I came across Warren Buffett's writings in 2009.
For 14 years, I have consumed every book & interviews about him.
14 lessons on investing and life:
🧵
For 14 years, I have consumed every book & interviews about him.
14 lessons on investing and life:
🧵
1. Fundamental pillars of investing
• Invest in companies with wide moats
• Know your circle of competence
• Think like a business owner
• Focus on future cash flows
• Macro is a waste of time
• Ignore volatility
• Invest in companies with wide moats
• Know your circle of competence
• Think like a business owner
• Focus on future cash flows
• Macro is a waste of time
• Ignore volatility
2. Two most important chapters from The Intelligent Investor
Chp 8: Sell when Mr. Market is exuberant & buy when Mr. Market is pessimistic
Chp 20: Always insist on a margin of safety when investing
Chp 8: Sell when Mr. Market is exuberant & buy when Mr. Market is pessimistic
Chp 20: Always insist on a margin of safety when investing
3. What is risk?
Risk does not come from price volatility.
Nor could it be managed away by simply diversifying.
Focus on whether after-tax proceeds generated by the investment provide at least as much purchasing power as the investor started with, plus a modest interest rate.
Risk does not come from price volatility.
Nor could it be managed away by simply diversifying.
Focus on whether after-tax proceeds generated by the investment provide at least as much purchasing power as the investor started with, plus a modest interest rate.
4. The eternal debate on growth vs value
Thinking that stocks with low PE, PB or high dividend yield is a value stock is erroneous thinking.
Likewise, a high PE, PB or low dividend yield might be a value purchase.
It's about paying less than the value what you are getting.
Thinking that stocks with low PE, PB or high dividend yield is a value stock is erroneous thinking.
Likewise, a high PE, PB or low dividend yield might be a value purchase.
It's about paying less than the value what you are getting.
5. It's not how fast they grow, it's how durable the growth is
Between fast growth or a more certain growth, Buffett will always choose the latter.
Without durability, fast growth in the early years are less ideal investments.
Between fast growth or a more certain growth, Buffett will always choose the latter.
Without durability, fast growth in the early years are less ideal investments.
6. Choose quality
Over the long-run, the returns of your investment will mirror the underlying business return on capital.
Even if a business is slightly overvalued, Buffett will rather hold on to it than to switch for a cheaper, lower-quality business.
Over the long-run, the returns of your investment will mirror the underlying business return on capital.
Even if a business is slightly overvalued, Buffett will rather hold on to it than to switch for a cheaper, lower-quality business.
7. Leverage
Buffett: "If you're smart you don't need it and if you're dumb you shouldn't be using it."
Buffett: "If you're smart you don't need it and if you're dumb you shouldn't be using it."
8. Live below your means
Despite having a net worth of 104.4b
Buffett still lives in the same house he bought in 1958 for only $31,500.
“I’m not interested in cars and my goal is not to make people envious. Don’t confuse the cost of living with the standard of living.”
Despite having a net worth of 104.4b
Buffett still lives in the same house he bought in 1958 for only $31,500.
“I’m not interested in cars and my goal is not to make people envious. Don’t confuse the cost of living with the standard of living.”
9. Hone your communication skills
Despite hating public speaking, Buffett enrolled in Dale Carnegie's public speaking course.
He understood that good communication is essential to success in life.
Despite hating public speaking, Buffett enrolled in Dale Carnegie's public speaking course.
He understood that good communication is essential to success in life.
10. Protect your reputation at all cost
In business or life, your integrity & reputation will determine how far you go.
“Lose money for the firm, and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.”
In business or life, your integrity & reputation will determine how far you go.
“Lose money for the firm, and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.”
11. Take good care of your mind & body
Image you can only buy 1 car your whole life.
Knowing that, you are going to protect it and maintain it well.
We only have 1 mind & body.
Start taking care of them while you are young.
Image you can only buy 1 car your whole life.
Knowing that, you are going to protect it and maintain it well.
We only have 1 mind & body.
Start taking care of them while you are young.
12. 20-slot punchcard
Imagine you could only make 20 investments in your life.
Your bar will be raised considerably.
This applies beyond investing.
Apply this to the tasks, projects and relationships you maintain in life.
Imagine you could only make 20 investments in your life.
Your bar will be raised considerably.
This applies beyond investing.
Apply this to the tasks, projects and relationships you maintain in life.
13. Tap dancing to work
Find your passion. And find out how to monetize it.
‘Take the job you would take if you were independently wealthy. You’re going to do well at it.’”
Find your passion. And find out how to monetize it.
‘Take the job you would take if you were independently wealthy. You’re going to do well at it.’”
14. Measuring success in life
“Basically, when you get to my age, you’ll really measure your success in life by how many of the people you want to have love you actually do love you.”
“Basically, when you get to my age, you’ll really measure your success in life by how many of the people you want to have love you actually do love you.”
I'm preparing a Warren Buffett Investing Checklist.
And I'll be sending it to readers on my newsletter.
Subscribe now to receive a free copy when it's ready!
steadycompounding.com
And I'll be sending it to readers on my newsletter.
Subscribe now to receive a free copy when it's ready!
steadycompounding.com
That's a wrap!
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