"Rule No. 1: Never Lose Money. Rule No. 2: Never Forget Rule No. 1."
Buffett personally lostabout US$23 billion in the financial crisis of 2008, and his company, Berkshire Hathaway, lost its revered AAA ratings. So how can he tell us to never lose money?
He's referring to the mindset of asensible investor. Don't be frivolous. Don't gamble. Don't go into an investment with a cavalier attitude that it's OK to lose. Be informed. Do your homework. Buffett invests only in companies hethoroughly researches and understands. He doesn't go into an investment prepared to lose, and neither should you.
Buffett believes the most important quality for an investor is temperament, notintellect. A successful investor doesn't focus on being with or against the crowd.
The stock market will swing up and down. But in good times and bad, Buffett stays focused on his goals. So should we."If The Business Does Well, The Stock Eventually Follows."
"The Intelligent Investor" by Benjamin Graham convinced Buffett that investing in a stock equates to owning a piece of the business. Sowhen he searches for a stock to invest in, Buffett seeks out businesses that exhibit favorable long-term prospects. Does the company have a consistent operating history? Does it have a dominant businessfranchise? Is the business generating high and sustainable profit margins? If the company's share price is trading below expectations for its future growth, then it's a stock Buffett may want to own.Buffett never buys anything unless he can write down his reasons why he'll pay a specific price per share for a particular company. Do you do the same?
"It's Far Better To Buy A Wonderful...