It is said that if you want to be successful in any field of life, look for cues from those who are successful in that field. Warren Buffet is one of the most successful stock market investor in the history of stock markets and therefore many investors consider his investment advice as the best stock advice.
After all Warren Buffet’s investment style has helped him to grow his wealth in excess of 9090 crores USD which exceeds the GDP of countries like Luxembourg, Oman or Bahrain.
Let’s take a look at some of the best stock advice given by Warren Buffet below:
Best stock advice # 1: Always invest for long term
“If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.” – Warren Buffett
Warren Buffett has repeatedly stressed that investors should always have buy and hold mentality. He himself has held on to number of his investments for several decades.
According to him this is important because it takes time for quality businesses earn high returns and increase in value over time.
Best stock advice # 2: Invest only in a business you understand
“Never invest in a business you cannot understand.” – Warren Buffett
According to Warren Buffet, an investor should invest only a business he understands and never invest in a business which is very complex. Warren Buffet himself has admitted that he stayed away from technology stocks, because he did not understand their business models and instead preferred to invest in stocks of companies like Coca-Cola, Wal-Mart Stores, Proctor & Gamble Co. and Wells Fargo & Co.
Best stock advice # 3: Know the difference between price and value
Stock prices keep fluctuating nonstop. Warren Buffet feels that rather than looking at the ticker quotes, investors should focus on the underlying business fundamentals while picking stocks.
He also advises that investors should be prepared for periods of time in the stock market where stock prices have zero correlation with the longer term outlook for a company.
Best stock advice # 4: Most news you come across is noise, not news
Warren Buffet advices investors to ignore most of the financial news they come across in their day to day life as believes that most of the news out there is to generate buzz and trigger investor’s emotions to do something in the stock market.
Best stock advice #5: The best investment moves are usually boring
“Beware the investment activity that produces applause; the great moves are usually greeted by yawns.” – Warren Buffett
Warren Buffet has said time and again that investing in the stock market is not a path to get rich quickly. He advises that stock market investment is a medium to moderately growing your existing capital over long periods of time and instead of trying to spot the next major winner in an emerging industry, it is better to invest in companies that already performing well.