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Business News/ Money / Personal Finance/  5 key money lessons on value investing one can learn from Warren Buffett
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5 key money lessons on value investing one can learn from Warren Buffett

Warren Buffett suggests investors to do their own research. He likes to do analysis on his own by reading all financial statements. The stock he buys, he does not want to sell often. He said that you should buy companies which even a fool can run because someday a fool will

Warren Buffett has a knack of investing in the stocks of companies, which have an economic moat around them . (AP Photo/Nati Harnik, File) (AP)Premium
Warren Buffett has a knack of investing in the stocks of companies, which have an economic moat around them . (AP Photo/Nati Harnik, File) (AP)

It is not prudent to describe the Oracle of Omaha even if you are unacquainted with the world of investing. The legendary investor Warren Buffett has built his reputation not only as a successful investor but also as someone who has profoundly simplified the art of investing by sharing his key insights through his lectures, speeches, interaction with the Berkshire Hathaway shareholders, and also through his annual letters with shareholders.

The more one tries to read between the lines of his letters, the better it appears. Here we try to recapitulate some of the key money lessons he has shared with the investors in the recent past. 

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Money lessons one can learn from Warren Buffett

1. Do your own research:  He believes in doing your own research. He likes to do analysis on his own by reading all financial statements. The stock he buys, he does not want to sell often notwithstanding the recent stake sale of Apple. He said that you should buy companies which even a fool can run because someday a fool will. 

2. Power of an economic moat: He is also fond of investing in the stocks of companies which have an economic moat around them. This means the companies with strong competitive advantage over competitors are likely to grow in the long run. “Great businesses are not all that common, and finding them is hard. Unusual factors combine to create the moats…" wrote Bill Gates in a 1996 article published in Harvard Business Review (HBR). 

3. Investing is simple: He is one of the few investors who often asserts that investing is simple and it is unnecessarily complicated by some. 

He says that there are some fundamental rules and investors should stick to them and ignore the noise that comes. 

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4. Question your decision of investing: Warren Buffett is known for asking the right questions before choosing to invest in a stock. It’s vital to ask the right questions. By questioning every investment and stock, you will make better investing choices. 

5. Overlook the noise: He believes that investing should be an objective decision and instead of following the market, it is advisable to ignore the noise. 

There could be a euphoria or scepticism about a stock or sector, but it is advisable to ignore both the extremes and invest rationally.

 

 

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Published: 15 May 2024, 09:28 AM IST
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