Monday, 21 August 2017

3 things to learn from Warren Buffett

Posted by Valentine at 12:43 Labels:

Warren Buffett, one of the most famous investors and philanthropists worldwide, has a few lessons to give us. But that of course would take many reading hours… Instead, we have put together three of Warren’s key quotes that summarize his approach on investment.

1 - “You could take all the gold that’s ever been mined, and it would fill a cube 68 feet in each direction. For what that’s worth at current gold prices, you could buy all—not some—of the farmland in the U.S. Plus, you could buy 16 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?”

Does it mean you should not put money on gold? Nope. What Warren really means is that you shouldn’t take gold as a long-term investment. In his opinion, putting your bucks into gold is just locking yourself to a “big cube of metal” that doesn’t produce value by itself.

The yellow metal is well-known for being a key safe-haven asset, which performs great in periods of market instability and uncertainty. Therefore, you could use it for that purpose.

2 - “Most analysts feel they must choose between two approaches customarily thought to be in opposition: “value” and “growth” . . . In our opinion, the two approaches are joined at the hip: Growth is always a component in the calculation of value.”

The idea behind this quote is actually pretty simple to understand: don’t focus in the present but rather in the future. By embracing a growth approach in your investments, you would open the doors to higher returns in the future.

3 - “Losing some money is an inevitable part of investing and there is nothing we can do to prevent it.”

And here we go again. I know… We have talked about it not once. Most successful investors have faced strong losses at some point. Even Mr. Buffett. But pay attention to this: “losing SOME money”, not all of it. This implies you should take care of your risks effectively.

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