Warren Buffet's Investment Advice

Warren Buffet

When it comes to the world of investments - especially in the stock market - Warren Buffet, the Chief Executive Officer of Berkshire Hathaway, is an enigma.

Celebrated as the "Oracle of Omaha" because of his unparalleled success in the stock market, Warren Buffet lives the life of your regular next-door neighbour, hardly eats in classy restaurants and drives a regular, used 4-wheel drive.

How is he able to maintain success for so many years? Here are some of his best advice. Hear him:

Stay liquid
"We will never become dependent on the kindness of strangers. We will always arrange our affairs so that any requirements for cash we may conceivably have will be dwarfed by our own liquidity. Moreover, that liquidity will be constantly refreshed by a gusher of earnings from our many and diverse businesses."

Buy when everyone else is selling
"We've put a lot of money to work during the chaos of the last two years. It's been an ideal period for investors: A climate of fear is their best friend.... Big opportunities come infrequently. When it's raining gold, reach for a bucket, not a thimble."

Don't buy when everyone else is buying
"Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance. The obvious corollary is to be patient. You can only buy when everyone else is selling if you have held your fire when everyone was buying."

Value, value, value
"In the end, what counts in investing is what you pay for a business -- through the purchase of a small piece of it in the stock market -- and what that business earns in the succeeding decade or two."

Don't get suckered by big growth stories
Buffett further reminded investors that he and Berkshire's Vice Chairman, Charlie Munger, "avoid businesses whose futures we can't evaluate, no matter how exciting their products may be."

Most investors who bet on the auto industry in 1910, planes in 1930 or TV makers in 1950 ended up losing their shirts, even though the products really did change the world. "Dramatic growth" doesn't always lead to high profit margins and returns on capital.

Understand what you own
"Investors, who buy and sell based upon media or analyst commentary are not for us.

"We want partners, who join us at Berkshire because they wish to make a long-term investment in a business they themselves understand and because it's one that follows policies with which they concur."

Defense beats offense
"Though we have lagged the S&P in some years that were positive for the market, we have consistently done better than the S&P in the 11 years during which it delivered negative results. In other words, our defense has been better than our offense, and that's likely to continue."

Hard work
All hard work bring a profit, but mere talk leads only to poverty.

Laziness
A sleeping lobster is carried away by the water current.

Earnings
Never depend on a single source of income. (At least make your Investments get you second earning)

Spending
If you buy things you don't need, you'll soon sell things you need.

Savings
Don't save what is left after spending; Spend what is left after saving.

Borrowings
The borrower becomes the lender's slave.

Accounting
It's no use carrying an umbrella, if your shoes are leaking.

Auditing
Beware of little expenses; A small leak can sink a large ship.

Risk-taking
Never test the depth of the river with both feet.(Have an alternate plan ready)

Investment
Don't put all your eggs in one basket.

General Investment Rules
  1. Rule Number 1 - Never lose money.
  2. Rule Number 2 - Don't forget rule number 1.
  3. You're neither right nor wrong because other people agree with you. You're right because your facts are right and your reasoning is right - and that's the only thing that makes you right.
  4. Risk comes from not knowing what you're doing. If you don't know jewelry, know the jeweler.
  5. If you don't feel comfortable owning something for 10 years, then don't own it for 10 minutes.
  6. There seems to be some perverse human characteristic that likes to make easy things difficult (Remember his advice to Bill Gates - keep it simple).
  7. One's objective should be to get it right, get it quick, get it out, and get it over... your problem won't improve with age.
  8. A public-opinion poll is no substitute for thought.
  9. It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.
  10. "I never buy anything unless I can fill out on a piece of paper my reasons. I may be wrong, but I would know the answer to that. "I'm paying $32 billion today for the Coca Cola Company because..." If you can't answer that question, you shouldn't buy it. If you can answer that question, and you do it a few times, you'll make a lot of money.
  11. You ought to be able to explain why you're taking the job you're taking, why you're making the investment you're making, or whatever it may be. And if it can't stand applying pencil to paper, you'd better think it through some more. And if you can't write an intelligent answer to those questions, don't do it.
  12. Be fearful when others are greedy, be greedy when others are fearful.
Discussions
29 people like this. Showing 50 of 56 comments

traderhub

I think he will keep his bullets for next year when more fear sinks in. His 5B investment into Goldman Sachs in 2008 was a classic! http://online.wsj.com/article/SB122220798359168765.html

