Personal Finance Series #12: Advice From 'The Oracle of Omaha'

Hi there,

I’ve had such a great reception to my earlier article on investment advice from Warren Buffett. So guess what? Here is part Two, and I hope we can all benefit from the wisdom of the ‘Oracle of Omaha’.

1. What is the ideal holding period for a great investment? Answer is Forever! Warren Buffett famously said, “If you aren’t thinking about owning a stock for ten years, then don’t even think about holding it for ten minutes”. If you have done your research and have a strong grasp of the business fundamentals of an investment, whether it be a company or a cryptocurrency, then trust yourself and invest with conviction for the long-term. This leads to the next advice…

2. Invest in what you understand. If you are investing in something purely based on what someone else said, you will not have the fortitude to stay the course when the inevitable ups and downs occur during the investment period. If the fundamentals are strong, then time is on your side. According to Warren Buffett, “time is the friend of the wonderful business, the enemy of the mediocre”. So do not panic over the normal market gyrations if you have belief in your investment. This also means that you should be selective in your investments because we do not have enough time in the day to research all types of companies and cyrptocurrencies…

3. Investing is supposed to be boring. Yep, really, according to Mr. Buffett. “Beware the investment activity that produces applause; the great moves are usually greeted with yawns.” From personal experience, this is absolutely true. I used to actively trade stocks, following the latest ‘news’ and chart trends. But this did not work very well for me and should have listened to Buffett who said, “the stock market is designed to transfer money from the active to the patient.” If we are in it for the thrill, we might be better off going to an amusement park, and leave the ‘thrill’ behind. Investing is a serious (and sometimes boring) business.

4. There is a difference between price and value. Warren Buffett said it best, “price is what you pay, value is what you get.” If you can understand this, you would be well ahead of the curve. Investors’ emotions can swing the price of a cryptocurrency, but the underlying fundamentals do not change that quickly. Do not buy a company stock just because it is trading at its 52 week low; it may feel like a bargain, but there is a reason why it’s trading that way. Key is to find high-quality companies/projects trading at reasonable prices, and then hold on to it!

Hope you enjoyed this article. Which quotes did you like the most from Warren Buffett? Please reply and let’s share our thoughts together. Thanks for reading!

If you liked this article, check out my previous posts on personal finance.

Personal Finance Series #11: Tips for Newlyweds

Personal Finance Series #10: Financial Habits of the Wealthy

Personal Finance Series #9: Finance Tips for Millenials

Personal Finance Series #8: How to Manage Your Debt

Personal Finance Series #7: Stop Wasting Your Money!

About the Author : I am a cryptocurrency enthusiast and a U.S. Certified Public Accountant with over 15 years of experience in accounting, taxation, and finance.

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