When the greatest investor in history speaks — it pays to listen.
I mean, if you want to be successful at what you do — whether that’s investing or anything else — you can learn so much from the people who’ve already made it.
And nobody — in history — has ever ‘made it’ quite like Warren Buffett.
The man they call the ‘Oracle of Omaha’ made his fortune by taking over an obscure, beleaguered textile mill called Berkshire Hathaway in 1967 for $8.6m.
And through the power of his profoundly effective investment skills… Buffett turned that failing business into a $320 BILLION global conglomerate.
In the process, Buffett became one of the richest men in the world, before donating billions of dollars to charity.
How did Warren Buffett become such a successful investor?
The fundamental principles of his success are far simpler than you might think.
He learned to identify great businesses. And through the stock market — where he became the world’s most famous investor — he identified first-class shares trading for less than they were really worth.
His insight and experience are unmatched in investing — and every year, as many as 40,000 Berkshire Hathaway shareholders travel to Omaha to hear the Oracle speak.
This time around, I was one of them.
I’ve brought back three lessons from Buffett — and each one of them has the potential to make you a better, wealthier investor.
Buffett’s ‘awful’ timing
It’s hard to believe that more than five years have now passed since the financial crisis of 2008/9.
The panic, fear and desperation during those eventful months will live long in the memory of investors around the world — a time when each new headline brought another disaster, sending stocks plummeting to new lows.
One of Buffett’s most famous expressions is to be “greedy when others are fearful and fearful when others are greedy”.
Well it’s hard to imagine a more ‘fearful’ stock market than the one that prevailed in the crisis months of 2008 — and true to his word, Buffett opportunistically loaded up on stocks.
A few years later, with global stock markets at or approaching all-time highs, Buffett’s purchases turned out to be strokes of genius.
Reflecting on this in Omaha, though, Buffett had another amusing take on it…
Despite making billions from buying stocks during the downturn, Buffett admits the timing of his investments were “awful” in 2008.
In a sense he was right.
You see, after buying in September of that year, stocks kept falling and the panic kept escalating… for another six months.
Why does nobody talk about this in 2014? Because it doesn’t matter!
When Buffett was bagging bargains in 2008, he didn’t care that the market could keep falling as he bought.
Instead he cared about getting great deals — and he was eventually rewarded with billions in profits, while other investors were heading for the exits.
Give that some thought when you’re next hovering over the ‘buy’ button, but too nervous to take action, because ‘the stock might fall further’!
Most investors who worried about prices falling even further during the crisis were left in the cold on the sidelines when the market turned.
Buffett never tries to ‘time the market’. He didn’t mind being six months early. He’s made a career out of market-thrashing calls just like that one — and there’s no reason why you can’t do the same.
The Power of Good Habits
Bad financial habits can take a lifetime to reverse.
Enjoying a financial education is not just important for investing…
…but for life in general.
And that doesn’t have to mean an MBA, or taking a university course in finance.
At the shareholder meeting, Buffett spoke about how lucky he was to get started early in investing (he bought his first stock at just 11 years of age!).
Very early on, Buffett grasped the important tenets of growing wealth:
Spend less than you earn, and accumulate cash-generating assets.
The financial basics are so important for getting ahead in life — and in the case of Warren Buffett, it started “at the dinner table” with his parents.
You may have to use your imagination to make it sound fun…
… but if you have young ones at home, you could be doing them a huge favour by simply explaining the basics of how money works.
And who knows, you might have the next young Warren Buffett in your family!
Get Out There And Get Talking!
In investing, industry knowledge can be enormously valuable.
One huge advantage in Buffett’s favour is his extensive experience of many different industries, from sweet shops to insurance…
But what would Buffett do if he had to start again from scratch?
And more importantly — how can you profit from doing the same thing?
Buffett’s answer is simple, and you’ll be pleased to know that you can copy this technique RIGHT NOW.
Buffett would look at lots of companies, and simply ask as many people as possible in that industry to chat about their business.
A very young and eager Buffett — long before he was a famous investor — was amazed at how often company executives would sit down and talk with him.
He’d ask them everything about how their industry worked, how the company made money… And he’d ask them this question:
“If you could invest for ten years in only one company in the industry apart from your own, which one would it be?“
If the same company kept coming up each time, he knew he’d found a good one!
Warren Buffett is a master at collecting and memorising information.
But any one of us can pick up the phone or email someone, to invite them to chat over lunch or a coffee.
You may be surprised at how many say yes — and the ways you can profit from becoming more knowledgeable about certain industries.
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Mark owns shares of Berkshire Hathaway Inc.