Warren Buffet is a very successful investor and if you are looking at how to generate an additional income by investing then it is definitely worthy for you to take a look at his tips.
Below are our favourite 5 quotes from him which have been and are being very useful in inspiring our learning process.
1. “Risk comes from not knowing what you are doing.”
- Indeed. Knowledge is essential in every aspect of life, and when it comes to money and investing, even more so. Depending on your level of knowledge it is fundamental to get used to knowing different investing tools, nomenclature, economic scenarios, macro trends or updates from the companies you follow (for example if you choose to invest in stocks).
- Everything you want to achieve requires you to focus on it. For money and investments it’s the same.
2. “The investor of today does not profit from yesterday’s growth. This, to us, has meant at least two things:
- If some people have been enjoying a consistent growth of a specific financial product, it doesn’t mean it will be the same for you: a good trend is not a guarantee;
- Many products, especially shares, are subject to volatility and fluctuations: of course it is better to try to buy low rather than high…
“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it”
3. “We simply attempt to be fearful when the others are greedy and to be greedy only when others are fearful.”
- As an example: sometimes bad news starts hitting a company, it might be performance slightly below the expectations, or a trend which will be working against the industry where the company operates. Sometime the market reacts “panicking” and a share can lose lots of value. What we have learnt is that, if the companies are solid, with strong competitive advantages and, with good leadership, this might become an extraordinary opportunity for buying low.
4. “Predicting rain doesn’t count, building arks does”
- When you know your stuff and you think you understand the mechanics well, when you feel confident, you need to act.We started with small amounts, we didn’t care about the brokerage fees or similar: we just wanted to put some findings into practice. At some point, you need to start, just start small.
5. “Your premium brand had better be delivering something special, or it’s not going to get the business.”We have interpreted this one as a suggestion to invest in companies which have been able, over years, to create a huge gap between them and their competitors, by acquiring a unique competitive advantage.
– Also, we sometime look at companies operating in upcoming industries which seem to be the one leading that sector in the next few years.
There is lots and lots to learn about investing and we just wanted to share our experience as well as spend a few words on investing as an insight of our post “How many incomes do we need nowadays?”
This is not meant to be a financial advise, for that you will need to consult a professional authorised to operate in your country.