4 Warren Buffett lessons I use to invest

first_img Our 6 ‘Best Buys Now’ Shares FREE REPORT: Why this £5 stock could be set to surge Christopher Ruane | Friday, 28th May, 2021 4 Warren Buffett lessons I use to invest christopherruane has no position in any of the shares 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. Are you on the lookout for UK growth stocks?If so, get this FREE no-strings report now.While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.And the performance of this company really is stunning.In 2019, it returned £150million to shareholders through buybacks and dividends.We believe its financial position is about as solid as anything we’ve seen.Since 2016, annual revenues increased 31%In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259Operating cash flow is up 47%. (Even its operating margins are rising every year!)Quite simply, we believe it’s a fantastic Foolish growth pick.What’s more, it deserves your attention today.So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. Warren Buffett is well known for his investment prowess. Thanks to his annual shareholder letters and high media profile, anyone can benefit from his advice on investing in shares.As an investor I have learnt a lot from Buffett. Here are four key lessons I use in my own investing.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…1.    Take a long-term perspectiveBuffett eschews short-term thinking. Instead of trying to eke out small profits trading, he looks to buy stakes in companies he expects to grow exponentially in the coming decades.Sometimes I am attracted to companies that seem to have a bright future if only for the foreseeable future. But when I think about Buffett’s advice, I focus more on investment ideas I think might succeed for decades.For example, Safestore is a self-storage provider. I expect demand for its services to grow for many years from now. I’d be happy to buy it now and hold it indefinitely. A growing industry can attract competition and drive down profit margins, though. So, like Buffett, I’d diversify my holdings to reduce my risk.2.    Read the accountsDuring the global financial crisis, Warren Buffett was asked to consider bailing out the bank Lehman Brothers. He spoke to its boss on the phone. But apart from that, he spent most of the day in his Nebraska office reading the company’s annual report and accounts.A lot of investors would think that for such a large possible investment, it would be necessary to speak to people across the banking industry. They’d want to get the latest information on the bank from people on the spot. Buffett didn’t. He realised that legal reporting requirements meant that if he scrutinised the company’s accounts closely, that could furnish him with much of the information necessary for his decision. He decided not to invest, and Lehman crashed within a year.Annual reports contain a lot of flannel but they are also often valuable sources of information. For example, I think Renewi operates in a promising business field, but one close look at its accounts gave me concerns about its weak profitability.3.    Warren Buffett on greedOne of Warren Buffett’s most famous aphorisms is “Be fearful when others are greedy and greedy when others are fearful”.Buffett sees other people’s greed as a warning sign of market overheating. That is why he is fearful. Lately there have been examples of greed in the market, from the Gamestop frenzy to the disappointing IPO of Deliveroo.I also think there is a fair amount of greed from some investors in Argo Blockchain. Following Buffett’s advice, I am therefore fearful. While I see some merit in the Argo business and its management, I don’t plan to invest in its shares at their current price.4.    Warren Buffett is happy to waitA striking theme of Warren Buffett’s investing across his lifetime has been his patience. He has said that if the stock market closed for years at a time, it wouldn’t bother him.What interests me about this is that it only works because of Buffett’s investment philosophy. If he was a trader exploiting market swings his patience could be a liability. But it’s not, because Buffett is an investor not a trader. He is looking for quality companies to buy and hold, in some cases forever.center_img See all posts by Christopher Ruane Simply click below to discover how you can take advantage of this. 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