The Motley Fool

3 top investing tips I’ve learnt from Warren Buffett

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

close-up photo of investor Warren Buffett
Image source: The Motley Fool

Warren Buffett is a world-renowned and legendary investor. As CEO of Berkshire Hathaway, he oversaw over 50 years of market-beating returns. Since 1965, Berkshire Hathaway returned 20% annually. This is double the annual 10% return from the S&P 500 during the same period.

To say the least, Warren Buffett is an experienced investor. And over the years, he has provided many words of wisdom for budding investors all over the world. Let’s take a look at my favourite investing tips from the Sage of Omaha.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Buy great companies

Buffett once said: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

His investment criteria has changed over the decades. He used to look at the cheapest value stocks, but these days he reckons it’s better to buy high-quality businesses at fair prices. I’d take this to mean companies that offer durable competitive advantages, or what Buffett calls an economic moat.

To find these, I look for companies that can sustain a high return on capital employed for many years. Berkshire Hathaway’s largest holding is currently technology giant Apple. This isn’t much of a surprise to me as Apple is a high-quality business with a sustainable competitive advantage.

Greed and fear

One of my favourite Warren Buffett quotes is: “Be fearful when others are greedy and greedy when others are fearful.”

Stock prices move for a number of reasons. In addition to business fundamentals, there are also psychological factors. Greed and fear play a big part. When the stock market crashes like it did in March 2020, investor fear can often push stocks to oversold levels. Uncertainty can cause chaos and fear that can lead to more fear. Buffett reckons these are often the best opportunities to buy great companies and I agree.

Long-term thinking

He’s well-known for holding some companies for many years. He once remarked: “Our favourite holding period is forever.

Instead of frequently trading stocks, Buffett prefers to buy right and sit tight. He has a long-term mentality and has held some companies (like Coca Cola) for many decades. Once a high-quality business is found, time is often needed to really make the most of a rising stock price. Buffett reckons short-term trading is not great for investment returns. He thinks it just adds to commission costs and potential capital gains taxes. He’s likely right, in my view. Patience is required to allow stocks to work.

What else would Warren Buffett buy?

Looking at my favourite Buffett tips has got me thinking. Which UK shares might the Sage of Omaha like? Well, I don’t know the answer to that question as there are so many factors and I can’t ask him. That said, there are some wonderful UK companies I like, I think he might like and that I’d love to hold for a long time. Some that come to mind include drinks giant Diageo, retailer Next, and property portal Rightmove. If If I’m right about these and I’m prepared to buy and sit tight, I feel I could make some great returns. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Harshil Patel owns shares of Apple. The Motley Fool UK has recommended Apple, Diageo, and Rightmove. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.