The following is an article that I think all investors would enjoy reading. I stumbled across this recently at someone’s office but the source of the article wasn’t identified.
Warren Buffett’s Certain Advice for Uncertain Times.
Warren Buffett is one of the world’s richest men — and the most successful investor in history.
You would think that he must be a genius at timing the market, knowing when to get in and when to get out. Not at all!
In fact, like all of us, Buffett has taken his share of losses: He lost money in the bear market of 1974, the 1987 crash, the downturn of 1990, the dot-com bubble, and most recently during 2008-2009.
So why is he ranked the third richest person in the world in Forbes magazine and we’re not?
Stop Worrying and Start Profiting
Buffett’s portfolio has an amazing ability to bounce back and go on to greater heights — sometimes in as little as a few months.
How does he do it?
Here’s Buffett’s advice on how to make certain you prosper in the long run, whether the market goes up, down or sideways — and what to do in the coming months…
- Realize that the market always comes back. In the 20th century, the U.S. endured two world wars, a d depression, a dozen recessions, oil shocks, terrorist attacks, and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497. The point is that over the short term, economic and political events may cause stocks to go down. But over the long term, the American economy is strong and resilient, which causes stocks to go up.
Some pundits predict another crash and are telling us to stay out of the market. But pessimists and doomsayers have a lousy track record at predicting the future.
- Bad news is an investor’s best friend. That may sound paradoxical. But the fact is that the best time to buy is when times are tough and other investors are scared.
For example, bad news allowed Buffett to get great deals on the shares of wonderful companies like American Express® and Cocoa-Cola®. In September of 2008, he was able to buy General Electric at nearly half off the price it had been selling for a few months earlier.
Which brings us to the next rule…
- Buy great businesses. Buffett doesn’t think of himself as owning pieces of paper whose prices go up and down; he thinks of himself as a business owner. And as such, he only buys shares in well-run businesses with growing sales and a unique competitive advantage.
One example is Coca-Cola, which sells over a billion beverages a day. Another is Gillette®, a division of Procter & Gamble that dominates U.S. razor blade sales. Thanks to worldwide expansion, this company will never run out of customers.
- Only invest in what you understand. Between 1998 and 2000. Buffett avoided internet stocks because he didn’t see how they could make enough money to justify their valuations. In 2002 he started warning against complicated “derivatives”. In the end, these derivatives brought down companies like Lehman Brothers and AIG-and led to the financial meltdown.
To summarize the main points outlined here, there is a process to follow if you want to be a successful investor. It starts with thinking about your goals, doing some investigation about the companies you’re considering investing in, and gaining valuable knowledge before one invests.
Then, once you have become comfortable with a company patience is required.
Life is a risk, investing is a risk, and this can only be mitigated by understanding what you are doing… before getting started.
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Call me, Vicki L Wille, today at 702-878-9562. Or click the button below and…