Warren Buffett Principles , will it make rich ?
Before investing his principles , lets understand that his principles does not work for common investors.
- Even he had lost billion of dollars , that is less than 1% of his portfolio , so not a bigdeal for him. He lost dexter shoes stock 3.5 billion . In IBM stock he lost 1.5 Billion. If you lose 50K , that will be the majority of the loss in your portfolio.
- He does not got rich by investing his money, he risked people money and invested it. Remember you are investing your hard earned money.
- If his companies buys stock , he always buys is preferred shares for large purchases. It means he buys way below the market price. In 2008 , he bought Goldman Sachs for 5 billion , with 10% discount rate from market and agreed 10% additional dividend . He already made several millions of profit on day one with this deal. The common investors don’t get this benefit , they buy at market price .
- Every investor strive to be value investors , not many succeed or able to mirror the success.
- Greedy when other are Fearful, any investors would say that. In 2008 recession, If you lost 60% of your portfolio, your home price crashed 50% , your job is at risk -you will be fearful ,you can’t be greedy at that time and investing . No one knows what is the bottom of the stock , in 2008 many claimed as value investors and bought Lehman brothers – all they got back is 100% loss.