how to invest like Warren Buffett
okay so Warren Buffett is unarguably one
of the greatest investors of all time
sage of Nebraska and from a young age he
knew he would be rich
that prophecy did come true and today
he's worth about 80 billion dollars at a
young age Warren would buy six packs of
coca-cola for a quarter can sell each
for a nickel he also sold the newspapers
in magazines door-to-door he collected
and sold the golf balls and in fact he
even got other kids from his
neighborhood to collect himself golf
balls as well he had all sorts of small
ventures he grew up doing he wants to
make money he said he loved doing
business and armed about 114 dollars in
which he had saved in 1942 he bought it
for a stock called cities and services
he said he went all-in and made a good
return and I think it's safe to say the
kid had a bright future and together
with his partner Charlie Munger they
have created one of the largest
corporations in the world so luckily for
you and I Warren has left clues as to
how he became so successful so in this
video I'm going to share 10 principles
for investing that anyone can use to
become rich so whenever Warren goes
hunting for companies and businesses to
buy he looks at the management team
first whether they're talented
incompetent and if so he buys shares in
the business one of his policies is not
to buy a hundred percent of a company or
a business but to own a none controlling
but substantial portion of the business
after all when he owned hundreds of
companies who has time to run the bomb
right Warren has invested in a vast
amount of businesses over the years
ranging from lollipops to get airplanes
some of the businesses measured by
earnings enjoyed terrific economics
producing profits that run from 25%
after-tax to far more than 100 percent
others generate good returns in the area
of 12% to 20% however a few of the
businesses he has invested in have very
poor returns the mistake he attributes
to missteps in meeting capital
allocation and evaluation of the
dynamics of the companies and the
industries in which it operated and on
the other hand the isness steps he
attributes the poor returns are usually
small blunders in the overall balance
sheet so keep your mistakes to a minimum
and don't be shy about taking calculated
risk never gamble your money but invest
in a venture that has a good chance of
succeeding focus on the future
productivity of the assets you are
considering investing in if you don't
feel comfortable making a rough estimate
of the assets future earnings just
forget it and move on
the one has the ability to evaluate
every investment possibility but
omniscience isn't necessary
you only need to understand the actions
you are undertaking warren buffett says
you don't need to be an expert in order
to achieve satisfactory investment
returns however you must recognize your
limitations and follow a core certain to
work reasonably well keep things simple
and don't swing for the fence when
promised quick profits respond with a
quick note when investing if you focus
on the prospective price changeover
contemplated purchase you are
speculating
there is nothing improper about this
though but you should be skeptical of
people who claim that they can
accurately predict the future price of a
stock with no solid evidence to prove so
half of all coin flippers will win their
first toss but none of those winners are
assured of profits if they continue to
play the game the fact that a given
asset has appreciated in the recent past
is never a reason to buy it don't keep
watch of your stocks daily in warrens
annual report he wrote with my two small
investments I thought only of what the
properties have produced and cared not
at all about their daily valuations
games are won by players who focus on
the playing field not by those whose
eyes are glued to the scoreboard if you
can enjoy Saturdays and Sundays without
looking at the scoreboard give it a try
in the weekdays forming macro opinions
or listening to the macro or market
predictions of others is a waste of time
indeed it is dangerous because it may
blur your vision of the facts that are
truly important such as the annual
report of the business future plans to
be happening the management team are
they competent or not such things
emotions aside owners of stocks however
too often that their emotions and
irrational behaviors of their fellow
owners cause them to behave
rationally as well because there is so
much chatter about markets the economy
interest rates price behaviour of stocks
etc but you are overwhelmed and end up
making irrational decisions some
investors believe it is important
illicit dependence and worse yet
important to consider acting upon their
comments people too often become frantic
when they hear chitchat about an inside
trade or deal they just can't miss on
and worst of all they act on this false
information without putting any time to
research whether this information holds
any merit or not never take investing
advice from someone who doesn't have a
clue about investing the point is do not
make life-changing decisions predicated
on tips or rumors you might have
overheard do not take investing advice
from friends and people who know nothing
about investing or the stock market if
your best friend or co-worker is
advising you to invest in a particular
stock or business don't just jump into
it critically analyze information he or
she is providing you ask them where they
got the information from and who gave it
to them it might actually be a good tip
but firstly your own due diligence
before investing a flash crash or some
other extreme market of fluctuation is
really bad for your average Joe but it
seldom hurts a seasoned investor because
while other people are seeing red flags
and smoke everywhere all is he's an
investor can see his opportunity indeed
tremblin markets can be a great
opportunity to the true investor if he
has cash available so always have a
reserve for such moments Warren wrote a
climate of fear is your friend when
investing before ik world is your enemy
never buy at a premium always have cash
laying around for such time because the
market will bounce back it always does
when Warren and Charlie buy stocks they
think of it as a portion of the business
their analysis is very similar to that
which they use in buying entire
businesses they first have to decide
whether they can sensibly estimate an
earning range for a 5-year period or
more and if the answer is yes they will
buy the stock or a business if it's
selling at a reasonable price in
relation to the bottom boundary of their
estimates if however they lack the
ability to estimate future earnings they
simply move on to other prospects Warren
Buffett said that in the 54 years he and
Charlie have worked
together they have never forgot an
attractive purchase because of the macro
political environment or the views of
other people
in fact these subjects never come up
when they make decisions so don't let
small circumstantial issues hinder you
from making a good investment most
investors of course have not made the
study of business prospects a priority
in their lives
if wise they will conclude with that
they do not know enough about specific
businesses to predict their future
earning power but Warren Buffett says I
have good news for the non-professionals
the typical investor does not need their
skills in aggregate American businesses
have done wonderful over time and will
continue to do so
though most assured in unpredictable
fits and starts in the 20th century the
Dow Jones Industrial Index advanced from
66 to 11,500 paying a rising stream of
dividends to boot the 21st century a
witness for the gains almost certain to
be substantial Warren says the goal the
non-professional should not be the big
winners neither he nor his health risks
can do that rather it should be to own a
cross-section of business that an
aggregate are bound to do well the
low-cost S&P 500 next button will
achieve this goal it is no secret that
Warren plans to give away most of his
fortune to charity upon his passing in
his will he said my advice to a trustee
could not be more simple for 10 percent
of the cash in short term government
bonds 90 percent in a very low-cost S&P
500 index fund
I suggest Vanguard he said I believe
that trusts long-term the result from
this policy will be superior to those
attained by most investors whether
pension funds institutions or
individuals who employee - managers
so in conclusion these are just 10
things that weren't buffered in seasoned
investors used to become rich and by
employing these habits you'll be much
better equipped to become wealthy
yourself thank you for watching guys and
I guess I'll see you on the next one
Cheers
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