American entrepreneur Warren Buffett is one of the most famous investors in the world. According to Forbes magazine's annual billionaire ranking, the personal fortune of Berkshire Hathaway's CEO 2013 G. Was $58,2 billion, making him the fourth richest person on the planet.
About that, how to succeed in the financial market, Buffett regularly talks in his interviews, books and regular letters to Berkshire Hathaway shareholders.
Buying stock is not just a matter of price
“It's much better to buy a great company for a good price., than a good company for a great price”.
You don't need to be a genius, to invest successfully
“You don't have to be a rocket scientist. Investing is not a game, where a person with a high IQ level beats the one, who has it lower”.
Know the basics well
“You don't need to understand for a successful investment, what is an efficient market, modern portfolio theory, option price or emerging markets. Maybe, will be better, if you don't know anything about it. From our point of view, they, who wants to understand investing, should study the following questions well: how to evaluate a business and what is a market rate”.
Don't buy a stock just because, that everyone hates her
“You shouldn't buy a business or stock just because, what stock or business is not popular today; the strategy of the game against the crowd is also stupid, like the crowd-following strategy. An analytical approach is needed. Unfortunately, Bertrand Russell's general observation applies to finance too: “Most people would rather die, what will start to think”.
Bad things are not very noticeable in good times.
“You will learn, who swims naked, only after low tide”.
Always have money
“I swore to you, rating agencies and myself - always running Berkshire with more than enough cash. We don't want to rely on the kindness of strangers., in order to fulfill your obligations. If you choose, then I will never trade a restful sleep for an opportunity to get additional profit”.
The best time to buy a company then, when she's going through tough times
“The best for us happens then, when a great company has temporary difficulties. We want to buy them, when they are on “surgical table”.
Stocks always come out of the crisis
“In the long term, news from the stock market will sooner or later be positive.. In the 20th century, the United States experienced two world wars and other terrible and expensive military conflicts., depression, a dozen recessions and financial panics, oil shock, the flu epidemic and the disgraced president's resignation. But the Dow has grown from 66 to 11 497 points”.
Don't be euphoric about unexpectedly large profits
“The line between investing and speculation is very difficult to distinguish. Especially it is blurry, when market participants make big profits. Nothing kills the vigilance like that, like a lot of easy money. Usually, during this period, a sensitive person begins to behave, like Cinderella at the royal ball. He knows, that the holiday is over long ago, but continues to speculate with the company, That, probably, won't make a profit, and in the end he loses everything”.
Evaluate from a long-term perspective
“Your goal as an investor is simple - to buy the company's shares at a reasonable price., which is easy to understand and whose business will be preserved in five, ten or twenty years. After a while you will understand, that there are not many such companies. So when you meet a company like this, then buy their shares. If you don't want to own the stock for the next ten years, you don't even buy it”.
Always a good time to own a stock
“When we are part of a great business with excellent management, always – our favorite period to own a stock”.
Buy a business, that even an idiot can control
“I try to buy stocks in a business, which is so good, that it can be controlled by an idiot. Because sooner or later it happens”.
You shouldn't take every opportunity
“Stock market - this is not a game, where it is necessary to respond to every serve. You can miss the ball and wait for the right moment to kick”.
Ignore politics and macroeconomics when choosing stocks
“We will continue to ignore political and economic forecasts, which distract the attention of investors and businessmen. Thirty years ago, no one could predict the length of the Vietnam War., limitation of wages and prices, two oil shocks, the collapse of the Soviet Union and the one-day collapse of the Dow on 508 points. But none of these events changed Benjamin Graham's investment principles.”.
The more you trade, the lower your result
“Isaac Newton discovered three laws of dynamics. But there is a fourth law, for investors: profit is going down, as the traffic increases”.
Price and cost are not the same
“Long ago Benjamin Graham taught me, what “price is that, what do you pay; cost is that, what you get”. Are we talking about socks or promotions, I like to buy quality goods, prices for which fell”.
Investments that are too complex do not carry profits
“A truly worthwhile investment idea can be explained in one sentence”.
A good businessman turns into a good investor
“I am better as an investor, because i am a businessman, and better as a businessman, because I am not an investor”.
High taxes do not interfere with the transaction
“Imagine, that investor, who do you trust, invites you to join a great investment idea. Will you tell him, that your decision will depend on the amount of taxes? If you are afraid of taxes, then it is better to put money in a savings account under 1% per annum”.
Companies, which do not change, best suited for investment
“Our approach is, that we profit from no change. So, for example, I really like, that Wrigley chewing gum doesn't change. I like this business”.
Time will show
“Time is a friend of great business, but the enemy of mediocrity”.
This is the most important thing
“Rule # 1: never waste money. Rule # 2: don't forget rule # 1”.
