The name Warren Buffett needs no introduction. As of 2022, his net worth skyrocketed to $115.4 billion according to the ranking by none other than Forbes. The CEO of Berkshire Hathaway has shown that there’s possibly no stopping to his success in the field regardless of battling prostate cancer. His influence in the stock market is just yet another field you can draw inspiration from.
Buffett’s idea is simple: look at the companies, not the stocks.
This idea plays by the rule of only looking at the company as a whole. Hence the entire focus should be about the potential of the company and how well it does in terms of making money. The market will one day or another favor the quality stocks once you put in use this key principle of investors like Warren Buffett.
What is Warren Buffett’s approach to Investing?
Buffett has been known famously for many things, including his sense of “investing in what you know and truly understand”.
Now, this strategy did not indicate your mere expertise in the company, rather you should be aware of the chosen business and its economic characteristics. He internalized Graham’s intrinsic value with the company’s welfare.
Buffett was a firm believer in the power of what lies in the “present” not the future. In his interview with Andy Serwer, he stated “you don’t buy a stock or business because one-year sales were 2% and next year it will grow to 3%, you just buy a stock or business with the thought hoping you bought it at the right time.”
A billionaire mind like that of Buffett’s runs on the motive of learning as a continual process. Regardless of reaching the high point of success, he has not stopped reading ever since he started investing from the age of 11.
How did Warren Buffett make his fortune in the stock market?
Beginning with his first-ever investment at the age of 11, Buffett’s first-ever stock purchase was made at $38 per share. After selling it at only $2 profit, Buffett did not know he could be the future billionaire.
The journey continued, regardless of small profits and ups and downs. From selling chewing gums and Coca-Cola as a child to being the biggest shareholder in Coca-Cola Company, he has earned the title of “Oracle of Omaha”.
Buffett slowly built up his fortune in the stock market over the years. In the year 1963, he became the savior of the American Express. Later in the mid-1980s, shares in Cola-Cola were brought. Bank of America and Kraft Heinz are just another few names at the top of the list. Apple, however, is his highest shareholding company to exist.
6 things you didn’t know about Warren Buffett’s philosophy of investing
For anyone who draws inspiration from Warren Buffett’s value-based investing strategies, you will be amazed to see these 6 things about investing, all from his books.
1) Quality over anything: Buffett’s preference of quality over quantity is apparent from his biggest shares in companies like of Coca-Cola and Apple. Setting standards for the business you invest in will ultimately bring you success in it.
2) Sell smartly: even the big names undergo bad days, Buffett was no exception. When he sold his first-ever purchase at only $2 profit and a year later realized it could be sold for $200, Buffett made a pact not to sell unless there was a significant change in the market.
3) Making use of Facts: emotions can derail a business which is why Buffett proposes people make use of facts not emotions when dealing with any kind of investment.
4) A long-term mindset: it is equally important that once you make a purchase, you do it because you want it to stay with you for a long time. Merely jumping for anything just because its prices are favoring you at the moment can land you into trouble.
5) Knowing value investing: under the influence of the father of value investing Benjamin Graham, Warren Buffett took to the approach of intrinsic value but with a slightly different approach.
6) Leading your own path: a self-made billionaire Warren Buffett may have had examples to learn from but what he did is never followed the crowd blindly. This includes not buying stocks only because everyone else seems to be rushing after them.
Lessons from his Frugal Life
When you rank among the richest people on the planet earth, living off on filthy rich lifestyle becomes obvious, except that is not the case with Warren Buffett.
Call him old school or humble, but he didn’t change his house ever since 1958. He has lived in the same house for more than 60 years. His everyday breakfast includes eating at McDonald’s but that too doesn’t go beyond $3.17. Just like that, he does not like to spend on cars.
This simple lifestyle shows how we can live off moderately even after having the money to buy nearly anything a person may wish for. It also shows that material things are not what it takes to establish your mark in the world. His frugal lifestyle is also what teaches us to be kept away from debt under all means.
