Warren Buffett Investments: the Strategies
Published: July 30th, 2020 by Andrew
Anyone interested in the Stock Market or Financial Investment has probably heard of Warren Buffett: The Oracle of Omaha.
He holds the title of greatest investor of all time and, unlike many billionaires, is willing to teach us how to invest.
In this guide you will find Warren Buffett’s strategies, the most important Stocks he invests in and his valuable advices. But first of all we start with the choice of a safe and reliable Broker to invest, an intermediary like eToro, which allows you to trade on the markets without paying commissions: the ideal way to start.
Warren Buffett: The Oracle of Omaha
Warren Buffett was born in Omaha, a town in the heart of the United States of America, in 1930. From a very young age he was very attracted to the business world and at just 11 years old he bought his first stocks!
After high school, Buffet began his education at the University of Pennsylvania’s Wharton School before returning to the University of Nebraska, where he earned a business economics degree.
He later went to Columbia Business School where he graduated in economics. In this university he was fortunate to learn from his mentor Ben Graham, a successful teacher and trader.
Warren Buffett began his career as an investment officer in the early 1950s and formed the Buffett Partnership in 1956. In those years he earned the nickname of Omaha’s oracle, for his insight and his economic forecasts.
Less than 10 years later, in 1965, he was in control of Berkshire Hathaway, his famous investment fund.
Recently Warren Buffett has mainly dealt with philanthropy together with his friend Bill Gates.
Investing like Warren Buffett
It is certainly not easy to invest like Warren Buffett but it is possible to follow his mental approach, which aims to generate profits and reduce losses.
Obvious, right? This is a rule followed by almost all famous traders, yet it is not easy to put into practice.
- First of all, it is necessary to list the reasons for buying a security, it should not be a purchase dictated by enthusiasm or fear but by a cold evaluation.
- Better to avoid unknown sectors, they could reserve surprises that are difficult to predict.
- Never invest following someone’s advice, some “trading guru”, his motivations and evaluations are different from yours and even if they are good advice, they will often be applied badly.
- Information is fundamental, you need to choose an asset and study it thoroughly before investing money.
- You must have the money to invest, do not commit all the capital at your disposal. To make profitable investments you need money, always keep some of it aside.
- After investing, follow the monthly trend of a security, not the daily one.
- Sell at the right time. When a stock no longer meets the reasons you bought it, you must sell.
Warren Buffett doesn’t pay too much attention to stock prices and doesn’t particularly care what the media says. What he wants to know is if the business works.
Is it an underrated title?
Is the company making money?
Will it make money in the future?
If the answer is yes, then Buffett buys. If five years later one of these factors changes: It sells. Simple isn’t it?
Warren Buffett: Which platforms to use to invest?
One of the characteristics of Warren Buffett’s approach is to have the money you need to invest, but what if you don’t have it?
Obviously his is a very well capitalized investor approach, but you can start investing even with very modest capital, let’s talk about a few hundred Euros, just use the trading platforms that offer CFDs.
CFDs (contracts for difference) allow you to invest upwards or downwards on any security, without paying commissions, and this makes them the most convenient and effective method of buying (and selling) securities directly online.
These platforms are made available by financial intermediaries called brokers and choosing a good intermediary can make a difference in investments, here are some tips.
Invest with CFD Brokers
To choose a CFD Broker you must keep in mind the essential criteria, here are what they are:
- A License (CONSOB, CySEC or equivalent) to guarantee the security and reliability of the Broker
- The possibility of investing both upwards and downwards (Short Selling)
- A minimum deposit of no more than 250 euros
- Offer commission free trading
To put Omaha Oracles’ advice and strategies into practice, the most convenient CFD Brokers are: eToro and ForexTB, let’s analyze them in detail.
eToro: Simplicity and Automated Trading
eToro is the Broker with the largest number of active users in the world, a guarantee in the world of online trading.
Authorized by CONSOB and CySEC license, it has obtained numerous other licenses for the countries in which it operates. Its trading platform is very simple and intuitive but offers all the tools necessary for the technical analysis of the securities.
To invest, choose a security (stocks, index, commodities, cryptocurrencies, etc.) on the platform, click on the “Invest” button, decide how much to bet on the operation and whether to buy or sell short.
Those who do not yet have much experience and want to learn from the best traders in the world (who invest in eToro) can do so with an automatic and free system patented by eToro: Copy Trading.
This feature allows you to copy the market operations of the chosen traders, in a totally automatic way.
To use Copy Trading it is sufficient:
- Register on eToro with the link at the end of the review
- In the “People” section, choose the traders to copy, based on their earnings
- With a click, the Copytrading will copy the operations of the chosen traders to your account
- So you will get the same results as these trading experts (in proportion to the investment), without doing anything
Here’s how much some of these traders earn (which you can copy):
Click here and choose which traders to copy
Both “automatic trading” and “manual trading” can also be tested on a free Demo account, without taking risks, with virtual money.Click here to sign up for free
To learn more, read our full eToro review.
