Deciding to invest is a big decision and one that should not be taken lightly. Once you’ve taken that step, though, you should make it your personal goal to be a great investor. The best way to get there, as with most things, is to have a role model. We think Warren Buffett is a great role model. Here are five key words that sum up his approach to investment that you can work on emulating to become also a great investor.
- Discipline: the number one point that we emphasise on this platform is strategy before investment, knowing how to set the criteria for success and failure. Warren Buffett does exactly that. He has this done to such a fine art that he knows what he is willing to pay for any stock and will never invest more than that. It takes discipline to turn down a good deal and stick to your assessments.
- Winners: when you invest in an industry or segment, pick the best – the one that people know and will stand the test of time. This is where established brands are attractive. In Warren Buffett’s case, Coca-Cola is a great example.
- Calculation: investment is not something you do once a month or a week; it is something that requires constant attention. The criteria you set before investing should make calculated investments easier. This means knowing when to sell to get your money working for you better.
- autonomous: Warren Buffett moved back to Omaha not simply because it was his home, but to avoid the rumour mill of Wall Street. He knew that doing his own research and coming to his own conclusions was the only way to move forward. Stick with the crowd and you’ll be only average at best.
- Upfront: not every investment is a success even for the world’s most famous investor. Admitting your mistakes, understanding them and moving on is a quality that separates good investors from great investors. Few are willing to take responsibility for their failures, but those that do rarely repeat those mistakes and win admiration in the process. Be upfront about your failures and learn from them.
The difference between a good investor and a great investor is not always easy to see, but there is a definite difference. Although many good investors have the five characteristics above some of the time, the great investors embody them all, all the time.