If you are in Stock Market, you definitely have heard of Warren Buffet once in your life time. He is the most successful stock investor ever. Despite committing various mistakes, still Warren Buffett’s investing strategies are unchallenged. At the age of 26, his net worth was $1,40,000. And when Market watch estimated his net worth in 2016, it was $73.1 billion. This means that his wealth get astoundingly compounded at the rate of 24.5%.
Buffett achieve this amazing rate of return while his competitors failed to do so. This shows that Warren Buffet was an outstanding investor. Market observed him and even psychologist try to find the secret to Warrent Buffett Investing Success. What made Warren Buffett achieve extraordinary returns when the entire market failed to do so. What was that secret? Today in this article I am going to reveal the secret to Warren Buffett Investing Success.
Warren Buffet Has Long Term Perspective
Do you know anyone near you who has the patience of holding a same stock for the period of 20 years? I don’t think so. On the other hand, Buffett held three stocks namely Coca Cola, American Express and Wells Fargo for more than 20 years. It is rightly said that ‘stock market is all about three things that is – patience, patience and patience’. He has also hold a stock of Moody’s for 15 years. Warren Buffett has also held three other stocks – Proctor & Gamble, Wal-Mart and U.S. Bancorp for more than 10 years.
If you are in the view that Buffett did not have to face failure, then you are completely wrong. He himself said that his 50 years of track record of investing was full of ups and downs.
Let’s look at the wrong decisions made by Warren Buffett in Investing
- Wal – Mart – In 2003, at the Berkshire Hathaway Shareholder Meeting, Warren Buffett himself admitted that his attempt to time the market backfired. He said “We bought a little, and it moved up a little, and I thought maybe it would come back. That thumb-sucking has cost us in the current area of $10 billion”.
- Berkshire Hathaway – Warren Buffett admitted that purchase of the ‘Berkshire Hathaway stock was the dumbest decision he has ever made’.
- Energy Future Holdings – The investment in bankrupt Texas electricity utility results in loss of one billion dollar of Warrent Buffett. He admitted that ‘this was the biggest mistake of his life’.
Even making such huge mistakes, he focused more on making big investment rather than quitting. You all know very well the end results. Longer time horizon helps to take the advantage of the opportunities that others do not have the patience for. But the question arises here is how he was able to make these huge investment in the first place?
Secret To Warren Buffet Investing Success
According to Warren Buffett, never invest in anything for which you need a computer or calculator to decide. Invest in something that shouts at you ‘Invest In Me’. If you feel like it doesn’t worth your attention, just walk way.
1. He did not get into the trap of Thinking Fast
Most of the people go for fast thinking and take their decision on the basis of it. Well, it also serves them well in most of the cases. But after sometime, they also realizes that their fast thinking on the basis of their emotions has resulted in biases and errors in decisions.
2. He Found Inevitable
Buffett focuses on finding the inevitable that is great companies that provides insurmountable advantages. Never go for conventional wisdom or thinking while taking any decision related to investment.
3. He goes against the trend of popular opinions
He recognizes that most of the people are interested in those stocks where everyone else is. According to him, select the stock when no one else is interested in it. His vies was never to make your decision on the basis of historical data. He said “If past history was all that is needed to play the game of money, the richest people would be librarians.”
4. Follow the advice of your Mentor
Buffett has always follows the advice of his mentor Benjamin Graham. According to him “Buy not on optimism [or sell due to pessimism], but on arithmetic.” Do not take any decision on the basis of your emotions rather do the objective analysis.
So, if you really interest in getting successful in the stock market, do read the secret to Warren Buffett Investing Success.