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.
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