Money Matters: INVESTOR EDUCATION = Warren Buffet,, the Wisest Investment Guru! =GREAT QUOTES

INVESTOR EDUCATION SERIES

WARREN BUFFET'S

INVESTMENT STRATEGIES

No discussion on investment strategies in the stock Markets will ever be complete without paying due respects to the words of Warren Buffet.

Simplest words expound his most successful strategies, which we find, are also the most practical ones on the Stock markets. Let us take a look at a few of his Gems, which I present here, to the best of my understanding. Those in quotes are his words and those outside are my comments.

"A public-opinion poll is no substitute for thought."
"You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right."

My comments :Do not be deceived by crowd behaviour. Make your thorough analysis and research and form your own judgment about the company you are looking at. Your data and reasoning must be adequate and to your satisfaction. Do not expect the crowd to agree with you; they have not done your analysis. You have. Once you find your data and reasoning to be adequate and to your satisfaction, go ahead and invest.

"Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it."

My Comments : It is in the nature of markets to fluctuate. There are Bulls and there are Bears.There is a see-saw all the time. You can't despair by market fluctuations. You must play the game and profit from the same fluctuations intelligently. Market men make mistakes and commit follies, all the time. Not every one has adequate information. There is no perfection in the market. Do not therefore participate in their folly. Make use of their folly intelligently to profit in the market.

"Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years."
"Always invest for the long term."
"Our favourite holding period is forever."

My Comments : Select the best companies for investment after adequate thought, study and research. Ask yourself the above critical questions of Warren. Will this company live and prosper for 10 years? Will it give me good returns and capital appreciation for a long, long time to come? Is the Management competent? Ask questions of this nature and satisfy yourself that your investments will prosper in the company for long, or rather, forever, and only when satisfied,invest in it.

"Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell."
"Wide diversification is only required when investors do not understand what they are doing."

My comments : Once you select the best of companies and invest in them, do not go on shuffling them every now and then. You don't need to. Good companies pay more on long term. If you frequently buy and sell and shuffle, the final averages may (in fact, most usually, they do) work out to your disadvantage.

For most people, resisting the temptation to frequently sell some thing and buy another is TOO MUCH, and they are in FREQUENT REGRET of losing this, that or other opportunity. Activity some times is more sin than inactivity in stock Market. We must learn to keep quiet and just watch the UPs and Downs.Every time, your stocks move down, they will touch a higher resistance than earlier and then, keep moving up and down above that. In the long term, you will notice that the stock has moved up considerably and is trading in a range around a historic high.

Secondly, once you are sure of your BEST STOCKS, do not go beyond them.You don't have to put your EGGS in too many Baskets.Best stock is the Best stock and will yield Best returns. Limit the Baskets in which you put your Eggs.

"You only have to do a very few things right in your life so long as you don't do too many things wrong."
"We enjoy the process far more than the proceeds."

My comments : With the best of Planning, a certain amount of failures are always likely in the stock market. If you do not do too many things wrong, your investments will yield very good results. You don't have to be, and you can't be, right every time in every investment. Take it easy. Watch your success Rate and learn from that.Enjoy the investing process and enjoy your successes and your failures, which are part of the same.