Investment Advice from Warren Buffett: Part 3

Happy Fourth of July!

We will close out our series on Warren Buffett’s investment advice today by sharing four more important tips and personal quotes from the billionaire entrepreneur.

Let’s dive in without any further delay…

Tip #1: It’s Always Best to Be Patient

Here’s a key piece of investing advice from the brilliant investor known as Warren Buffett. It goes something like this…

“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

Take a look at Buffett’s portfolio to truly see what he means. He has owned shares of certain companies for decades at this point.

The quote above was taken from a 1988 shareholder letter written to the owners of Berkshire Hathaway stock. In the letter he discusses such companies as the Washington Post and Coca-Cola.

Guess what? Berkshire Hathaway still owns shares of these companies to this very day, right now in 2013. I expect Berkshire Hathaway to own shares of these companies as long as they exist.

Moving on…

Tip #2: Keep Emotions Out Of Investing

You’re probably thinking it’s easier said than done, and you might be right. But let’s take a look at another vital piece of investment advice that speaks about the dangers of emotions in investing…

“Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.”

When you think about the above quote, it surely makes a great deal of sense. When you see the most amount of greed in the marketplace, this usually takes place when equities are soaring.

So many people end up buying shares of stocks at highly inflated prices. Then a big selloff will take place and lots of fear will come into the market as the prices begin to drop. This often causes amateur investors to lose lots of money or only make small gains. But if you pay attention, fearful markets present incredible buying opportunities for those who exercise patience if they are willing to be greedy while others are fearful.

Tip #3: You Do Not Have To Watch Your Investments like a Hawk

Here’s an interesting quote from Warren Buffett that you may benefit from tremendously if you heed his advice…

“You could be somewhere where the mail was delayed three weeks and do just fine investing.”

Now in all fairness, Buffett made this statement before the information age provided access to investing information at the click of a button. But the point still holds true to this very day.

If you believe in the companies of which you invest, and believe in the management and their vision for the business, then you have no need to read the day-to-day market fluctuations, company updates and general information.

He’s not saying to ignore what’s going on with the company. But Buffett is saying that you don’t need to follow every single piece of news. As a matter of fact, the daily fluctuations and news might make you too emotional and they could even hurt your investments by causing you to act due to fear instead of right-thinking.

Let’s check out the final tip in this series…

Tip #4: Be Careful When Listening to Investment Advice

It’s not always wise to take investment advice from just anybody. Here’s how Warren Buffett puts it…

“Never ask the barber if you need a haircut.”

Remember, when a broker is providing investment advice, this individual may have a conflict of interest. They may have their own bottom line in mind, and they may not have your best interests at heart.

As you can see, there is so much to learn from Warren Buffett. If you’re looking for more great information from the investing phenom, then you should read his letters to shareholders. They are quite entertaining and easily accessible.

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