Warren Buffett’s lessons for ordinary investors

LET’S learn a few things from the greatest investor of all time – Warren Buffett.

It’s OK If You Don’t Know Much About Investing.

Most investors do not have business degrees. Most do not take courses in stock investing. Warren Buffett wrote in his 2013 letter to Berkshire Hathaway shareholders: I have good news for these non-professionals – The typical investor doesn’t need this skill. Just invest your funds in a low-fee index fund tracking a broad cross-section of businesses. When Buffett eventually passes away, he has this advice for his trustee: Invest 10 percent of in short-term government bonds and the other 90 percent in a low-cost index fund tracking the Standard & Poor’s 500 index. This is simple enough, no bachelor’s degrees required.

Be Patient. 

Buffett said that  the stock market is a device for transferring money from the impatient to the patient.

Those who have patience invest and stay on the sidelines to watch their money grow.

Be Greedy When Others Are Fearful, And Fearful When Others Are Greedy.

Buffett repeated this advice frequently in 2008, in the middle of the Great Recession. At the time, fear was widespread and stocks were tanking, but Buffett said he was buying stocks others were selling.

The reason: Stocks are cheapest when fear is running high and a herd mentality has beaten down their prices well below what business fundamentals warrant. A large percentage of Buffett’s performance has been due to buying quality companies when markets crashed.

Avoid Difficult Business Problems.

Buffet stated that Charlie Munger and I have not learned how to solve difficult business problems. What we have learned is to avoid them. He recommends that investors stick with what they know. It is usually far more profitable to simply stick with the easy and obvious than it is to resolve the difficult. This is why he is not a fan of Bitcoin and other get-rich-quick fads.

Buy Into A Company Because You Want To Own It, Not Because You Want The Stock To Go Up.

Buffett believes that owning stock in a company equates to direct ownership in a business, so treat it is as such. If you own an apartment, house or farm, you wouldn’t sell it based on social media news. Treat stocks the same way.

* * *

Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.

* * *

He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies.  He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at vicsy@live.com.

No Comments Yet

Leave a Reply

Your email address will not be published.