Warren Buffett's Investment Rules For Smart Investors
with Warren Buffett (Photo credit: Wikipedia)
Warren Buffett's Investment Rules
You can describe Warren Buffett as one of the greatest investors of all time. He is definitely the greatest stock market investor of the present age. As a stock market investor, this man has no rival. The man believes in buying stocks and he has a huge portfolio to back up his beliefs. Over the years Mr. Buffett has developed an investment strategy that has worked wonders for him. Warren Buffett's investment rules are clearly spelt out below.
Do not lose your money:
This is rule no. 1 of Warren Buffett's investment rules. From this statement the investment guru makes it clear that investing is not the same thing as gambling. People who want to invest need to properly investigate the company before staking their money. With the right research, you can identify a solid company and invest in it.
Do not forget the first rule:
Now, this is a witty manner of bringing home an important message to the investor. The point of this second rule is that investors need to be very careful. Lost money does not ever come back to the investor. For this reason, investors should invest after weighing a lot of factors.
Invest for the long term:
Warren Buffett is a man who takes the advice he gives other people. In his view, investments need some time before they begin to pay off. This is why he advises people to invest in stocks and hold on to the stocks for the long term. Even during the lowest points of the stock market crash, Warren Buffett was buying stocks. Now, the market is picking up again. The stocks he bought for a song at that time are picking up already. This is his formula and this is what he advises investors to do as well.
Avoid unnecessary Diversification:
Some experts advise people to diversify. This means buying stocks in different industries. The reasoning behind this move is that if some stocks do not appreciate in value, others will. Warren Buffett does not subscribe to this view. In his opinion, the secret of investing well is to identify the right firm and buy the stocks of that firm.
These are Warren Buffett's investment rules. He has made a fortune from these rules. So have other people who have followed these rules. Apply these rules and you will make money too.