Warren Buffet is one of the most influential investors in the world.
The most important of his words is that they are available for any investor who, with a little dedication and learning, can effectively manage their assets regardless of their amount.
From his messages in recent years, we highlight the 3 basic principles that underlie his recommendations:
Students should stay away from debt originated by credit cards and increase their ability to save.
The PRICE is what you pay and the VALUE is what you get.
A bull market is like sex: the best moment occurs just before the end.
Recommendation 1. Invest in funds referenced to indexes
Its long-term strategy is to invest 10% of the capital in short-term government bonds that provide instant liquidity in cases of need and the rest in an investment fund referenced to the Standard & Poor’s 500 index, suggesting The Vanguard Total Stock Market Index Fund, the largest investment fund in the world that invests, mostly, in US equities.
It is about relying on the long-term revaluation in the leading companies listed on the deepest and most developed stock market on the planet and not spend savings on hiring professional managers with very high fees.
Recommendation 2. Stay away from Bitcoin
Buffett’s aversion to technology is known for the fact (recognized) that I have refuses to invest in what he does not know.
It recognizes the usefulness and effectiveness of the virtual currency to transmit money quickly and anonymously all over the world, but it does not consider it an investment because it does not attribute the necessary function of preserving the value of consolidated currencies.
The very high volatility of the Bitcoin’s price does not fit into its basic principles of long-term investment.
Recommendation 3. Learn accounting
Accounting is the language of business and its learning is an investment that recovers throughout life. In addition, it is almost universal language: the numbers are added and subtracted in the same way in Europe as in Asia or Asia and accounting standards are practically homogenized in the main developed countries.
Read and analyze quickly and effectively the financial statements of an investor’s target companies is a regular and necessary task to reduce the risk associated with any investment decision.
Recommendation 4. Obsessing with saving
Saving is a habit that must be learned as soon as possible. It is much easier to get rich little by little through to a long-term strategy that quickly and “overcoming” the market.
It is even possible that a stroke of luck before adopting a savings and investment methodology could be negative and confuse the investor.
Recommendation 5. Do not get scared and stay calm
When the market is bearish, it is quickly what has been gained little by little for years and the uncertainty of the stock exchanges, when the investor must remain calm, trust in its strategy and long-term methodology and not sell.
Buffet does not pretend to anticipate the movements of the market and affects the importance of a reasonable fundamental analysis based on accounting before making the investments. Even consider the inevitable bearish periods must be used to strengthen positions.
Recommendation 6. Do not pretend to be an expert
Do not be influenced by fashions or by analysts with possible conflicts of interest. Do not even believe everything you hear or read. If you invest in securities of companies or sectors that you do not know, your performance will depend excessively on chance.
Invest in what you know and are able to analyze with certain criteria, be confident in your methodology and strategy, do not be influenced by market noise and be patient. Time will give you the reason.
