Warren Buffet’s 6 Rules Of Investing

Warren Buffet is an American investor whose net worth is estimated to be 73.9 billion dollars which makes him one of the richest people in the world.

Cash is Not a Good Investment

  • Cash does not produce anything and goes in value overtime
  • Just need to have enough, but don’t need to have excessive amounts around
  • Rather have good businesses than cash
  • Dollar will always be worth less in the future

Invest in Productive Assets

  • Example is if you sit in a mountain of gold, you can stare at it, hold it, but gold itself won’t do anything for you. You need somebody in the future that thinks gold is worth more for you to sell it off
  • Price you pay will depend on how much the asset will deliver overtime. Another example is with a farm. You measure its productivity on how much corn it can delivery over time.
  • It doesn’t matter on the timing of when you buy the company, as long it’s under valued

Stay in your Circle of Competence

  • Invest in what you know
  • You don’t need to be an expert on everything
  • But knowing where your perimeter of what you know and what you don’t know is the most important

Evaluate Companies First

  • How much is it selling for, how much is it worth
  • Read annual report to evaluate the company
  • Did not look at price first, but looked at the company first. Evaluate it then see if the price is worth the value

Play Big and Don’t Waste Opportunities

  • Not going to have 500 great opportunities so when the opportunities come, need to bet big on it

Invest in Yourself

  • Nobody can take away what you learn from you
  • Develop habits of success
  • Look around the people you admire and why you admire them and what makes them talented