Finding a better investor than Warren Buffett is not easy. Thanks to him, Berkshire's stock value increased by over 2.7 million percent from 1965 to 2019, equivalent to an annual increase of 20.3%. Meanwhile, the S&P 500 only increased by 19,784% in the same period, equivalent to 10% per year.
Obviously, you might want to invest in the style of Warren Buffett to get rich like him. However, you should not invest as this billionaire, because you simply cannot. Here are 5 factors that explain this, and you can learn what the billionaire has suggested, thereby building wealth over time.
Maybe you think Buffett is a stock investor, but in fact, he has been in charge of running big companies for decades. The strong growth of these businesses has partly helped him own the current fortune, thanks to making acquisitions in the long run. Here are some of the famous businesses that Buffett owns: Benjamin Moore, Brooks, International Dairy Queen, Johns Manville, Justin Brands, McLane, Business Wire, Clayton Homes, Forest River, Fruit of the Loom, GEICO, Nebraska Furniture Mart, NetJets, Pampered Chef, See's Candies, Shaw Industries and the entire railroad operating company BNSF.
Accordingly, it can be seen that carrying out the acquisitions really works with this billionaire's investment strategy. However, you cannot afford to do the same.
In addition, you are not growing up in places and times like Warren Buffett, so you can hardly make money as early as he. Buffett was born in Omaha - Nebraska in 1930, and he made the first money by selling chewing gum when he was 5 years old, then selling the golf balls he picked up. As a teenager, he delivered many newspapers and even made more money than his teachers. His wealth does not come from inheritance and is difficult to achieve.
When he started investing in the stock market, the investment field was very different from what it is today. The information comes more slowly and you often have to research for a long time to find potential companies. There was no internet at the time and there was no way to track stocks just through a computer screen. In addition, there were also very few investors. In the meantime, finding mispriced stocks is difficult now, as many people and automated systems are also looking for that.
Next, you do not have a mindset like Buffett to avoid common mistakes, such as investing in areas you do not understand or panicking, selling when the market falls sharply. Buffett often refers to the "ability circle" and how he has not become an "outsider" when investing. In addition, he noted that he was satisfied with not making a deal for a long time while waiting for the opportunity to come.
In this respect, he gave advice on what a good investor should pay attention to: "You should be knowledgeable about the way businesses operate, the language of business, and the enthusiasm for that field and temperament - factors that are more important than the IQ scores. These will allow you to think independently and avoid panic in different contexts when investing over the long term."
You cannot read and learn as much as Warren Buffett, while all the information gathered is an important factor contributing to his investment results. In an interview, he shared that he loves to read: "I read a lot. I can read 5-6 hours a day. I cannot read as fast now as I was when I was young, but every day I read 5 daily newspapers, a lot of magazines, annual reports, and lots more. "
Accordingly, he recommends that you read regularly. The billionaire pointed to a pile of books and said: "Reading 500 pages of books like this every day, that's how knowledge works. It is built similar to compound interest. You can all do it, but I guarantee that not many people will. "
In the end, you should not invest like Warren Buffett not only because you cannot, but also because you do not need to have the purpose of building wealth. Instead, you can opt for low-cost index-tracking funds - which has been Buffett's recommendation for years. He proved that advice by taking action by instructing his wife to invest: "Pour 10% of cash into short-term government bonds and 90% into the S&P 500 index fund."
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