Image source: The Motley Fool
The famous investor Warren Buffett has achieved amazing success in buying stocks. But he has far more wealth than most private investors.
That’s why, even if I’m only investing £500 today, I’ll apply the five Buffett moves below.
1. Pay attention for a long time
Buffett says that if you’re not willing to hold a stock for 10 years, you shouldn’t even consider holding it for 10 minutes.
That doesn’t mean you need to hold it for a decade or more in practice. But Buffett emphasizes that he is a long-term investment believer, not a speculator hoping to profit from short-term price movements. When considering buying stocks, it looks for a long-term investment case.
2. Hold fast to what you know
Buffett only invests in industries he understands. This helps to assess the future of the business, which can be the basis for investment decisions.
I’d rather do what Buffett does than chase the hot new thing I don’t understand, and stick to the industry I understand when picking stocks for my portfolio.
3. Find a long-term competitive advantage
£500 may not seem like a lot to invest. But one of the joys of investing in the stock market is that I get to own a handful of world-renowned companies, even if I only have a small stake.
When investing, Buffett looks for companies with a competitive advantage that he thinks can be sustainable. This is important because it gives them pricing power. Examples of Omaha Portfolio Sage include blue-chip companies Apple With a strong brand and user ecosystem as well CokeThanks to the proprietary formula.
4. Focus on value
For Buffett, having a good business is not enough in itself. He wants to invest only at an attractive price. Otherwise, even if a company is doing well, the shares may actually be a disappointing investment.
Buffett doesn’t just look at price. It looks at the value of an investment opportunity. I think it’s just as important a lesson when you’re investing hundreds of pounds as when you’re dealing with millions.
5. Be different
Buffett spends long and long hours finding great companies whose shares he can buy at attractive prices. Even then, sometimes it is wrong.
That is why it distributes in different stocks. £500 is enough to do the same thing, for example investing £250 into two companies.
Learning from Warren Buffett
I notice that many people try to make investing too complicated. It doesn’t always have to be. Buffett has been successful by adopting a well-intentioned but precise approach to investing.
Instead of reinventing the wheel, I’m glad I applied these five lessons from a proven master to my own small investment.