Warren Buffett, the sixth richest man in the world, is one of the most successful investors in the history of investing, earning incredible profits. The combined growth of capital with professional decision-making has made Baft one of the richest people in the world. Over the years, many people have asked Baft how he got such wealth and what he thinks about the stock market. Warren Buffett’s comments can be found in the form of popular quotes, such as “Be greedy when others are afraid.”
Baft focuses on buying companies that offer attractive values. He does not buy shares of companies that are overvalued; Rather, in order to buy stocks, he prefers companies that have recently fallen or the market has neglected them. This strategy prevented Buffett from buying shares in companies such as Amazon and Google in the early days of their offering; However, the same strategy encouraged him to buy a large stake in Apple, a stock that has contributed to the growth of his portfolio.
During his interviews, annual meetings with shareholders, and letters, Buffett provided valuable insights to investors who are building their portfolios. In the following, using Content Recently published on the Medium website, here are seven quotes from Warren Buffett with some striking examples that can change the way you invest.
Quote No. 1
“Investing becomes risky when you do not know what you are doing!”
Before making any investment, make sure you know exactly why you want to invest in a particular company (or project). Many investors are only looking for assets that have been on the rise, without knowing much about those companies.
Although sometimes the results of these investments are favorable, but if you have chosen the wrong project, in some cases you may get the opposite result. Instead of trying to figure out what to look for and tactics to help ease the way, you can make more informed decisions and, ultimately, take less risk.
Quote No. 2
“Do not rely on formulas!”
Formulas convince you. Formulas inform you of the normal value of a stock by considering specific variables. The problem with using formulas to determine the price of a stock (or a digital currency) is that you are using a definite tool in an environment where there is no certainty.
For example, new data in the US Federal Reserve’s updated economics and statistics are two countless variables that affect the stock market. The volatility in the stock market is such that just a simple tweet from Tesla CEO Elon Musk could increase the company’s stock value by 5%.
Most market fluctuations are seen before companies’ profits; However, different news can easily have a significant impact on stock prices.
Instead of relying on formulas, consider the current financial resources and growth of companies (or digital currencies). Many people spend a lot of their time calculating the price-to-earnings ratio of companies. This formula can put growing companies like Amazon lower in terms of valuation.
Quote No. 3
“Do not ask the hairdresser if you need a haircut or not.”
Be careful who you get financial advice from. Some people have hidden motives and may not be honest; Some people have good intentions, but they may not be a good advisor to you.
If you ask a bankrupt person how to invest in the stock market, you will learn from someone who is in a bad financial position. This person may tell you to save your money in a bank and not make the slightest investment in the stock market or real estate.
If you ask an Apple employee what stock he or she should invest in, he or she will probably offer you Apple stock. There may be no financial incentive, but this person may be prejudiced against his workplace. If he’s not happy with his job at Apple, he’s probably telling you not to invest in Apple stock.
Think of a question that you are looking for an answer to. Then, look for people who can give the best answer to this question. If the investment strategy of the person is focused on low valued currencies, he will not offer you bitcoin. But if his strategy is to invest in growing companies, he will probably tell you to buy or hold bitcoins. In any case, it is more useful to consult with these people for financial advice on Bitcoin.
Quote No. 4
“I always knew I was going to get rich. “I did not even have a moment of doubt.”
The most important characteristic of investors is to have reasonable self-confidence. Reasonable self-confidence is enough to make you believe in yourself; But you should not believe in yourself too much, so much so that you think that whatever you touch will turn into gold!
You may have more faith in some currencies; But you should always have confidence in yourself. Baft never doubted, even for a moment, his long-term goal, and this self-confidence played a key role in his achieving such great wealth.
During this process, Buffett may have been hesitant about investments that would get him there sooner or things that would hinder his progress; However, he never doubted his ultimate goal.
Quote No. 5
“Opportunities are rare. “If it rains gold, put a bucket under it, not a finger!”
You have to be prepared to seize opportunities. For this reason, Baft has a lot of cash reserves and has recently bought gold. Buffett is waiting for the stunning fall in stock prices to seize the opportunity to make the best deals of the century. The same is true for other investors who bought stocks in late March (early April) when stock markets plummeted.
Some investors, especially younger ones, may be reluctant to save cash. However, opportunities come in many forms and are not just available in the marketplace. If you have the opportunity to find a new customer or increase your salary, do your best to get it and seize the opportunity.
Quote No. 6
“You can’t get a 10-year-old tree by planting 10 1-year-old trees in one day.”
Accept this bitter truth: The financial market is a game of patience. If you are aware of an opportunity in time or invest at the right time and increase your wealth, you are very lucky. But in any case, investing is like betting.
Most people accumulate wealth over several years. It is almost impossible to grow from zero dollars to one million dollars in one year in one market. However, achieving this goal within 50 years is possible and practical.
In some areas, such as investing, you just have to be patient.
Quote No. 7
“You do not always have to invest in everything. “Wait for the right opportunity!”
Just because you have the money to invest does not mean you have to invest. It is true that by comparing the interest rates of banks with the inflation rate, saving in the bank definitely means the devaluation of your capital. However, if you make the wrong investment, you will probably lose a lot more money.
No need to rush to buy. You can review a particular asset for several months before deciding whether or not to buy it.
As mentioned earlier, Buffett lost the chance to invest in Amazon and Google. Although he did not make a huge profit, he did not lose any money. He waited and bought Apple stock and made enough profit.
Just because everyone is buying special and popular assets does not mean that you have to follow the majority. Following the majority without rational consideration is the worst thing you can do in the market.