The words stock market investment and Warren buffet are almost synonymous. Warren Buffet is considered as the greatest investor alive who is always vocal when it comes to sharing some stock market tips. Anybody who has ever thought of trading in the stock market is bound to come across the tidbits shared by Warren Buffet. Here we have listed down some of the top stock market investment advice from him.
1. Investing is a long term game
“If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.” – Warren Buffett
Investing is a different gamut of money management than trading. While trading involves taking measured risks and generate profits involving wild swings for a discreet period, investing is different. Investments are done to generate wealth over the long term and not for short-term profits.
2. Always remember the difference between the price and value
“Price is what you pay. Value is what you get.” – Warren Buffett
It is not uncommon that stock prices swing according to investor’s emotion. However, this does not mean that a company’s future stream of the cash flow will change. Here, investors need to differentiate between the price and value. They should concentrate on high-quality companies that are trading at reasonable prices. This is one Warren Buffet investment strategy you should imbibe in your life.
3. Be Informed and educate yourself
“Risk comes from not knowing what you’re doing.” – Warren Buffett
It is advisable to get into industries of which you have a good knowledge and understanding. You can also get informed and try and mitigate the risks. Avoid investments where you do not understand the industry deeply.
4. Patience is an important virtue
“The stock market is designed to transfer money from the active to the patient.” – Warren Buffett
Being impatient with your money is a recipe for disaster. If you have thought of investing your money, then you need to be patient with it as well. The best returns can be earned when you wait for the right opportunity to show up. Those who follow the herd mentality are bound to fall eventually. As each investor’s goals are different, so is their choice of investment.
5. Know the boundaries of your circle of competence
“What counts for most people in investing is not how much they know, but rather how realistically they define what they don’t know.” – Warren Buffett
It is human nature not to admit that they do not know about certain things. Here, we can understand that it is important to admit the lack of knowledge and find ways to educate ourselves and fill the gap.
6. Invest in companies who have proven their worth
“We make no attempt to pick the few winners that will emerge from an ocean of unproven enterprises. We’re not smart enough to do that, and we know it.” – Warren Buffett
When you start investing, it is important to choose companies that have a proven track record of profits. It is important to find quality businesses whose value can compound in the long run.
The above Warren Buffet quotes can help you understand investment better. These can also help you chart a road map for your investments and to avoid any mistakes while investing.