"Warren Buffett, The Oracle of Omaha," is one or the most Talk-About investor ever. Consistently, Warren Buffett claims that all his actions, all the investments he has made, stem from doing nothing beyond your ability, and perhaps that is the secret of his charm and success."
Its investment principles are well known and have even been translated into all the world languages. I will try to match Buffett's investment principle - what motivates or stops you and me from making investments.
Anyone who takes part in the capital market must consider "the psychology of money".
An investor must control his/her emotions and be particularly alert when other investors bad decisions produce investment opportunities.
In 2002 Buffett said at the annual meeting of Berkshire Hathaway the following important sentence:
"We should not be smarter than anyone else.
"We should be more disciplined than anyone else."
When Buffett talks about discipline and tight investments, he refers to the following principles:
Principle No. 1 - Interest Rate - Compound Interest
The return produced in the first year increases in the second year and the first- and second-year’s return has a nice profit the third year.
This principle, compound interest, calls for what we don't have these days - patience.
To earn a lot, you need perseverance and patience.
It will not come in the first two years, be patient.
It will happen, but in the end.
Principle No. 2 - Do not invest in a company that you do not know in-depth
One more thing we don't like to do, or we don't do well: Research. Buffett promotes the company's business analysis. Based on the business environment, its advantages and disadvantages, the industry's competition, the customers, Buffett decide whether to invest in the company. In this context, he has repeatedly said the following sentence:
I do not invest in companies that I do not understand their business and their business models.'
Principle No. 3 - Law No. 1 in Investments – Never, Never Lose Money
The number one rule in investing - never, never lose money. Rule No. 2 - Never, never forget Rule No. 1 - Buffett says.
Jack Walsh, the legendary CEO of General Electric, asked in a press interview about his successful secret
Walsh answered , "Good decisions."
The journalist asked "how to make right decisions?"
Walsh answered in one word , "experience."
Reporter: "how to gain experience",
Walsh replied , - "bad decisions."
Principle No. 4 - Invest in a relatively small number of companies
Broad diversification of the investment portfolio is required when investors do not understand what they are doing. says Buffett, and rightly so. Investment managers are supposed to generate a return thanks to the choice of profitable investments. This can be with a small number of investments. Buffett has always invested in a relatively limited number of companies.
Principle No. 5 - Have you purchased shares? Great. Think of yourself as in control
Stocks are not paper. They express part of the ownership and control of the business. Therefore, when you are considering investing in a stock, think of yourself as a controlling shareholder, 'says Buffett. Buffett wants investors to treat every investment with respect and understand the strategic, managerial, chairman's way of thinking, CEO, and board of directors of the invested company.
Principle No. 6 - Buy and hold
One of Buffett's most important principle. In contrast to the constant movement in the capital market of buying and selling, Buffett invests in companies that he 'understands' and holds the investment. "When you think about investing in a stock, if you are not thinking of holding it for at least 10 years, do not invest more than 10 minutes in the decision," he says and implements.
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Principle No. 7 - Do not be part of the herd
Buffett likes to say that 'capital market volatility is a friend, not an enemy. Profit from stupidity instead of participating in it. When stock prices are going down (because everyone is scared), it is your time to invest. If prices go up because of investor greed, maybe it's time to break away from the herd and sell. After all, the market is volatile - his volatility can be exploited for profits.
Since the capital market is known for its volatility due to the geopolitical situation, interest rate, blue-chip companies' performance, we believe in listening to Buffett's advice. His decades of experience, excellent investments, and 70 billion to show it. In a life that the fastest unit of time is the transition from euphoria to depression and back again, God forbid, it will not hurt us a little economic sanity.
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Buffett’s 2020 investment prove the most important; Believe in yourself. Believe in your business. Believe in your ability. Believe in you.
In the first nine months of 2020, Berkshire Hathaway, Buffett’s company spent $16 billion buying back its stock. The investment surpasses many of Berkshire’s investments in recent years. Are you buying stocks, or aggressively invest in your business?