Guide To Investing In Stock Market (Part II)

I guess you read the first part of my Guide To Investing In Stock Market (Part 1). If you haven’t read that yet then I request you do so. Before investing in stock market I really recommend you to read the life of Warren Buffet (World’s Greatest Investor of all times).

Warren Buffett’s Secrets of Success

If you are an investor and don’t know who Warren Buffett is then Warren Edward Buffett (born August 30, 1930, Omaha, Nebraska) is an American investor, businessperson and philanthropist. He is the third richest person in the world according to Forbes Magazine with an estimated current net worth of around US$56.9 Billion. He known as the world’s greatest investor or “Oracle of Omaha”.

Here are a few quotes by Warren Buffett which I find interesting and makes sense. If you are an investor then it’s a must read.

Words of Wisdom from Warren Buffett

‘Never invest in a business you cannot understand.’

‘Always invest for the long term.’

‘Buy a business, don’t rent stocks.’

As Buffet said in the speech, “He’s not looking at quarterly earnings projections, he’s not looking at next year’s earnings, he’s not thinking about what day of the week it is, he doesn’t care what investment research from any place says, he’s not interested in price momentum, volume or anything. He’s simply asking: What is the business worth?”

‘Price is what you pay. Value is what you get.’

‘Stop trying to predict the direction of the stock market, the economy, interest rates, or elections.’

‘I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for ten years.’

‘Buy companies with strong histories of profitability and with a dominant business franchise.’

‘Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.’

“… Only those who will be sellers of equities in the near future should be happy at seeing stocks rise.  Prospective purchasers should much prefer sinking prices.”

‘Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing.’

‘Wide diversification is only required when investors do not understand what they are doing.’

‘You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right – that’s the only thing that makes you right. And if your facts and reasoning are right, you don’t have to worry about anybody else.’

‘It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.’

‘The first rule is not to lose. The second rule is not to forget the first rule.’

‘Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.’

‘We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.’

‘Why not invest your assets in the companies you really like? As Mae West said, ‘Too much of a good thing can be wonderful.’

‘Our favorite holding period is forever.’

‘Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.’

‘The critical investment factor is determining the intrinsic value of a business and paying a fair or bargain price.’

‘Risk can be greatly reduced by concentrating on only a few holdings.’

‘It is not necessary to do extraordinary things to get extraordinary results.’

‘An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.’

‘In the business world, the rearview mirror is always clearer than the windshield.’

‘A public-opinion poll is no substitute for thought.’

‘It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.’

‘An investor needs to do very few things right as long as he or she avoids big mistakes.’

‘The investor of today does not profit from yesterday’s growth.’

‘You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing.’

‘I do not like debt and do not like to invest in companies that have too much debt, particularly long-term debt. With long-term debt, increases in interest rates can drastically affect company profits and make future cash flows less predictable.’

‘I always knew I was going to be rich. I don’t think I ever doubted it for a minute.’

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