Be Greedy When Others Are Fearful: Warren Buffett’s Top Five Investing Lessons

Billionaire Warren Buffett has recently turned 92, but his investing lessons are still relevant to the market and investors. Here’re Buffett’s five tips for you.
Warren Buffett Sees Greater Value In Own Company Berkshire
Warren Buffett Sees Greater Value In Own Company Berkshire

Legendary billionaire Warren Buffett, whose impromptu humor on investing and the stock market touched people around the world, has recently celebrated his 92nd birthday. But even in his old age, his jokes continue to amuse people. 

In one of his wittiest remarks, he once famously said that he and his associate Berkshire Hathaway vice-chairman Charlie Munger are 190 years of age together.

Munger is the 98-year-old vice-chairman of Berkshire Hathaway, the illustrious company that Buffett founded. Over the years, Buffett has invested in many profit-making behemoths, helping him and his clients generate record income. 

Buffett's mantra of success has been his unwavering focus on company products and their ability to make profit. 

Celebrated American economists Benjamin Graham’s writings on value investing hugely influenced Buffett in his early years of investing. 

“The basic ideas of investing are to look at stocks as business, use the market's fluctuations to your advantage, and seek a margin of safety. That's what Ben Graham taught us. A hundred years from now, they will still be the cornerstones of investing,” Buffett once said.

Here are Warren Buffett’s top five investing lessons:

#1 Believe In Long-Term Stock Investing

"If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes," said Buffett. Research has always been the cornerstone of Buffett's investing strategy. One should only invest in the stocks of a company if its products or services could be relevant in the next ten years. Buffett believes that going that extra mile before picking a stock would always pay off in the long term.

#2 Don’t Be Scared Of Market Crashes

Buffett once said that (be) “fearful when others are greedy and greedy when others are fearful.” An old-school saying in Wall Street that two emotions drive markets--fear and greed--underscores his point. 

When the market crashes, the fear sentiment is high, and when the market rises, greed dominates. So Buffett believes one should invest in a stock with high intrinsic value. For instance, a share could be down for reasons unrelated to the stock. This way, you could also get your favourite stock at a discount.

#3 Cash In Hand Is Important 

Buffett also stresses that ready cash is critical to “play” in the stock market. During the 2022 Berkshire Hathaway annual general meeting, Buffett said: “There have been a few times in history, and there will be more times in history, where if you don’t have it, you don’t get to play the next day. It’s like oxygen. It’s there all the time, but if it disappears for a few minutes, it’s all over.” 

So, if you keep aside some cash, you might be able to grab the opportunities the market presents next time. Ready cash also helps in emergencies since you won’t need to sell your assets to generate money.

#4 Invest In Yourself To Stay Ahead Of Recession 

In an interview with Forbes, Buffett once said that “The best thing you can do is to be exceptionally good at something. Whatever abilities you have, can’t be taken away from you. They can’t actually be inflated away from you. The best investment by far is anything that develops yourself, and it’s not taxed at all.”

Buffett believes one could stay ahead of recession, inflation, and job-loss worries by investing in oneself and developing career skills. For example, in February 2022, India's Tata Consultancy Services (TCS) partnered with NTTF, a technical institute, to up-skill over 60,000 people to prepare them for future industry needs.

#5 Time Invested In The Market Matters 

In an annual letter to Berkshire Hathaway shareholders, Buffett once said that the only value of stock forecasters is to make fortune tellers look good and that a smart investor knows that it is impossible to predict a stock’s outcome. 

The nonagenarian investor believes that a stock could swing any side- profit or loss-but the hope of 'hitting big' has attracted many investors to the market.

For example, many market participants were shocked when Nifty 50 rose 2.58 per cent, or 446.4 points higher, to close at 17,759.30 after falling 1.4 per cent to 17,312.90 on August 29. “Lost 50 crores today! Hopefully I will recover tomorrow,” said a Twitter user when his portfolio was down on the same day. As per Buffet’s philosophy, instead of timing the market, time your investments through regular contributions like SIPs and use the market corrections to deploy idle cash. 

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