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Warren Buffett’s Success Secret
Warren Buffett is a wealthy American investor who amassed a substantial fortune in the 1980s, estimated at $110 billion in 2021 by Forbes. Ranked among the world’s wealthiest men, he is renowned for his shrewd investments. He has a habit of concentrating his investments on businesses with high growth potential that he believes are undervalued. Here’s what he’s revealed about the secret to his success.
He Prefers Business over Stocks
Although Warren Buffett understands the significance of a company’s value and its component elements, he has always viewed them as two entirely distinct things. That’s why he usually prefers to buy a business instead of a few stocks. According to him, the probability of a stock falling is higher compared to a business going bankrupt.
He Gets Involved in the Business
Additionally, Warren Buffett takes his time to make choices. Before making a move, he conducts a thorough analysis of various factors, both positive and negative. He makes decisions with careful thought and extensive research, and he actively involves himself in the business, unlike many other investors.
He prefers to acquire businesses that he comprehends the fundamentals of. As he is most knowledgeable about the finance sector, the majority of Warren Buffett’s wealth comes from stakes in finance-related companies!
He Doesn’t Wait for the Right Time but the Right Opportunity
Warren Buffett is exceptionally astute and never worries about the ideal time to acquire or sell a business. Whenever he detects an opportunity, he seizes it. However, he does advocate buying stocks when their prices are at their lowest. This is how he built his fortune.
He doesn’t rely on luck because he believes everything should be well-calculated. He never hesitates to visit companies before buying or selling stocks or various businesses. This investor has always thought that collective performance significantly impacts the future and that it’s better to gauge the situation firsthand.
He Takes His Time
He always looks ahead. When it comes to selling his businesses, he doesn’t rush. This strategy is effective. For instance, if he purchased shares in a company for $155,301 during the 1980s, the value of those same shares today may be as high as $200,000.
Unlike some investors, he has always managed to remain calm. Even when his shares are falling, he doesn’t make hasty decisions and always thinks long-term. During a business transaction, this American investor doesn’t rely on trends. Instead, he makes decisions by focusing on the potential of the business he intends to acquire and questions its value beyond five years. He also scrutinizes what the company contributes to essential and logical needs in life to ensure that his decision is the right one.
Warren Buffett has never been afraid to take risks while remaining cautious. So, try to remain calm when making an investment. Instead of rushing, be methodical and think about the future of your acquisition or sales.
His 20 Quotes
- “Time is the friend of the wise investor but the enemy of the speculator.”
- “Risk comes from not knowing what you’re doing.”
- “Price is what you pay, value is what you get.”
- “It takes 20 years to build a reputation and five minutes to ruin it.”
- “When we own an investment, we regard it as a part of the business. The price fluctuations of the stock are insignificant.”
- “Never invest in something you don’t understand.”
- “Diversification is protection against ignorance. It doesn’t eliminate losses, but it spreads them.”
- “Our behavior is the most important criterion for judging our success as investors.”
- “Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.”
- “The quality is the best investment.”
- “Be fearful when others are greedy, and be greedy when others are fearful.”
- “The best thing to do when markets fall is to buy shares in great businesses and hold them.”
- “Investing is not trying to find companies that will go up 50% or 100% in a few months. Investing is finding a great company at a fair price and holding it for years.”
- “Our favorite holding period is forever.”
- “Investing is the process of turning money into money. Prosperous companies produce money.”
- “The best way to end poverty is to stop it at the source – that is, not having children you can’t afford.”
- “Diversification is protection against ignorance. It is better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
- “You don’t need to do extraordinary things to get extraordinary results.”
- “I don’t try to jump over seven-foot bars; I look for one-foot bars I can step over.”
- “Your rate of return is not the same as Warren Buffett’s. But that doesn’t mean you can’t become a wise and successful investor by following basic principles.”