You Don’t Have to be a Genius to Invest like One : Investment Strategy from Warren Buffett
YOUNG MONEY Staff
25 January 2011
According to Mark Riddix, investing requires patience. Rather than judging your portfolio's performance over the short-term, it is best to have a long-term outlook, assessing the performance of your investments on a five year basis. Sometimes it can take two or three years for an investment strategy to pay off - and often times, even longer.
When Buffett invested $5 billion in Goldman Sachs during the recession in 2008, many analysts said that the investment guru had misstepped by taking such a large stake in a bank that was battered by the financial crisis and whose stock had slipped to $115 per share. However, Buffett reaped millions from the deal as the bank has surged back, with a closing stock price yesterday of $165 per share.
Moreover, Buffett is often a contrarian investor, going against popular opinion about the fate of one company or industry. Buffett's investments, including stakes in Costco, Exxon Mobil and Comcast, have been viewed with ire by analysts in the past, but they have brought highly profitable returns on investment to his company, Berkshire Hathaway.
Lastly, it's best to keep things simple when investing in stocks. Stock brokers and investment analysts increasingly utilize complex mathematical models to pick "hot" stocks, but Buffett mostly eschews that method, investing in companies with business models that are easily understood. Companies like Target and Apple make their money in straightforward ways, while other companies can obfuscate their models, reaching that volted "hot stock" status without ever producing real results.
If you want a $47 billion fortune and all the perks that come with it, you should probably set your sights a little lower - or set a long-term outlook and be on the lookout for investing opportunities at any given moment.
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