Warren Buffet is the third richest man in the world, an investment guru and the owner of Berkshire Hathaway. The guru gives sound investment advice to everybody.
Warren Buffett has made an enviable return of 1,826,163% over the past half century, which is an average annual gain of 21.6%.
In his yearly letter to his shareholders at Berkshire Hathaway he gave these four important investment tips:
'America’s best days lie ahead'
In 2008, during the recession, while many sold their stocks, others like Buffett held on and hold most of his stock, which generated for him return rates of 200%.
His investment strategy is anti-cyclical, so when markets struggle, he invests heavily and other investors are selling. And he continues to do so currently as Buffett foresees a great outlook for the US economy.
'Stocks are not risky, if long-term is the focus'
The risky features of stocks are the rises and falls. Buffet thus advises that the ups and downs should not be associated with risks but rather should be managed by building a diversified portfolio of established companies while saving for the long term.
He said the mistakes investors make that aggravate their risk exposure include active trading, inadequate diversification, high and unnecessary fees paid to managers and advisors and using loan to finance investment which destroy the joy associated with holding an investment and reaping long term returns from same.
Don’t listen to experts'
The bottom-line here is that no one can accurately predict the future. He said no one can tell what could happen in the market, not even him, and that experts will only fill one with tales but not money.
It is no surprise that majority of analysts provide buy recommendations to make the stocks they monitor more popular.
On this point, he highlighted the benefits of action and cost of inactions by painting the picture of how he lost millions of dollars due to inaction. As an investor or as a person, decision making is paramount and should be done with dispatch and like the old saying goes: Procrastination is the thief of time.
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