Warren Buffett: "You have to do this."

 

Warren Buffett: "You have to do this."

Council One:
Examine accounting. Buffet insists on it, comparing the ability to understand accounting with language knowledge.

"You should know what you're reading," he said with regard to accounting. "Some people have more ability than others, but this is something I have studied on my own," the billionaire added. After learning basic accounting, he also attended courses. "But I learned it myself, in many ways. So, you have to do it."

Indeed, accounting is the language of business. Understanding general principles will allow analyzing and using information about assets, liabilities, capital, as well as financial results of companies. Ability to read financial statements will help to assess the current state and economic potential of the company, its strengths and weaknesses.

Tip Two:
Buffet encourages investors to see the main thing when buying shares, namely, good business. According to him, the strategic vision of the investor is that "you buy part of the business.

Berkshire Hathaway's executive director emphasizes that an investor should not buy something that "fluctuates on the chart, or has a resistance zone, or 200-day moving averages, or that you buy putts or cola or something like that. Of course, technical analysis and studying how the stock price moves in different time periods is important, but the point is different.

"If you buy a business wisely, you will make money," Buffett is sure. As an example, he points to Coca-Cola, a company in which he himself has held shares for over 30 years, while remaining a passionate regular consumer of products. Back in 1988 in his annual letter to Berkshire Hathaway Buffet said that he expects to keep Coca-Cola "for a long time.

Buying a good business, such as Coca-Cola, it is important to see how the company interacts with customers, he said. "You just watch the business, you see how it grows and you're happy."

Faithful to his investment philosophy, he characterizes investing as owning part of an "outstanding" business with "outstanding" management.

Describing the strategy of Berkshire Hathaway, Warren Buffett stresses: "We are the opposite of those who are in a hurry to sell by registering balance sheet profits when companies have worked well. But we are the ones who cling to a business that is disappointing".

Peter Lynch aptly calls this behavior "cutting flowers and watering weeds".

Berkshire Hathaway's CEO stresses that "the right attitude to invest is far more important than any technical skill". A convincing example of the application of skills is the diversified portfolio of the largest companies in the world, which is managed and owned by Warren Buffet.