Learn to invest with Buffett

Chapter 106

No.17 Chapter 5 How to practice Buffett's investment philosophy in the stock market
The constant winners in the stock market are not others, but those investors who faithfully implement long-term value investment strategies.

--Warren Buffett
After reading the content of this book, I believe you have a comprehensive understanding of Buffett's investment ideas and concepts.For ordinary people, although they don't expect to become the next Buffett, many of Buffett's strategies are worth learning if they want to improve investment performance.

1. People looking for money is not as good as money looking for money
Unlike rich people who get rich by inheritance or production in the traditional sense, Buffett has never participated in the actual production or sales of commodities. His investment flagship, Berkshire Hathaway, is more like a giant private equity fund, investing gradually Profit is its main business.Now many people invest in stocks and funds, the primary purpose is to chase the price difference.In fact, investing in stocks and funds allows you to change from finding money yourself to letting listed companies or funds help you find money.This is why stocks and funds are the most important varieties in the current global investment and wealth management market.

2. Only invest in varieties that you are familiar with
In the 20s, Buffett publicly declared that he did not understand Internet companies and refused to invest in companies related to this. Therefore, he missed the upsurge of Internet stocks for several years, but he also avoided the bursting of the Internet stock bubble. huge losses to come.

Compared with this, some ordinary investors prefer to chase new varieties.They believe that in the current mature stock and fund market, there may not be more profit opportunities, and when new varieties appear in the market, they are often more willing to try.For example, the floating wealth management products in the past two years, and now the wealth management products linked to gold prices, agricultural products, etc., were once sought after by the market because of their unique concepts.Although structurally, there may be no loss of the principal, but the return is sometimes even less than that of a one-year time deposit.Therefore, when you choose a financial product, you should first ask yourself whether you understand and are familiar with it. If you are not familiar with it, you should act cautiously even if the expected return is high.

3. Carefully research the target company
Unfortunately, many investors would rather spend their time idly chasing current market conditions than poring over a company's annual report.But please keep in mind that blindly trying to use gossip from the stock market or habitually using some heresy as an investment strategy is definitely not as good as spending a few 10 minutes reading the latest operating and financial statements of the investment target company More practical and effective.

4. Long-term investment to get the maximum return

"Money begets money, and interest grows." This was the mantra of rich people in the past. They have lent money for many years, and they have accumulated for many years. Although the numbers are insignificant each time, they are really large sums of money.So why can't you be a millionaire investor?You have to hang the line for a long time to catch big fish.There are many examples of using this method to catch big fish. For example, in 1989, Buffett believed that the stock price of Coca-Cola was undervalued, so he invested a large amount of Berkshire’s funds in Coca-Cola stock, and has held it for 19 years. The investment has soared from an initial $10 billion to $80 billion today.

In contrast, looking at the Chinese stock market, during the period from the second half of 2006 to August 2007, the fund market created many myths, but what is interesting is that the more experienced investors are, the returns may not be as good as Those investors who don't know anything and only know how to "squeeze to death".This shows what?
The huge return gap is simply because one investor has held on to the stock for a longer period of time than the other.All these remind us that when investing, as long as we look at one investment product, we should invest for a long time!Only then can you get the most out of it.

Investment motto:

China's capital market is immature, but there are still rules to be found.For those who have mastered the rules, the Chinese market is more useful, and investment is easy.Moreover, there is no "stock god" who is invincible in the stock market. Failure is the mother of success, and lock-in is the threshold that every investor must cross to become mature.The experience of not being trapped for a long time may not be a good thing.Occasionally being quilt will help investors become more proficient in their trading skills.Only through continuous practice can investors find out the laws of the stock market and invest better.

(End of this chapter)