The recent weakness in the stock market is a good opportunity to follow Warren Buffett’s advice about when and how to buy shares.
He’s perhaps the most successful general stock market investor the world has ever known, and he’s worth billions. I discovered a lot about his life and his methods from several sources of information.
Where I’ve found Warren Buffett’s advice
Perhaps the most important is the library of shareholder letters he makes available online for everyone. His annual letters to the shareholders of Berkshire Hathaway have become eagerly awaited by investors. Berkshire Hathaway is the conglomerate company he controls. And he didn’t make all his investments over the years in the shares of publicly listed stocks. He often buys companies outright and adds them to the conglomerate.
The letters chronicle many of the twists and turns of his investment career. And examples and advice pepper each one, helping me to invest better. I think the letters are a great resource that many investors would enjoy using and benefit from.
I also read his authorised biography written by Alice Schroeder – The Snowball. And a book called Tap Dancing To Work, which Carol J Loomis put together. It is a collection of articles written about Buffett in Fortune, the American business magazine. Both books gave me valuable insights into his investing methodology.
Buffett’s known for buying the shares of companies with strong businesses when the shares are cheap. He then holds on to his stocks for a long time, allowing progress in the underlying business to drive a good return on his investment. But that’s not his only method of investing. Indeed, great companies at sensible prices don’t come along every day. So, Buffett also makes a lot of shorter-term investments, and people don’t often write about those.
A toolkit for investing
But one book does a good job of lifting the lid off Warren Buffett’s toolkit of investment strategies. It’s called Buffettology, and his daughter-in-law Mary Buffett wrote it along with David Clark. Within its pages, I discovered a lot of detail about what Buffett typically looks for when identifying the quality of an enterprise.
I think those four sources of information make an excellent basis for learning to invest like Warren Buffett. And one of the main features of his style is to approach every investment from a business perspective. In other words, with shares, he acts with the same focus and tenacity to research and ownership as if he controlled the entire business.
Buffett looks for excellent businesses at a price that makes sense of an investment. And I reckon following a business perspective like that can help me get rich and retire early. Indeed for me, aiming to invest like Warren Buffett is a good idea.
Kevin Godbold has no position in any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.