Have you ever watched a time traveler movie and wished you could go back in time and share some hard-earned investing wisdom and knowledge with your younger self? You could, of course, tell your 2004 self to load up on Apple shares, but that’s not really the point.
Wouldn’t it be great if you could give yourself some general advice on how to live life successfully?
You would whisper in your younger ears an admonition to look at the big picture, focus on long-term results and forget the short-term noise that permeates everyday society.
You could tell your think-you-know-it-all past self that taking shortcuts doesn’t work and trying to get rich quickly is a fool’s game.
That would be fantastic!
Unfortunately you can’t travel back in time because time machines don’t exist.
However you can listen to investing advice from someone who has the proven experience you don’t yet possess. Someone like Warren Buffett who made Billions in the stock market.
If you think about it, it’s almost like having your smarter, more experienced future-self come back in time and give you sound advice based on his or her hard-earned investing wisdom and knowledge.
And you know what?
The investment advice Buffett gives you today is most likely far superior to any advice your future-self could give you – because Buffett obviously knows about investing while it’s almost certain your future self won’t be in Buffett’s league.
So if you want to invest successfully and don’t have a time machine, the next best thing is to listen to Buffett — perhaps it’s even better than a time machine (okay, perhaps not).
With that in mind, here are four things that Buffett would tell you to do to save you from the pain and loss most people have to experience in order to learn the hard way.
Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.”
In other words, don’t try to time the market and don’t pay outrageous fees to mutual fund companies and banks. But if you feel the need for greed, at least don’t follow the crowd over the cliff.
It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
If you purchase great companies you don’t have to get them at bargain-basement prices in order to do well. Great companies have great earnings and will eventually reward you with great returns.
Long ago, Ben Graham taught me that ‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
Always look at the value you’re getting, not how little you can pay. A $2 screwdriver that breaks in the middle of an important job is no bargain even if it was very inexpensive. Whereas a $50 screwdriver on sale for $20 that always gets the job done is a terrific value even at 10 times the price of the cheap one.
Time is the friend of the wonderful business, the enemy of the mediocre.”
When you invest in terrific businesses, you simply sit back and reel in the rewards as your investments compound over decades. However when you invest in less-than-stellar businesses, you need to watch them closely in order to get out before they collapses over time. Always purchase quality even if you have to wait longer to do it.
Good advice indeed.