Warren Buffett's 5 Strategy for Investment
1. Choose an area you’re Interested
The very first thing that you do is choose an area that you are interested in this could be artificial intelligence it could be the semiconductor industry the gaming industry blockchain whatever it is you pick their industry and you become an expert in it
Next step look at the small stocks in their industry the stocks that you can understand and as you go over all of these stocks you will find little wrinkles here and there little hidden gems little arbitrage opportunities which can make you a lot of money but the key is to pick an industry that you can understand and that you're interested in and then look at all the small stocks in their industry and you will find the deals however I will say this make sure that you follow strategies who or at least understand and strategy two.
2. Look at USA stocks
Strategy two is that you want to use strategy one looking at smaller companies with USA stocks or companies in the USA warren Buffett’s has a love for USA stocks because those were the stocks they're made am rich and the USA has a reputation for being trustworthy and very business oriented and when you're analyzing small businesses you need to be able to trust the figures in the information that they put out and with USA companies you can pretty much trust these figures you know the USA stock market is very heavily regulated by the Securities and Exchange Commission and other agencies checking there each figure released by these companies by the stocks is correct
However, if you invest in small companies in certain countries such as China or third world countries you can't really trust the figures that the stocks put out and this is just the truth go talk to Americans or certain Westerners living in China or people living in other smaller third world countries and they will tell you the same thing the business practices in the regulation it's just not the same as the United States of America so if you're looking at smaller companies in those other countries you don't really know if you can trust those figures in thus there's just too much risk in those countries
However, I personally will say these other countries such as Australia you know England, Canada, Swaziland, and India. I personally believe it's fine analyzing smaller cap stocks in those countries, they're very well regulated as well and they have an honest business practices by Buffett will tell you United States is the place to do it.
3. Buy stocks when they are selling for a price well below their intrinsic value
Strategy three is to only buy stocks when they are selling for a price well below their intrinsic value and that's the beauty about looking at small-cap stocks, because they are often so under-analyzed you can find plenty selling well below their intrinsic value you see often those big names like Netflix, Amazon Microsoft are analyzed by so many different analysts that they don't quite offer the same opportunities like the ones that are not been analyzed as much so with these small-cap stocks that you are looking at making sure that you know how to calculate the value behind them and then it becomes simple only buy them when the price is well below the intrinsic value that's how you ensure really high returns.
4. Be Fearful When Others are Greedy & Greedy When Others are Fearful
This time and time again investors are highly driven by their emotions I've seen this time and time again worth let's say Tesla stock one minute they're the happiest group of investors they think they're going to become rich the next minute they all panic because earnings are down for a quarter and they run for the hills if you can take a step back and look at the facts you will make a lot of money and what you'll find is that the best opportunities to make money is when everyone else is fearful when Even is running for the hills that's when you want to buy a stock just look at what Facebook stock has been doing over the past year halfway through 2018 it had their big crash where investors became worried about privacy issues and them had recent scandals like Cambridge and alit occur in the stock shot down like a rockets this was the best time to buy into Facebook stock when it was cheap we never announce was panicking we need run was fearful and that's what this was when lots of people were buying a lot of Facebook stock because the numbers on it was so good the fundamentals were great if you look at the facts the earnings we're still doing good the user numbers were growing and they were still expanding as business.
When it comes to achieving great investment returns and I'll tell you this there's a chance a stock market crash could occur in the short-term medium-term future if you can maintain some stable emotions and buy stocks when they're crashing you will make some good money just like those investors who were bought in 2009.
5. Keep Turning Over Pages
Turn over the most pages those that analyze the most stocks that will generally do the best when it comes to investing the great investor Peter Lynch, he said this he said I've always said that if you look at ten companies you'll find one company that's interesting if you look at 20 companies then you may find two if you look at 100 you may find ten the person that turns over the most rocks wins the game.
The more stocks that you go through the more shareholder reports you read the more you read the better your investor returns are going to be generally speaking.
You know Warren Buffett, he stays the same thing he said when I started I went through the manuals page by page I went through 20,000 pages in the Moody's industrial transportation banks in finance manuals twice I actually looked at every business, although I didn't look at some very hard reading, has made him rich overtime he told the story of going through Moody's annuals in 1951 it was absolutely a question of turning pages and the more that you can turn pages the more stocks that you can analyze the more you can learn about investing the higher your returns are going to be you.