I compile some of what I think are Warren Buffet’s best lessons.

I guess we all know who W. Buffet is but if you don't know I advice you to go to his wiki page.

Apologies if I mess something up. Below are interesting nuggets of investment advice from the Buffet. I change a few words and commented a bit here and there.

0. Actually he recommends just buying an ETF and just DCA and don't look at the charts. Avoid mutual funds. “The trick is not to pick the right company, the trick is to essentially buy all the big companies through the S&P 500 and to do it consistently and to do it in a very, very low cost way.

The first rule of an investment is don't lose [money]. And the second rule of an investment is don't forget the first rule

Why? Because gaining back what you want is not a linear 1:1 it grows exponentially,

-90% — need 900% Gain

-80% — need 400% Gain

-70% — need 233% Gain

-60% — need 150% Gain

-50% — need 100% Gain

-40% — need 67% Gain

-30% — need 43% Gain

-20% — need 25% Gain

-10% — need 11% Gain

  1. Keep all your eggs in one basket, but watch that basket closely. That is don't over diversify sometimes its better to just concentrate on a few stocks and watch it very close.
  2. In a volatile market, patience is key. Hold steady and wait.
  3. Be fearful when others are greedy, and greedy when others are fearful.
  4. Investing is laying out money now to get more money back in the future.
  5. Never invest in a stock you cannot understand or use; know what you are getting into.
  6. I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over
  7. If a project does well, the asset will eventually follows.
  8. For some reason people take their cues from price action rather than from values. Price is what you pay. Value is what you get.
  9. In the short run, the market is a voting machine. In the long run, it's a weighing machine. ( this is why on the short run a stock can get pump from sheer marketing/popularity but eventually the value of its utility will come into play. See ARK vs Berkshire for a good example )
  10. The most common cause of low prices is pessimism. We want to purchase in such an environment, not because we like pessimism, but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.
  11. Risk comes from not knowing what you're doing.
  12. It is better to be approximately right than precisely wrong.
  13. All there is to investing is picking good companies at good times and staying with them as long as they remain good projects.
  14. Wide diversification is only required when investors do not understand what they are doing. ( except when buying an index, do those instead)
  15. You do things when the opportunities come along. I've had periods in my life when I've had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing. ( I bold the last part, sometimes doing nothing is best)
  16. What we learn from history is that people don’t learn from history.
  17. You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.
  18. You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ. ( being smart is not everything its diligence, patience, and following through, and all the above)
  19. You should invest in a stocks that can be run by a fool, because someday a fool will. ( I think he gave coca colas as example)
  20. Diversification may preserve wealth, but concentration builds wealth. ( similar to pt 1 doesn't spread yourself too thin; instead pick a few projects and study it hard )

TLDR: being smart is not everything its diligence, patience, and sticking to your plan.


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