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How to Invest Like Warren Buffet

By on April 7, 2014
Categories: INVESTING

In 2012, Financial Author Larry Swedroe wrote a handy little pocket book entitled “Think, Act and Invest Like Warren Buffett: Playing the Winner’s Game.” In it, Swedroe shares some of Buffett’s most successful strategies, and how every investor can use them to build his or her own sound investment habits. It’s a helpful little guide and recommended reading for any investor.

Of course Buffett has not been sitting idly by since Swedroe’s book was published. As Chairman and CEO of Berkshire Hathaway, he achieves each spring what nearly every other publicly traded business owner can only dream of: He publishes an annual shareholder letter that people actually read. The 2014 letter has not yet been officially released, but his words of wisdom are so eagerly awaited by so many, that Fortune magazine has released a “trailer” for Buffett’s annual letter, as if it were a blockbuster hit about to be released.

Unlike some sneak previews, this one does not disappoint. Jam-packed as it is with a litany of essential “Buffettisms,” it reminds us and inspires us yet again on why much of Buffett’s advice about investing – and life – is worthy advice indeed. There are so many good quotes in his forthcoming letter that it’s hard to choose just a few. We encourage you to read and enjoy the preview in its entirety, as it deserves. But to get you started, here are a few of our favorites from “Buffett’s annual letter: What you can learn from my real estate investments.”

 “When promised quick profits, respond with a quick ‘no.’”

“I am unable to speculate successfully, and I am skeptical of those who claim sustained success at doing so.”

“The fact that a given asset has appreciated in the recent past is never a reason to buy it.”

“Games are won by players who focus on the playing field — not by those whose eyes are glued to the scoreboard.”

“If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.”

“Because there is so much chatter about markets, the economy, interest rates, price behavior of stocks, etc., some investors believe it is important to listen to pundits. … For these investors, liquidity is transformed from the unqualified benefit it should be to a curse.”

“In aggregate, American business has done wonderfully over time and will continue to do so … The goal of the nonprofessional should not be to pick winners — neither he nor his ‘helpers’ can do that — but should rather be to own a cross section of businesses that in aggregate are bound to do well.”

“The ‘know-nothing’ investor who both diversifies and keeps his costs minimal is virtually certain to get satisfactory results.”

Good stuff, don’t you think? And yet, as Swedroe observes in his book: “While Buffett is widely admired, the majority of investors not only fail to consider his advice but also tend to do exactly the opposite of what he recommends.”

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