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Warren Buffett is well known for his buy-and-hold investing strategy, and making solid bets on low-performing stocks when others are selling at a loss.
At his company’s annual meetings, Berkshire Hathaway’s shareholders have the opportunity to pick Buffett’s brain on any number of topics.
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One investor who attended the conference in 1999 cut right to the chase in a memorable way. “Mr. Buffett, how can I make $30 billion dollars?” he asked (1).
As always, the Oracle of Omaha conveyed complicated theories in simple terms — rules that can guide any investor.
“If I were getting out of school today and I had $10,000 to invest … I probably would focus on smaller companies … You have to buy businesses, or little pieces of businesses called stocks, and you have to buy them at attractive prices, and you have to buy into good businesses.”
If you want to learn the ropes that helped the nonagenarian accumulate a massive fortune, here are three of his fundamental rules to consider.
Tom Watson Sr., the founder of IBM (NYSE:IBM), once said, “I’m no genius. I’m smart in spots — but I stay around those spots (2).” That’s the mantra Buffett has applied to his investing, too.
By focusing on industries he understands and avoiding temptation to chase trends, Buffett has built his fortune through a disciplined and patient approach.
His strategy, however, comes with an important caveat: volatility. At the 2020 Berkshire Hathaway shareholder meeting, Buffett reminded investors of the inevitable ups and downs.
“You’ve got to be prepared, when you buy a stock, to have it go down 50% — or more — and be comfortable with it, as long as you’re comfortable with the holding,” he said (3).
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