Buffett, The Six Way To Invest In The Stock Market

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First, make money instead of losing money.

This is a quote often quoted by Buffett: "the first rule of investment is not to lose money; the second rule is never to forget the first.

"Because if you invest one dollar and lose 50 cents, you only have half of your money, unless one hundred percent.

Buffett's greatest achievement was that he went through 3 bear markets between 1965 and 2006, while his Berkhire Hathaway Inc only appeared in a year (2001).

Two, don't be fooled by profits.

Buffett prefers to use the return on equity to measure the profitability of an enterprise.

The rate of return on equity is divided by the company's net income divided into shareholders' equity. It measures the percentage of company's profits in shareholders' capital and can reflect the company's profit growth more effectively.

According to his value investment principle, the company's ROC should be no less than 15%.

Of the shares of listed companies held by Buffett, Coca-Cola has a return on equity of more than 30% and American Express 37%.

Three, look at the future.

People call Buffett "the prophet of Omaha" because he always consciously identifies whether the company has a good future and whether it can continue to succeed in the next 25 years.

Buffett often said that he could not look at the rearview mirror through the window.

One way for Forecast Ltd to develop in the future is to calculate the expected cash income of the company in the future.

This is Buffett's way of assessing the intrinsic value of the company.

Then he will look for companies that seriously deviate from this value and sell at a low price.

Four, adhere to the investment can create a huge "barrier" to competitors.

Predicting future risks is inevitable, so Buffett prefers companies that can create huge "economic barriers" to competitors.

This does not necessarily mean that the company that he invests must monopolize a product or a market.

For example, Coca Cola Co has never been short of competitors.

But Buffett always looks for companies that have long-term competitive advantages and make him more secure in forecasting company value.

In the late 1990s, one reason why Buffett was reluctant to invest in technology stocks was that he could not see which company had enough long-term competitive advantage.

Five, bet big bet.

Most value investors are conservative in nature.

But Buffett is not.

He invested $62 billion in the stock market in 45 stocks.

His investment strategy is even more radical than this figure.

In his portfolio, the first 10 stocks accounted for 90% of the total investment.

Justin, a senior stock analyst at Morning Star Inc, said: "this is consistent with Buffett's investment philosophy." Fuller said.

Don't be hesitant. Why not invest your money in your favorite investment target?

Six, be patient and wait.

If you change hands in the stock market, you may miss the opportunity.

Buffett's principle is: do not change hands frequently until there are good investment targets.

Buffett Ever quoted the legendary baseball batter, Ted Williams, as saying: "to be a good batter, you must have good balls to play.

If he doesn't have a good investment target, he prefers to hold cash.

According to Morning Star Inc statistics, cash accounts for more than 18% of Berkhire Hathaway Inc's investment mix, while most fund companies only have 4% of their cash.