ForexTB: Trading Course and Free Trading Signals
ForexTB is a broker focused on training and operational support for its users.
Authorized in Europe by CySEC, it offers two trading platforms to satisfy every investor:
- The Web platform, very simple and usable by any browser and device without downloading any software
- Metatrader 4, the most used trading software in the world, is very technical and full of customizable tools and indicators
To become a professional trader, following in the footsteps of Warren Buffett, you must first learn the rules behind trading and ForexTB has created a course just for this.
It is an ebook that explains the functioning of the markets and is considered among the best courses ever. You can download this course for free with the official link below:Click here and download the trading course for free
ForexTB support is not only theoretical but also practical. Until you have the intuition of Warren Buffett, you can operate with the indications of a very renowned analysis center: the Trading Central.
This center sends, via ForexTB, free Trading Signals to the investors of this Broker. They are very reliable indications and have a success rate of 70%, here is the link to receive them:To receive free trading signals click here
Read our ForexTB review for more information.
Warren Buffett: Investment Strategies
Warren Buffett has a long-term investment approach, passed down from the school of his mentor Benjamin Graham.
Buffett is considered one of the biggest investors of all time and his main skills are consistency and patience.
The investment strategies used by Warren Buffett are very clear and can be used by those who want to learn the basics of trading, and also by those who want to improve their investment decisions.
Stick to Investment Strategies
Don’t let fear and greed change your investment criteria. Avoid being overwhelmed by external forces that influence decisions.
Never sell panicked and afraid. Don’t change the rules of your strategy, Warren Buffett has always followed his rules and it seems that this has brought him good right?
- To make money with trading you need a lot of discipline.
Invest in what you understand
The Omaha oracle only invests in shares of companies he understands. His investments always have a long-term vision and at the base there is a question:
- In 5 or 10 years, is it expected that this company will still be successful?
That’s why its exposure in “technology assets” and “startups” is always very small.
Invest as if you were buying the entire company
The best way to understand if you are making a potentially profitable investment is to buy as if you were buying the whole company, not just a share package.
In other words, if you had the money, would you buy the whole company at that price? Or would you choose a more advantageous competitor?
Find quality companies
Buffet believes in investments in quality companies and is linked to the previous point.
In addition to investing as if you were buying the entire company, you have to choose exceptional companies.
Better to pay a fair price for an exceptional company rather than a low price for a mediocre company.
Choose stocks with competitive advantages
Companies with pricing power, strategic resources, established brands or other competitive advantages have the ability to outperform in good times and even in difficult times.
A long-term investment strategy requires investments in companies that are able to withstand both positive and negative economic periods.
Patience and compound interest
Warren Buffett believes in long-term value investments because he understands the power of compound interest.
Companies with sustainable profits can grow for many years, as shown by the giants that Buffett has always invested with his Berkshire Hathaway.
The best strategy that can be learned from the Omaha Oracle aims to reinvest part of the profits in the company itself, for years, is how capital is grown.
Warren Buffet Stocks
- Apple (NASDAQ: AAPL)
- Amazon (NASDAQ: AMZN)
- Bank of America (NYSE: BAC)
- Wells Fargo (NYSE: WFC)
- Coca-Cola (NYSE: KO)
- American Express (NYSE: AXP)
- Kraft Heinz (NASDAQ: KHC)
- US Bancorp (NYSE: USB)
- JPMorgan Chase (NYSE: JPM)
- Moody’s (NYSE: MCO)
As you can see, they are all large and historic companies. This is another feature of Warren Buffett, he rarely invests in medium-small companies, prefers the giants of the market, and has he been right right so far?
Warren Buffett Invests in Value
To understand what moves Warren Buffett’s choices, we want to give a real example:
In early 2007, Apple stock was quoted $ 13 per share. The iPhone was presented that year and a possible success could be glimpsed, but it was not easy.
After a few years, however, the value of this company has become evident, that’s what Warren Buffett is investing in.
At the end of 2008, the market was falling and Apple also fell from $ 25 to $ 11 per share. However, the reasons for buying Apple had not changed, so it was not the time to sell but rather to invest further.
If you want to know the current Apple listing you can use this link: Apple Listing
Warren Buffett is not easy to imitate but in this guide we have outlined what moves his choices and the discipline he puts in place to respect his own rules.
The investment strategies used by the Omaha Oracle are not complicated, but the trader’s psychology is essential if you decide to follow them to become a successful investor.
If you have little trading experience, the first step is to register on one of the Demo accounts offered by the CFD Brokers that we have presented. They are unlimited accounts that use virtual money, so you can test your strategies without taking any risks. Here are the official links to access:
- Access the eToro Demo account for free by clicking here
- Register for free on ForexTB and access the Demo account from this link
Also called the Omaha Oracle, it is considered the largest investor in the world.
Warren Buffett invests in Stocks of large companies, for more details read our guide.
Warren Buffett’s strategies are based on the value of companies. Find out which ones are in our guide.
eToro is the most suitable online broker to put Warren Buffett’s strategies into practice safely and without paying commissions.