During his annual shareholders meeting in Omaha, Warren Buffett shared some life and investing advice from his decades on earth and in the markets.
At Buffett Online School, we also believe in investing in great companies you understand and utilizing Free Investing Resources to help you start your financial freedom and investment journey is one of the best ways to learn.
Key Takeaways from Berkshire Hathaway AGM
1. Understand consumer behavior over the product
Knowledge is often seen as a prerequisite in investing.
What’s more important than knowing is having the right mindset.
It’s why most people panic when they see the stock price of their investment holdings fall.
It shows why psychology plays such a hugely important role in investing.
Warren Buffett had this to say about Apple:
“I don’t understand the phone at all; but I do understand consumer behavior.”
And yet, Apple is Berkshire’s largest holding.
Human psychology plays a huge role in investing success, even more than the product itself.
Apple may not have the best product. Yet, at every new iPhone release, raving fans queue to get the latest iPhone.
2. Sometimes portfolio diversification is ‘deworsification’
Focus on quality over quantity.
Before adding the next hot stock to your portfolio, consider whether it aligns with your investment objectives and risk appetite.
“Diversification has become a standard investing rule to help reduce risk and create a more resilient portfolio, but there is such a thing as overdoing it that investing educators don’t give enough attention to”
Know the edge of your ability
Understanding your abilities and limitations as an investor is crucial for making informed decisions.
You cannot possibly be an expert in every industry or asset class.
Instead, focus on areas where you have the most knowledge and experience.
Where does your circle of competence lie?
Put your money in only your best ideas
We all have finite resources and capital.
Rather than spreading them out in mediocre investments, it helps only to invest our capital in our best ideas.
Focusing on a smaller number of high-quality investments helps us maximize the impact of our best ideas on our overall portfolio performance.
3. Die without regrets
“You should write your obituary and then try to figure out how to live up to it”
Do some introspection.
Identify the values, accomplishments, and relationships that truly matter to you.
Keep those that matter, and cut those that don’t.
What is the legacy you want to leave behind when you die?
Reverse engineer to make more intentional choices that contribute to a meaningful existence.
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At the Buffett Online School, we believe in learning the right investing mindset and system, cultivating emotional detachment, and growing our wealth safely and substantially in the long run.
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Remember, you can cultivate the right investing mindset and unlock your potential to build wealth through intelligent investing. Together, we can create a network of educated investors who make informed decisions and contribute to their financial well-being!