2011-09-29 19:16

mancon

Malaysian market is very small but plenty of shares/warrants for sale, just print and print.............even sell for few cents still make money :))

2011-10-01 09:49

Nasir Said

the above advice really make sense

2011-11-01 05:08

AL833D

today i supprise that here, i3investor.com, have above good advice! how come i no clicks on this page before?
-You only have to do a very few things right in your life so long as you don't do too many things wrong--- Warren Buffet

2012-05-07 22:57

AL833D

-For the past 33 years, I have looked in the mirror every morning and asked myself: 'If today were the last day of my life, would I want to do what I am about to do today?' And whenever the answer has been 'No' for too many days in a row, I know I need to change something. --- Steve Jobs

Good Nite.

2012-05-07 23:12

NavinShah

On paper everything look simple. But it is hard to put in practice. You must die yourself in order to go to HEAVEN.

2012-10-09 20:02

Farsaudi Hanapia

I am new in this dot com and never started yet to invest.still gaining knowledge.To friend NAUZIDHOM,how can have secure that book you have said.

2012-10-24 21:52

Alvin Lee

some what warren says does make sense once you start to do it in a practical way. an example would be his call to buy when everyone sells. I have been investing in stocks for the past 5 - 7 years. I usually buy into stocks for long term. it works for me if you think pragmatically.

2013-01-02 11:50

jennylee1382

alvin lee : can you tell what are the share can I invest

2013-05-13 20:46

daryltkt

Daya and Handal but need to hold for long term.

2013-06-12 07:21

clc6152

Be fearful when others are greedy, be greedy when others are fearful.

2013-11-20 14:02

clc6152

i wan to print out n read it everyday

2013-11-20 14:03

danielwil82

it has been 3 months since i started trading fulltime (no experience startup) truth is, more losing days than winning and losers are great but winners are pennies.

at a loss now.

many time in doubt but needed to look up to dreams. if im gone in another 6 months than i did not make it. but i will make it! period!

2013-12-19 22:50

cloud

thanks warren buffet

2014-01-04 14:56

GroggY

Illidan, relax. I am new to this forum but have traded some over the years mostly IPOs. I had fingers burnt with SAAG but since then i did make some money off KLCCP, Bursa, Dayang, Iris etc... I believe you should know your counters well via sifus from this forum and read up The Edge or similar publications. Trust your instinct and do not hesitate. Play with money that you can afford to lose or you will lose hope. With time, comes experience, and with experience you'll enjoy more upswings than downswings... Cheer up!

2014-02-03 18:14

The_onE

That's nice Groggy but I think Illidan is gone.

2014-02-16 01:09

AyamTua

"Don't save what is left after spending; Spend what is left after saving. " nice!

2014-02-16 01:26

The_onE

Illidan, I was observing you since your last post to see if you could survive.. and hoping that you can too. All the best to your future endeavour, whatever it might be.

2014-02-16 21:08

Henry Wong

hi everybody..I newbie at here and also in stock market. would like to start some investing in market. hopefully could find more friend to share their experience and possibility to guild me in market trading. pls dont be hesitate to add my fb account at henrywongcs@hotmail.com. look forward for more new friend in investment industry.

2014-06-25 00:36

ogre

hi henry wong: for a start, look for Technical Code Breaker @ TCB thread, follow matrixcool, stockraider, intelligent investor, calvintaneng (to name a few) comments & analysis... value investing.

