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After a strong stock market performance in 2023, it may be difficult to achieve good returns in the new year. For those looking to set new goals and adjust their portfolio, check out these investing tips from none other than Warren Buffett. Buffett, who studied under Benjamin Graham, known as the father of value investing at Columbia University, advocates establishing long-term investment horizons and acquiring companies with sustainable profitability. But for the average investor, Buffett always recommends buying a low-cost index fund that tracks the S&P 500. “Overall, American business has performed exceptionally well over the long term and will continue to do so,” Buffett wrote in his 2013 annual letter. . “The goal of a non-professional should not be to pick winners, neither he nor his “backers” can do that, but rather to own a variety of businesses that should be collectively successful. The cost of the S&P 500 index fund will accomplish this goal. A decade ago, the Oracle of Omaha revealed that Buffett’s will directed him to invest 10% of his cash in short-term Treasuries and 90% in low-cost S&P 500 index funds. (He hinted at Vanguard’s investment). Professional money managers and advisors on Wall Street have an incentive to recommend a variety of securities, and the fact is that they believe they rarely beat the market. “You just have to realize that you’re in an industry where you get paid to be a good salesperson,” Buffett said at Berkshire’s 2020 annual meeting. “If you look at the nuts and bolts of investment management, you actually make a lot more money selling than you do managing.” Mathematics can be dangerous for investors trying to pick winning stocks Buffett believes that you don’t need to be great at technical analysis or mathematical calculations to find good opportunities. “If you need to use a computer or a calculator to do calculations, don’t buy one,” Buffett said at the 2009 annual meeting. “It should be so obvious that you don’t have to carry it out to one-tenth of a percent or one-hundredth of a percent. It should scream at you.” It is regarded as something that is being done. People buy something when they know the intrinsic value of the asset, or the current discounted value of the cash the company will generate in the future. The 93-year-old investment icon believes that most market behavior is primarily driven by emotions such as fear and greed, and that math and high IQ are not always helpful. “Higher mathematics may actually be dangerous and will lead you down paths that are better left untrodden,” Buffett said. “We don’t sit around with spreadsheets and do things like that. We look at what’s clearly better than others and understand that. And then we take action. For those who have made investments that failed in the past, Buffett believes the best option is to move on. “Indeed, a very important principle in investing is that you don’t have to try to recover the way you lost it. And in fact, that’s usually a mistake. You try to recover the way you lost it,” Buffett said in 1995. Mr. Buffett talked about his first bitter bet on the old U-Air in 1989. Berkshire invested $358 million in preferred stock in U-Air. A few years later, Mr. Buffett told shareholders: “It could have been a lot worse, but it was a mistake,” Buffett said at the 1995 annual meeting. Buffett, a man who stays away from declining companies, used to buy very cheap companies that failed, which he called “cigar butts” when he was just starting out. Berkshire’s CEO likened buying distressed companies at deep discounts to picking up discarded cigar butts. “Even if the stump is ugly and soggy, the puff will be free. But once you’ve enjoyed that momentary pleasure, you can’t expect anything more,” he said. Later, under the influence of his longtime partner, the late Charlie Munger, Buffett came to understand that buying “cigar butt” companies was not profitable in the long run. In 2012, Buffett said, “It pays to stay away from companies that are in decline.” “If you really think a company is in decline, you should probably avoid it in most cases. …The real money is made by growing.” That’s what you should focus on. ” Buffett is now known for finding great companies to buy at fair prices. He transformed Berkshire Hathaway from a small, failing textile mill into a nearly $800 billion multifaceted behemoth.
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