Warren Buffett is one of the world’s most successful stock market investors, with over $100 billion net worth. His advice is plentiful throughout the internet, but some of his best nuggets about his investment philosophies caught our attention.
#1: Be Different in the Market
Buffett, a strong advocate of fundamental analysis, emphasizes that investors must not blindly follow the crowds. Buffett’s contrarian investment philosophy involves buying and selling stocks when others do the opposite. Strategies include buying during a sell-off to profit after a rebound. In a 1990 New York Times magazine article, he stated:
“What doesn’t work is when you start doing things that you don’t understand or because they worked last week for somebody else. The dumbest reason in the world to buy a stock is because it’s going up.”
#2: No Need for Competent Investors to Overstress Diversification
Diversification is a classic investment strategy to reduce risk. Buffett explains that investors can modestly diversify among a few companies and know those companies in detail. In a 1996 Berkshire Hathaway annual meeting in Omaha, Buffett stated:
“We think diversification is — as practiced generally — makes very little sense for anyone that knows what they’re doing. Diversification is a protection against ignorance.”
#3: Think Long-Term
Buffett invests with the far future in mind, holding market positions for many years. The new challenge is riding out short-term fluctuations emotionally. In a 1990 Forbes article, he said:
“Buy shares in a great business for less than the business is intrinsically worth, with managers of the highest integrity and ability. Then you own those shares forever.”
Investing with Tulsa Financial Advisors
Investing is a risk, and past performance does not indicate future results. With a long-term outlook of at least three to five years, First State’s Gold Chip Standard is proven to meet client growth objectives. For those interested in investing in high-quality stocks, contact us for a free consultation at (918) 492-1361.
This overview is for informational purposes only and is not a recommendation. It should not be the sole deciding factor in making an investment. Investing is a risk and, as with all risks, a positive return is not guaranteed. Past performance does not indicate future results.