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Warren Buffett’s 10 Biggest Rules for Investing Success

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Warren Buffett is considered one of the greatest investors around the world; the third richest man in the world after Carlos Slim and Bill Gates. A respected man, a reference, an idol in the world of business. Many imitate what he did to try to have a success similar to his.

Some Info about Warren Buffett

His father was a stockbroker, so from very young age, Buffett was already interested in the world of stockbroker; he was always surrounded by media and economy, since he was a newspaper seller.

Buffett had a remarkable ability with mathematics and memorization of numbers that would help him in the future to intelligently analyze the stock market world.

At the age of 12, “The Oracle of Omaha“, known by this name in the present, made its first investment in association with his sister, making a small profit of approximately 9 dollars, but with this investment Warren Buffett had already entered this world.

Today, this multimillionaire man has even achieved President Obama to include part of his rules for tax recollection in United States. He has written several books and has given many of its rules to ensure the success of new investors in the largest extent, a teaching guide.

1. You have to preserve the capital

One of the most famous rules by Warren Buffet says: “Rule No. 1: never lose money. Rule No. 2: never forget rule No. 1”.

Capital is the most important thing to an investor, since it is their last ammo to save their investment and it should be used when a good opportunity is found.

Do not allow the losses to increase and leave you without capital and if it happens, learn how to deal with these losses.

2. Invest long term, somewhat basic but essential

Our favorite holding period is forever”, says Warren Buffett.

The more long-term you invest, the greater the potential effect of cumulative profitability on the original value of their investment.

3. Do not go with the flow

Be fearful when others are greedy and greedy only when others are fearful“.

Unexpected or negative news may have an important effect on the behavior of stock markets.

4. Price is what you pay, value is you get

It is very important for us to be able to tell the difference between these two terms, since the market reactions do not always reflect the valuations of the companies.

With this in mind, we can effectively determine when it is a good time to make a purchase, for example: when the price drops below the value of the firm.

5. It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price

Buffett gives more importance to the quality of the firm, even if it meant paying a price of entry that weren’t necessarily very low.

6. Time in this business is not best friends with many

While large and already established companies usually only benefit from time and grow even more, small companies are damaged and affected by this factor.

It is the enemy of the wonderful company, the enemy of the mediocre, so remember that your investment should win the passage of time. With this in mind, assemble a good strategy.

7. I’ve never swung a ball while it’s still in the pitcher’s glove

The phrase refers to not invest in companies that still have not proven to be successful or those that are barely starting.

8. Never ask a barber if you need a haircut

It is like asking your wife if your girlfriend is pretty.

When you’re going to purchase an action or a new company, never ask the owner if it is good or profitable. Evaluate it yourself; analyze profitability and proceed or not with the purchase.

There is no better eye than yours.

9. Take advantage of what you know, there is wealth

These words speak for themselves.

10. The stock market is a no-called-strike game

You don’t have to swing at everything – you can wait for your pitch.

The problem when you’re a money manager is that your fans keep yelling, “swing, you bum!”.

You must not hit all the balls, expect correct, so you press the public.

This refers to opportunities. Wait patiently for the right opportunity; do not despair, because if you do you will be out of the game. If you wait for the one you can swing, you will have a guaranteed success.

10 COMMENTS

  1. Play it safe, this is the main idea. Investing money is not a game, you can actually lose all your savings if you’re not careful. I’ve always admired Warren Buffett, though I’ve only recently started reading some of the books he wrote.

  2. I have never read any of Warren Buffet’s books, but I can definitely vouch for some of the lessons he teaches to the public about stock investing. Going long term is definitely profitable compared with short-term gains. But sometimes, greed comes in and you want to reap in the profit immediately rather than keeping the stock much longer. I also particularly like about #10. When you’re investing in the stock market, sometimes there’s much noise. Some would just throw in opinions to hype a particular stock or to sow fear in others. Thus, it’s very important to not be distracted with the noise around. Be prepared to do your own research so you won’t be easily swayed by what other people are saying. Stay your ground and yeah, don’t panic.
    tabby recently posted…my stock market journey with COL Financial IncMy Profile

    • Being distracted by the noise is certainly something that I can improve on. It is not so much that I take action and let that noise affect my decision-making, but internally I am always second guessing myself and wondering if I have made the right moves, or need to switch strategies. I am sure I am not alone here though, and with the 24-hour news cycle it is hard to avoid the noise. Staying the course is usually the best option though. Interesting stuff, and thanks for sharing.

  3. I recently got into stocks this year, so all of Warren Buffett’s advice has been like gold! Thanks for organizing all these awesome tips in one place. If you’re looking to learn about investing, might as well learn from the best, right? I wish I could have a 30 minute talk with him!
    DJ @ Money Goody recently posted…Free Monthly Budget SpreadsheetMy Profile

    • Oh how I wish to be a fly on the wall at one of his meeting with his top guys. It makes me wonder how much talking I should do, though, and I think a quick “so what do you think” would suffice, and then I would just open my ears and take notes. It really shows you that when you have the ability to pick the brains of smart people, you should really take advantage of those opportunities. Maybe one day I will get to be that fly, though. Thanks for sharing.

  4. The first time I heard Warren Buffet talk on a CNN interview, he immediately earned my respect. When he talks, he really talks a lot of sense. I consider his speeches as good guides when it comes to investing. I specifically love his rule number 1 followed by rule number 2 which means that he is really emphasizing about preserving your capital and always making sure that you don’t lose money because this money will be your shield against the volatility of the market.
    gracer recently posted…Abduction Cases in The PhilippinesMy Profile

  5. The difference between price and value is one that I cannot help but know is very important but I still struggle with it sometimes. You can explain it me a thousand times and I will still feel a little lost and not know exactly what you are talking about. Thank for compiling this little list, though, and I have to say that there is really nobody better to learn from than Mr. Buffett.

  6. “Take advantage of what you know” is a really important one, especially for newer investors. Many people seem to think they should be in every sector or even every business. They would almost always be better off by focusing on a few sectors that they really understand and then diversifying with index funds.

  7. Warren Buffet has to be one of the most inspiring people that I’ve ever known. These are really great rules for investing. Anyone who is serious about creating great and lasting wealth should take these and implement them in their lives. Thanks for sharing this article.

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