren Buffett”
– 2022 Net Worth: $115,500,000,000
– Earnings Per Year: $5,197,500,000
– Per Month: $433,125,000
– Per Week: $99,951,930
– Per Day: $14,278,847
– Per Hour: $594,951
– Per Min: $9,915
– Per Sec: $165
And today in this article we will try to understand his investing philosophy a little bit. So can make changes and learn from his experience.
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| Image – appleinsider.com |
1) Know what you are Investing In – Well, it is very important to deeply know the company before investing your hard earned money into it. Warren Buffett is so successful because he never makes decisions based on the social media hype or in any company he never understands. Moreover, he prefers to invest in his interest based company. So he can understand their vision completely.
2) An Investment Must Fit in Criteria – Before Investing in a specific company, Warren Buffett used to follow criteria to make sure his investments are safe. His company never makes any investment in any type of risk.
Some the key point that warren use to follow based on his interview talks –
– The Stock Must Be Sensibly Priced – According to this point the stock price must be matched with the value of the company. There are many valuation metrics that Oracle of Omaha uses like the price-to-earnings ratio, price-to-book-value ratio, and price-to-sales ratio.
– Management of The Company – Buffett Invest much based on the Management of the Company, it’s important to understand who’s running it. The point is that even a company has a good value product but poor decisions made by a management team will result in significant declines.
– The company must be crazy for reinvestment – Buffett never gives any primary importance to company dividend or earning from his holding. Because, he prefers to invest that money in the growth of that company. In fact, he looks for companies like Amazon.com that — even with small margins — reinvest their earnings and generate a return on equity (ROE) of more than 20%.
– Strong Earning Power- Well you guys never see any of his investments that make losses. Because he never invests in any company that is already loss making. So he always invests in that company generating compelling profits.
3) Is Cash a good Investment – Well we all know that cash is a very bad investment. But sometimes it is good to hold cash. In most of the Interview Warren Buffet said cash is not good because it never produces anything and shortens its value over time.
But on the other hand, It is better to hold cash if the investment never fits in your investing criteria. Holding cash is bad when you have an opportunity but it is good to hold and wait for an opportunity to arise.
4) Don’t Set It and Forget It – Warren Buffett is one of the most active investors in Wall street. He never used to make an investment and forgot for years. To be a successful investor we should rebalance our portfolio according to our investing Criteria. We should actively participate in updates related to our investment and when our investment touches its higher value, we should sell it and start looking for the next opportunity.
5) Sell When Value Dissipates – As an investor you definitely heard one common line that Buy when $1 is selling for $0.60. Which means we should look for the discount price for a specific stock [ We can set a rough price by understanding its current market value] and try to buy when it is selling for discount and sell it when it reaches its fair price or touch it over valuation .
Warren Buffett is a successful investor and his first preference is knowledge. And he used to spend most of his time in his office in Omaha, Nebraska. Where he spends the majority of his time just sitting alone and reading books. There are a lot of books recommended by Warren Buffet and ” The Intelligent Investor” is one of them. In the fourth edition of the book he wrote “I thought then that it was by far the best book about investing ever written. I still think it is.”
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Disclaimer – Well the whole data available above is based on our research. We are not financial advisors. Please do your own research before making any decision
