What Warren Buffett is doing Right to make Millions of dollars in the Stock Market
Analyzing his famous quotes, his trading principles, actual portfolio, and what ChatGPT says about him
Over 80 years of investment experience. Warren Buffett amazes us with his results. What is the phenomenon of market survival of this legendary investor?
The idea of writing this article came from years of studying technical analysis, unprofitable forex trading, and investing in cryptocurrencies. All these attempts to find a working trading system led me to the American stock market, where I got my first profit.
W.B. turned out to be my mentor in absentia. What I know from his investment experience and use as principles in my stock trading:
- Focus. All investment ideas are only related to the stock market, it’s a more trend-oriented and predictable market.
- Timing. Trend following reduces over-trading.
- Money Management. Risk limitation and diversification are some of the best ways to preserve capital.
Actual Ideas from Warren Buffett Quotes
“Risk comes from not knowing what you’re doing.”
This quote warns against rash trades without knowledge of fundamental and technical analysis. In modern trader’s slang, it’s “monkey trading”. — A situation in which a novice investor, due to insufficient knowledge or in a state of tilt, makes chaotic trades, ignoring the rules of the trading system.
“The difference between successful people and really successful people is that really successful people say No to almost everything.”
This phrase implies that saying “no” is a skill that can give you a different perspective on the market (or life). This is probably the mindset of 5% of really successful investors.
“The most important thing to do if you find yourself in a hole is to stop digging.”
This universal phrase is applicable both in life and in investments. It applies to investing and trading: If you make a bad investment, you should get rid of it and avoid similar mistakes in the future.
“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
Immediately associated with long-term investing and trend-following trading system. A great investment decision made 1 month, 1 year… ago makes you profitable today. — This wonderful emotional state is no match for the perpetual stress of intraday trading.
“I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business. I read and think. So I do more reading and thinking, and make less impulse decisions than most people in business. I do it because I like this kind of life.”
W.B. means that an investor’s self-development directly affects his adaptation to market conditions. — And therefore his financial results.
Let’s take into account the fact that 30 years ago there was no Internet, no market scanners, and no Python-programmed trading. All work on analyzing companies was done manually. It will be interesting to see how IT and AI technologies will change the habitually accepted statistic of 95% of investors losing money.
Warren Buffett’s Top 10 Principles of Investing
(List of principles courtesy of ChatGPT)
- Never lose money. — This is Buffett’s first and most important rule.
- Always have a margin of safety.
- Pick businesses, not stocks.
- “Be fearful when others are greedy and greedy when others are fearful.” — He advocates contrarian investing, which means going against the crowd.
- Invest in what you know.
- Be patient and disciplined. — W.B. is known for his “buy and hold” strategy, which means holding stocks for a long time.
- Think like an owner, not a trader.
- Diversify, but not too much. — He avoids spreading money across many different stocks, which can reduce returns and increase risk.
- Learn from your mistakes and others.
- Have fun and enjoy the process. — W.Buffett loves investing and considers it a game that he plays for fun, not for money. He enjoys reading, learning, and analyzing businesses, and he has a passion and curiosity for finding great investment opportunities.
Warren Buffett — Berkshire Hathaway Portfolio
Warren Buffett’s holding company Berkshire Hathaway has more than 50 stocks in its portfolio. Most of them are well-known American blue chips and shares of other countries.
For a full list of stocks, see online > https://www.cnbc.com/berkshire-hathaway-portfolio/
The companies that have received the most investment are:
- Apple Inc 48.5%
- Bank of America Corp 9.2%
- American Express 7.2%
- Coca-Cola Co 6.4%
- Chevron Corporation 4.3%
The most expensive stocks on the list: NVR Inc $6,920 and Markel Group Inc $1370.
We can see that Warren Buffett has the highest confidence in Apple Inc (AAPL). — Invested in almost half of the capital in this great American brand.
Each of us can invest in companies from the list, all of which are available for example in InteractiveBrokers.
Everything is accessible and clear.
So why are we all so far from the level of Warren Buffett?
Focus,
Timing, and
Money Management