2014-06-25 01:27

Geld Gleichgesinnten

hi mate. i am new to this bursa malaysia trading. i'm first timer. still readings.... any advise... i have 3k in ma acc that i am willing to WIN/LOSE///please advise... any tips..tq

2014-07-06 09:36

hamkarchanadmin

Buy mpay.

2014-07-06 09:46

nonstop1628

hi everyone

2014-07-07 01:39

nonstop1628

today I begin a new life. today I shed my old skin which hath, too long, suffered the bruises of failure and the wounds of mediocrity. today I am born anew and my birthplace is a vineyard where there is fruit for all ..

2014-07-07 01:43

Helpforinvestor

Post removed.Why?

2014-07-16 16:51

KMGN

keep it in my mind

2014-07-22 19:19

Nancy Seow

Hi I am new here hopefully can guide me

2014-09-11 05:33

alvinchiam

What up will down, no matter how good a share will come down, when market no good, and also is control by computer , u know..? When u buy at fair value also get stuck... how? U know?ha ha...

2014-10-09 06:53

miapancho

please give me some links, to popular BLOGS on malaysian stock market further then this i3 site.. i only know of nexttrade blog,,,HOW ABOUT OTHERS???????? I hope more members can participate here..thanks

2014-10-09 07:05

satvinder883821

Alibaba.com

2014-10-09 07:19

alvinchiam

When buy fair value also sometime also too high, use ur research to decide is not too expensive, when buy..

2014-10-09 07:23

miapancho

Posted by satvinder883821 > Oct 9, 2014 07:19 AM | Report Abuse

Alibaba.com


SARDARJI YOU FORGOT TO DRINK MILK TODAY JI ???????????

2014-10-09 07:23

miapancho

IF ALREADY TAKEN YOUR MILK,,THEN YOU SHOULD NOT GIVE THAT FUNNY ANSWER

2014-10-09 07:25

moon888

i have just entered the stock market today. i believe i can gain money enough for the things i want to own.

2015-04-20 11:42

dividendenshark

Moon: Spending
If you buy things you don't need, you'll soon sell things you need. :)

2015-05-11 16:40

3EMWE

buffet the oracle of omaha who loves drinking cherry coke among other things

2015-12-07 22:47

NavinShah

Greed and fear rules the world

2016-06-10 07:33

125879

The problem is to put it into practise

2016-06-10 22:47

GPATYS

I would like to read Ooi Teik Bee recommended speculative stocks for 2018. All stocks selected by Ooi Teik Bee, he ensured fundamental of the stock must be very good.

2018-01-29 07:56

Amdi Hamzah

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2018-04-09 13:56

ruwenn

Hi everyone, I'm from CIMB Investment Bank.

Our TradeBeyond account is offering 0.1% and minimum RM8 brokerage fees, with no minimum deposit.

You may contact me via Whatsapp at 012-7706822 for more info.

Thanks.

2018-04-09 15:31

3iii

Great

2018-09-03 15:42

Bearsih

I will bear it in my mind

2019-07-08 14:11

JENNYYEW

HI

2020-08-03 10:45

JENNYYEW

PLS ADVISE WHAT SHARE CAN I INVEST?

2020-08-03 10:45

pierre69

well, banking stocks like Maybank are relatively cheap now so Maybank is worth looking at. Malaysia Airports (MAHB) is also very cheap now so that is worth investing in the long-run as the stock price of MAHB will definitely go up after they have found a vaccine for covid-19. Also, you can look at Genting Malaysia which is very cheap now due to covid-19. Other than that, property developers' stocks such as Mahsing, Tambun, Ecoworld, Paramon are also relatively cheap now due to the slowdown in housing/property market.

2020-08-03 14:54

pierre69

there are also petroleum-related stocks such as MHB which are at historical lows now and are worth looking at

2020-08-03 15:07

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2021-03-13 14:46

alexgan9918

hi,i am new to this site. Just to seek anyone's advice any good stock to invest at this point of time ?

2021-10-17 23:51

Ashleywong

Nice

2022-02-18 10:04

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