Warren Buffett’s investment advice for non-professional investors | Author: Kalpen Patel | The Capital | May 2021
Hi everyone, thank you for coming back to my blog. I hope you found my last blog interesting and useful, in which I introduced “10 basic strategies for creating a bright financial future‘.
In this blog, I will introduce some simple but interesting investment advice from Warren Buffett, one of the richest and most influential figures in the American business world, “Oracle of Omaha”. This advice is for ordinary people with limited time, just like you and me, and may prove to be the best advice you can get.
Most of us are not financial wizards, or even work in financial-related fields. We are teachers, doctors, lawyers, laborers and engineers. So can ordinary people do a good job in stock selection? Well, it depends.
Warren Buffett has more than 60 years of experience and full-time investment. Historically, Buffett has always insisted that investment does not require a high IQ, but it does require experience to identify a great investment. He also has some advantages that ordinary people do not have, we will not elaborate. However, his basic strategy is available to everyone.
Buffett suggested two different sets of instructions for non-professional investors.
If you lack knowledge of the stock market and are short on time, you should do this:
The money can be used quickly and easily, but it will not rot in current or savings accounts.
Although this is not the most exciting suggestion, it makes a lot of sense. Few managed funds can match the fee adjustment results of index funds within a few years. In addition, the fees and stupidity of fund managers are too disadvantageous.
This is the exact advice Buffett left to the trustee who manages his wife’s trust. Assuming he loves his wife, this might be good advice for the rest of us. There is nothing simpler than this. It also requires very little time and attention.
If you prefer to pick your own stocks, please follow the suggestions below:
Buffett often makes this suggestion to business students. It includes analyzing every stock on the New York Stock Exchange. When students pointed out that there were thousands, Buffett’s answer was, “Start with A”.
· Buffett once said that after you have studied thousands of companies, it is easy to identify good companies.
Invest in companies that are discounted to the company’s true value-the greater the margin of safety, the greater the potential upside. The disadvantages are also greatly reduced.
Buffett does not recommend investing just because there is a certain type of economy. In the final analysis, the most important thing is the quality of the underlying company. The economy rarely appears.
According to Buffett, there is no need to have above-average wisdom when it comes to investment. Instead, stick to easy-to-understand businesses. For example, it is easy to understand how a grocery store makes money. Biotech companies are more complicated.
Buffett once said, “Never ask your barber if you need a haircut.” If you follow the broker’s advice, who will benefit? Be sure to consider the source.
· Unfortunately, the more mysterious the source, the more we tend to project onto the source. You may doubt your friend, but you convince yourself that the strange person on the bus must know what he is talking about.