February 17, 2022, 11:37 | Business
"Why reinvent the wheel"? — the same can be said about investments and competent multiplication of money.
There are principles of investing money that have proven themselves well, which have been used by millions of people around the world for a very long time and with great success, informs Ukr.Media.
Below are the rules followed by Warren Buffett, the richest investor today. Why reinvent the wheel when you can use Buffett's wisdom.
So, Warren Buffett's investment principles for novice investors:
– You should buy stocks when other people are desperately trying to sell them.
– Beware of emotions: under their influence, beginners go astray, showing excessive optimism when they have a big “plus” in their account, or becoming excessively pessimistic in the event that they have large losses on their accounts.
– Beware of ignorance: buy only what you understand and never stop learning. Circle of Competence: Invest only in areas and companies that you really understand well.
– Be patient: Many investors are too impatient to wait for good opportunities and too impatient to wait for good financial results.< /p>
– Avoid buying securities of issuers with financial statements that are difficult to understand. It should be easy to understand how the business makes money.
– Avoid startups. They have not yet had time to prove their ability to bring sustainable profits for a long time. And the additional noise around them dramatically reduces the probability that you will find profitable offers.
– Everything that is important in investing is against common sense. And everything that is obvious is wrong.
– Financial markets are cyclical: the stock exchange and the economy follow "waves" cycles Nevertheless, newcomers stubbornly expect the current market trend to continue indefinitely. They do not see (and do not believe) a break in the trend.
– Buying shares means buying part of an existing business. Buy stocks only when they are selling at a discount compared to their normal value.
– There are no prizes for feverish activity in investing. Rather, it is a matter of waiting for those rare moments when the chances of making money far outweigh the chances of losing them.
– Buffett ignores macroeconomics. It's too complicated.
– Don't borrow money to buy stocks.