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Warren Buffett: On How To Pick Stocks and Invest Properly



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Warren Buffett is the greatest investor

of all time I personally learned

countless lessons off buffets when I

started studying investing five years

ago Warren Buffett he was my go-to guy

what I loved about him is that he puts

in this thing and such simple in

easy-to-understand terms so anyone can

learn from him anyway in this video I

wanted to show you the clip from Warren

Buffett back in 1985 that will teach you

sex a very simple lessons to know when

picking out stocks and investing and

general the first word on investment is

don't lose and the second on investment

is don't forget the first rule and

that's all the rules there are I mean

that if you buy things for far below

what they're worth and you buy a group

of them you basically don't lose money

all right what do you consider the most

important quality for an investment

manager it's the temperamental quality

not an intellectual quality you don't

need tons of IQ in this business I mean

you have to have enough IQ to get from

here to downtown or mall but but you do

not have to be able to play

three-dimensional chess or be in the top

leagues in terms of bridge playing or

something of the sort you need a stable

personality you need a temperament that

neither derives great pleasure from

being with the crowd or against the

crowd because this is not a business

where you take polls it's a business

where you think and Ben Graham would say

that you're not right or wrong because a

thousand people agree with you and

you're not right or wrong because a

thousand people disagree with you you're

right because your facts in your

reasoning or right well what do you do

that's different than 90% of the many

managers who are in the market certainly

most of the professional investors focus

on what the stock is likely to do in the

next year to avail all kinds of all

kinds of arcane methods of approaching

that but they do not really think of

themselves as owning a piece of a

business that the real test of whether

you're investing from a value standpoint

or not is whether you care whether the

stock market is open tomorrow if you're

making a good investment in a security

it shouldn't bother you if they close

down the stock market for five years all

the ticker tells me is the price

and I can look at the price occasionally

to see whether the price is outlandish

ly cheaper outlandish lehigh but what

prices don't tell me anything about a

business business business figures

themselves tell me something about the

business but the price of the stock

doesn't tell me anything about a

business I would rather value a stock or

a business first and not even know the

price so that I'm not influenced by the

price in establishing my valuation and

then look at the price later to see

whether it's way out of line with what

my value is so Buffett chose to stay in

this world Omaha Nebraska where corn

grows just minutes from downtown

now Omaha is a nice town but nobody

claims it's a world financial center

here the only flynn during heard is

actually on four feet

don't you find home on a little bit off

the beaten track for the investment

world well believe it or not we get mail

here and we get periodicals and we get

all the facts needed to make decisions

and unlike Wall Street you'll notice we

don't have 50 people coming up and

whispering in our ears that we should be

doing this or that this afternoon you

appreciate the lack of stimulation here

I like the lack of stimulation we get

facts not stimulation here how can you

stay away from Wall Street well if I

were in Wall Street I'd probably be a

lot for at you get overstimulated in

Wall Street and you hear lots of things

and and you may you may shorten your

focus and a short focus is not conducive

to to long profits and here I can just

focus on what businesses are worth and I

don't need to be in Washington to figure

out what the Washington Post newspaper

is worth and I don't need to be in New

York to figure out what some other

company is worth that's it's it's simply

it's an intellectual process and unless

the most static there is in that

election process really the better off

you are what is the intellectual process

intellectual processes is defining your

level defining your area of competence

and valuing businesses and then within

that area of competence finding whatever

sells at the cheapest price in relation

to value and there are all kinds of

things I'm not competent to value but

there are a few that I am comforted

have you ever bought a technology

company no I really haven't

in 30 years of investing not one I

haven't understood any of my so you

haven't ever boned for example IBM we're

never owned IBM Mar a company I made a

sensational company but I haven't known

IBM and so here is this technological

revolution going on and you're not gonna

piss artistical and right past me is

that all right with you it's okay with

me I don't have to make money in every

game I mean I don't know what cocoa

beans are gonna do I don't you know I

there are all kinds of things I don't

know about you and that may be too bad

but you know why should I know all about

them I'm working hard on insecurities

business you literally every day have

thousands of the major American

corporations offered you at a price and

a price that changes daily and you don't

have to make any decisions you have to

make that nothing is forced upon you so

you there are no called strikes in the

business the pitcher just stands there

and throws balls at you and if you're

playing real baseball and that's between

the knees and the shoulders you either

swing or you got a strike : I need to

get too many calls I knew you're out in

the securities business you sit there

and they throw us steal a 25 and they

throw Journal Motors at 16 you don't

have to swing at any of them they may be

wonderful pitches to swing at but if you

don't know enough you don't have to

swing and you can sit there and watch

thousands of pitches and finally get one

right there where you want it something

that you understand and then you swing

and so you might not swing for six

months

he might not swing for two years it's

net boring it would it would bore most

people and and certainly boredom is is a

problem with most professional money

managers if they if they if they stray

sit to sit out an inning or two not only

do they get somewhat antsy but their

clients are start yelling you start

yelling swing you bum you know from the

from the stands and that's very tough

for people to do one your your approach

seems so simple why doesn't everybody do

it well I think partly because it is so

simple that the academics for example

focus on on all kinds of variables

partly because academics you may know

professors right yeah the data is in

business school sure that and the data

is there so they focus on whether if you

buy stocks on Tuesday and sell them on

Friday you're better off for people I'm

in election years and sell them in other

years you're better off if you buy small

company

all these variables because the data are

there and and they've learned how to

manipulate data and as a friend of mine

says to a man with a hammer everything

looks like a nail

and once you have these skills you just

are dying to to utilize them in some way

but they aren't important if I were

being asked to participate in a business

opportunity would it make any difference

to me whether I brought it on a Tuesday

or Saturday or an election year

something it's not what a businessman

thinks about in buying businesses so if

I think about it when buying stocks

because doctor just pieces a business

system and that's is the reason why I

like listening to Warren Buffett's he

just makes everything so simple he's not

someone on Wall Street saying well if we

look at this technical indicator over

here we can see that the stock price is

up 0.1 percent over the past day and a

half he's a long-term investor and he

speaks his mind because he knows over

the long term compound interest and only

businesses are an amazing combination as

long as you invest correctly so I do

hope these sex tips can help you with

your investing journey and make you

become a better investor and get better

long-term returns but guys don't forget

to let me know in the comments if you

have a favorite rule from Buffett that

was not spoken in the sense of you that

you always adhere to but you know in

this day and age we Iran is worrying

about the market price and what's the

market gonna do we can use buffer as a

reliable source of facts to help us do

better in the markets

you