Here are some of Warren Buffett’s most famous pearls of wisdom, also known as Buffettisms.
As the recent Berkshire-Hathaway AGM just concluded, Warren Buffett was quoted saying, ““Do not make any mistakes that take you out of the game and you should spend a little bit less than you earn or you’ll never get out of debt.” The famous billionaire has a unique approach to investing and has shared many pearls of wisdom, including this, over the years. Here are some of his most famous “Buffettisms.”
“Rule #1: Never lose money. Rule #2: Never forget rule #1.”
This is perhaps one of the most famous Buffettisms, and it emphasizes the importance of protecting your capital. Buffett is known for being a value investor, which means he looks for undervalued companies and buys them at a discount. By doing this, he minimizes his risk and maximizes his potential for profit.
“It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.”
Warren Buffett emphasizes the importance of surrounding yourself with people who are better than you, as they can push you to improve yourself. This applies not only to business but to life in general. By spending time with people who have admirable qualities, it is easy to learn from them and become a better person.
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“Price is what you pay. Value is what you get.”
This Buffettism highlights the difference between price and value. Just because something is cheap doesn’t mean it’s a good deal, and just because something is expensive doesn’t mean it’s not worth the money. Buffett looks for value in his investments, which means he’s willing to pay a fair price for a company that has strong fundamentals and good long-term prospects.
“Risk comes from not knowing what you’re doing.”
Buffett stresses the importance of knowledge when it comes to investing. He believes that the more you know about a company and its industry, the less risky your investment will be. By doing your due diligence and understanding the risks involved, you can make informed decisions and minimize your chances of losing money.
“Be fearful when others are greedy and greedy when others are fearful.”
This Buffettism highlights the importance of contrarian thinking. When everyone is bullish on the market, it’s often a sign that it’s overvalued and due for a correction. Conversely, when everyone is bearish, it can be a good time to buy stocks at a discount. By going against the crowd, investors can often find good opportunities that others are overlooking.
Warren Buffett is famously patient when it comes to investing. He believes that holding onto quality businesses for the long-term is the best way to generate wealth. This is because good companies tend to appreciate in value over time, even if there are short-term fluctuations in the market.
Warren Buffett’s “Buffettisms” reflect his unique approach to investing and his focus on value, knowledge, and long-term thinking. His focus on preserving capital, investing in quality businesses, and doing your homework have made him one of the most successful investors of all time.
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Rule #2: Never forget rule #1.” This is perhaps one of the most famous Buffettisms, and it emphasizes the importance of protecting your capital. Buffett is known for being a value investor, which means he looks for undervalued companies and buys them at a discount.
Warren Buffett once said, “The first rule of an investment is don't lose [money]. And the second rule of an investment is don't forget the first rule. And that's all the rules there are.”
“The first rule of investment is don't lose. The second rule of investment is don't forget the first rule.” Buffett famously said the above in a television interview. He went on to explain that you don't need to be a genius in the investment business, but you do need what he deems a “stable” personality.
Buffett is seen by some as the best stock-picker in history and his investment philosophies have influenced countless other investors. One of his most famous sayings is "Rule No. 1: Never lose money.
A 70/30 portfolio is an investment portfolio where 70% of investment capital is allocated to stocks and 30% to fixed-income securities, primarily bonds.
They are: (1) Use specialist products; (2) Diversify manager research risk; (3) Diversify investment styles; and, (4) Rebalance to asset mix policy. All boringly straightforward and logical.
Buffett's investment strategy stands out because of his aversion to losses. Instead of accepting losses, he tends to double down on his positions or even increase his investments when they go against him. He believes that if you like a stock at a certain price, you should like it even more when the price goes down.
Buffett presented a three-step exercise to help streamline his focus. The first step was to write down his top 25 career goals. In the second step, Buffett told Flint to identify his top five goals from the list. In the final step, Flint had two lists: the top five goals (List A) and the remaining 20 (List B).
In the interview, he said the Berkshire shares would go to philanthropy. Part of the cash would go directly to his wife and part to a trustee. He told the trustee to put 10% of the cash in short-term government bonds and 90% in a low-cost S&P 500 index fund.
The 80% Rule is a Market Profile concept and strategy. If the market opens (or moves outside of the value area ) and then moves back into the value area for two consecutive 30-min-bars, then the 80% rule states that there is a high probability of completely filling the value area.
The Rule of 69 tells you how long it takes to double your money with different returns. 🚀 The formula is simple: 69 divided by your investment's annual return rate.
The Buffett Rule is part of a tax plan which would require millionaires and billionaires to pay the same tax rate as middle-class families and working people. It was proposed by President Barack Obama in 2011.
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