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10 Investing Teachings Applied By Warren Buffet & Benjamin Graham

what are the teachings of investing by warren buffet and benjamin graham


Investing Teachings By Warren Buffet And Benjamin Graham

Nobody can time the market. Greed and Envy never pays well in markets. so just be prepared to wait for the best!

Term 'Investing' gives the immense sensation and feel of becoming rich but, is it that simple???

Legendary investors like Warren Buffet and Benjamin Graham used some teachings to achieve great success which you too can apply.

Here are the 10 Commandments:

Law Of Farm

The stock market is a device for transferring money from the impatient to the patient. - Warren Buffet

If you’re confident about your choice, just give it time.

Equity investments always take time to show growth. Of course, there’s a chance that the stocks or funds you invest in fail to deliver expected results, but often enough, stocks take time to appreciate in value. Acting in haste to remove a stock from your portfolio may turn out to be a reckless move that you repent at leisure.

Volatility Cannot Be Avoided

You should not expect a ride in the stock market to be uneventful. The stock market has always been a volatile space, and this gives fear in the hearts of many investors.

But it is precisely this volatility that could be exploited for gain if you follow some time-tested investment principles. You should invest in bearish times because they typically bounce back when the economic climate improves.

The ‘Best’ Time To Invest?

The best time to plant a tree was 20 years ago. The second best time is now.

There is no so called perfect time to start investment in market. There are opportunities everywhere if you’re willing to look. You’ll always find some undervalued stocks even in a bull market. And in a bear market, when inexperienced investors generally avoid buying stocks out of a fear that prices will plummet even lower, you can find great stocks at bargain prices. Take care not to get greedy. You should avoid buying overpriced stocks in the unfounded hope that their prices will go up further.

Guessing Tops and Bottoms Is A Waste Of Time

Every investor dreams of buying at the bottom and selling at the top. But this is impossible to achieve. A more realistic and achievable aim is to invest in fundamentally good stocks when their prices are low. Studies prove that staying invested over a stock market cycle and eliminating unnecessary punting is a recipe for a happy investor. It also makes you wealthier in the long run. You are better off studying investment strategy and finding new companies to invest in rather than trying to time the market.

Never Forget To Take A Look At Mutual Funds

It is imossible to time the market. Nobody can do it! Picking the right stocks for investment is really very hard work. This becomes more difficult when you aren’t good with numbers.

This is where equity mutual funds come in. These funds pool capital from multiple investors and invest on your behalf. They’re managed by highly qualified fund managers, offer a diversified portfolio and deliver great returns at a reasonable cost.
SIPs: The ‘Auto-Pilot’ of Investing

An ideal way to invest in mutual funds is via Systematic Investment Plans (SIPs). A fixed amount is invested in a mutual fund of your choice, on a predetermined date every month. SIPs help you to become a disciplined investor, and reduce some of the stress associated with timing the market.

Stock Valuations Vs. Stock Values

When the market goes up dramatically, many investors end up selling their holdings fearing a market correction. Never do such mistake! These investors often miss out on the opportunity to generate even more gains. Remember to stay invested in a stock as long as the company earnings and its fundamental valuation support the stock price. You should sell your stock only when you feel that its price have exceeded its value.

Look Elsewhere For Excitement?

Fluctuations in stock prices are exciting for some investors, horrible for others. Your investment decisions shouldn’t rely on these ups and downs. Stick with basic investment strategies. A quick fluctuation in the wrong direction could end up making you exit at a loss.

Envy  - The Enemy Of Investing

Envy must not influence your investment decisions. Avoid accepting the strategies of other investors around you in the hope of making a instant money. Their goals or investment horizons may be different from yours. Worse  -  they may have timed their investments well, and it may be a bad idea to do what they did now. Think hard before taking  your investment decisions and keep your own goals in mind while starting your investments.

First Emergency Fund Then Investments

The basic principle of equity investing is to give up something today for a better future. But, giving up too much can hurt you in an emergency when you need liquidity to pay a hospital bill, for instance, and your money is locked up in a fund. Invest only after setting aside your emergency fund which should be minimum about 6 months of your requirements. Equity investments may also suffer periodic declines in value. Don't panic! Be patient! This patience will be rewarded in the long run.

Get Started Now!

Investing with these mentioned principles can go a long way for you to build a successful and healthy portfolio. It’s also important to keep policy changes in mind when planning your investments such as the change in long term capital gains tax. A well-planned investment strategy based on sound principles can grow more rapidly than you think.

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