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TraveltoFI

1y ago

Value investor on path to financial independence. Sharing what I learn along the way. Writing about psychology, money, wealth, happiness, travel.

Buffett's Laws of Investing - 3 Rules that Will Make You Unstoppable
TraveltoFi

There are limitless resources on Buffett's investing.

I've read his all letters to Shareholders, multiple biography books and will save you hundreds hours of reading. Those rules are foundations for prosperous investing and making money. Incorporate it into Your Investing Strategy to become unstoppable and successful.

Rule #1 When you buy stock you're buying part of business

It's not a piece of paper that you're trading, you should not worry about short term changes in price, but look at overall business value. Buy the stocks that are in your circle of competence, after careful analysis.

Rule #2 Market is "Voting Machine" and not "Weighting Machine"

Look at Market as manic-depressive, who as per Graham "often lets his enthusiasm or fears run away with him". Therefore you should not worry about short term fluctuations, just use it as a chance to buy cheaper stocks when everyone else is afraid.

Rule #3 Buy Stock only when it's on sale

Only buy a stock when it's selling for much less than it's value. That means that you'd want to wait for right, rare moment, when chances of making money exceed chance of losing it. This means using "Margin of Safety" and waiting for those moments patiently.

Not many people recognizes this slow and not fancy strategy. It requires you to wait and then take decision and act big when it's right time. You need to be like a baseball player and as Buffett said "You don't have to swing at everything - you can wait for your pitch"

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