Warren Buffet's 7 best pieces of investing advice

Hello,

I am Juan-Diego Currea from Rockland Financial and i just wanted to take a couple of minutes to share with you, which i do on occasion. When I share you will notice it isn't always about real estate but I do try and share stuff that I think is useful for everyone, ranging anywhere from mortgages, to credit, to investing as evidenced here or something cool I may have done (hope those don't bore you). Anyhow enough about me, on to the sharing I spoke of.

Most of you know who Warren Buffett is and if you don't, you should. Google him, he is in this humble Mortgage Broker's opinion the most successful and intelligent investor of an era. When Warren offers investing advice, everyone listens. 

1. The worst investment you can make over time: cash.
Keep enough cash around so you feel comfortable and don't worry about sleeping at night. But it's not because he likes cash as an investment. Cash is a bad investment over time. But you always want to have enough so that nobody else can determine your future essentially.

2. Invest in a broad-based index fund that tracks the S&P 500.
If you are a professional and have confidence, then tread softly and with care. For everyone else,  the idea is to participate in total diversification. The economy will do fine over time. Make sure you don’t buy at the wrong price or the wrong time. That’s what most people should do, buy a cheap index fund, and slowly dollar cost average into it.
  
3. Invest in yourself.
“The best investment you can make is in your own abilities. Anything you can do to develop your own abilities or business is likely to be more productive.”Believe in yourself and do whatever you can to expand your knowledge, learn and ask questions. The more we know the better decisions we can make

4. If you’re determined to pick stocks, don’t buy into a business you don’t understand.
[Individual investors] ought to think about what he or she understands. Say they you are going to put your whole family's net worth in a single business. Would that be a business they would consider? Or would they say, "Gee, I don't know enough about that business to go into it?" If so, they should go on to something else.... Keep in mind that not even Warren and his people fully understand and I don't think that causes them to stay up at night. It just means you go on to the next one, and that's what the individual investor should do.

5. Focus on the competition as well.
[Buying stock in a company is] buying a piece of a business. If they were going to buy into a local service station or convenience store, what would they think about? They or you would think about the competition, the competitive position both of the industry and the specific location, the person they have running it, a niche or lack of, is it up and coming, is it established as always due diligence and research don't just jump into anything blindly.


6. Invest for the long haul.
“If you aren’t willing to own a stock for 10 years, don’t even think about owning it for ten minutes” I have heard this since I was a kid, I didn't realize this was one of the guys that preached it. It's so true, almost every investment chart or graph shows ups and downs but over the long hall it's almost always at the end of the day, steadily going up... if you have it long enough.


7. The hardest part about investing: trusting yourself.

When I first started with Rockland Financial it was almost a leap of faith, but here i am 20 years later and still going strong. You need to divorce your mind from the crowd. The herd mentality causes all these IQ's to become paralyzed. Smart doesn't always equal rational. To be a successful investor you must divorce yourself from the fears and greed of the people around you, although Warren thinks it is almost impossible. 

Most of this is right from Warren's mouth, some I paraphrased. He is someone I admire and well, I thought I would share some of what I read recently, although I am sure these are old ideas they still hold true.

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