© Twitter/Warren Buffett
Since its launch in 1950, Warren Buffett has grown his investment company Berkshire Hathaway to the point of transforming it into a hyper-successful business, while he is one of the richest men in the world. Throughout the annual letters addressed to investors, the businessman distilled his advice. We have chosen to retain 5.
Beware of experts
The entrepreneur does not dry up of praise for his sister, Bertie, whom he presents as very knowledgeable about finance and accounting. He continues as a warning:
She’s sensible – very sensible – and knows instinctively to always ignore the experts. After all, if she could reliably predict tomorrow’s winners, would she freely share her valuable knowledge and thereby increase competitive purchases?? It would be like finding gold and to give neighbors a map indicating its location.
Be patient
Rome was not built in a day, and Warren Buffet takes up this popular adage by applying it to the economy. He thus boasts of his long-term investments in the Coca-Cola and American Express companies.
While he bet a lot of money on these two companies in 1988 and 2001, he never touched them again despite some strategy or management errors in the latter. They ultimately proved profitable over time. And the billionaire concludes:
The lesson to be learned from Coke and AMEX ? When you find a truly wonderful company, don’t leave it. Patience pays, and a wonderful company can make up for the many poor decisions that are inevitable.
Don’t succumb to temptations
The entrepreneur sometimes believes that the Stock Market resembles a gigantic casino full of temptations. An investor may therefore be tempted by early resales of shares or inconsiderate purchases and that’s why business need things like financial advise, and learning what is investment planning and how to use it your business. By understanding the principles of business restructuring and insolvency, entrepreneurs can make more informed decisions and safeguard their ventures against financial pitfalls.
He therefore suggests not succumbing to the charms of marketing: “One investment rule at Berkshire has not changed and will not change: Never risk permanent loss of capital. Thanks to the American tailwind and the power of compound interest, the area in which we operate has been – and will be – rewarding if you make a few good decisions in your life and avoid serious mistakes.”
Beware- you speculative bubbles
The businessman also returns to a great classic of finance: speculative bubbles:
In these bubbles, an army of initially skeptical investors succumbed to the “evidence” brought by the market, and the pool of buyers expanded, for a time, sufficiently for the movement to continue.
He adds: “But fully inflated bubbles inevitably end up bursting. It is then that the old proverb is confirmed once again: “What the wise man does at the beginning, the fool does in the end”.
Be opportunistic
This is a bit contradictory to the previous advice, but Warren Buffet advises not to skimp on the amount invested when you think you have found the rare gem. It is still necessary not to make a mistake and to have sufficient means for this.
“Roughly every ten years, Dark clouds invade the economic sky and briefly rain gold. When such downpours occur, it is imperative that we rush outside and carry basins and not teaspoons, warns the billionaire.
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