No doubt, Warren Buffet is the most intelligent and successful investor today. He made his destiny using common sense. You don’t required to have an extra brain to understand this secrets. It is very simple.Here are some quotes from this legend investor to help anyone to be succeeded… have a look.
1. Buffett on investing on business not in stocks
“Whenever we buy common stocks for Berkshire’s insurance companies (leaving aside arbitrage purchases), we approach the transaction as if we were buying into a private business. We look at the economic prospects of the business, the people in charge of running it, and the price we must pay”
2. Understand the business prior to invest
“Did we foresee thirty years ago what would transpire in the television manufacturing or computer industries? Of course not. Why, then, should Charlie and I now think we can predict the future of other rapidly evolving business? We’ll stick instead with the easy cases. Why search for a needle buried in a haystack when one is sitting in plain sight?”
3. Don’t invest on “franchise” business
“As Peter Lynch says, stocks of companies selling commodity-like products should come with a warning label: ‘Competition may prove hazardous to human wealth”
4. Be a long term investor than a short term trader
“We are willing to hold a stock indefinitely so long as we expect the business to increase in intrinsic value at a satisfactory rate . . . we do not sell our holdings just because they have appreciated or because we have held them for a long time”
5. How to deal with price volatility
“Charlie and I let our marketable equities tell us by their operating results not by their daily, or even yearly, price quotations whether our investments are successful. The market may ignore business success for a while, but eventually will confirm it”
6. Buy good business when people are fearful
“If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they feel elated when stock prices rise and depressed when they fall. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices”
7. He is against short term trading
“Indeed, we believe that according the name ‘investors’ to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a romantic”
8. His words against over diversification
“If you are a know-something investor, able to understand business economics and to find five to ten sensibly priced companies that possess important long-term competitive advantage, conventional diversification makes no sense for you”
He is advising each beginner investing dudes to understand the Mr. Market and Margin of safety terms, which originally mentioned in the great book “Intelligent Investor” written by legend value investor and professor of Warren Buffett, Benjamin Graham.
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)
If your understanding is true on this terms, you are in a safe place by automatically avoiding major errors commonly happening with any investment decisions.