Buffett's teachings on investment sound deceptively simple. But there is no deception. They truly are simple. Do not allow investment advisers to persuade you that investment is a complex matter needing great expertise. Instead, learn how to assess the fundamental and financial values of a business yourself, and invest according to your convictions.
Ignoring convention
To invest well you must be prepared to go against the prevailing wisdom and ignore conventional investment guidelines. So:
* Do not put your eggs in many baskets.
* Do not place small amounts in each basket.
* Do not switch holdings frequently.
* Do not avoid holding cash.
* Do not rely on outside analysis.
* Do not often, act on a hunch.
* Do not follow the crowd.
* Do not watch the market intently.
* Have fixed investment principles.
Contrarian principles
The conventional approach, Buffett believes, makes it difficult to beat the market and easy to do worse. Increase your chances of finding winning stocks by adhering to Buffett's contrarian principles.
Invest in winning Stocks
* Invest in no more than five or 10 shares.
* Only buy if you are prepared to put at least 10 per cent of your net worth into the stock.
* Expect to hold your investments for ever.
* Only invest your cash when you can find something worth buying.
* Do your own research - and do it thoroughly.
* Always have sound, well-argued, well-researched reasons for your investments.
* Ignore the market, the crowd, and its fashions.
Links to three further parts of the Warren Buffet Investing in Stocks Masterclass now follow:
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