Warren Buffett: How To Achieve A 30% Return Per Year (7 Investing Rules)

About this video

• Video Title: Warren Buffett: How To Achieve A 30% Return Per Year (7 Investing Rules)
• Channel: Cooper Academy
• Speakers: None explicitly named, but content is attributed to Warren Buffett.
• Duration: 00:11:05

Overview

This video outlines seven investing rules attributed to Warren Buffett, aimed at helping viewers achieve high long-term investment returns. It emphasizes rational decision-making, understanding the underlying business of a stock, ignoring market noise, holding investments long-term, being contrarian, investing in understandable companies, and buying at a price below intrinsic value.

Key takeaways

• Invest in the Business, Not Just the Stock: A stock represents ownership in a business. If the business performs well over the long term, the stock price will eventually follow. Look for companies that dominate their future markets, have high profit margins, and are ahead of the competition.
• Ignore Market Noise: Most financial news and commentary are "noise" designed to generate views and engagement, rather than providing actionable insights for investors. Focus on essential details rather than the constant chatter about markets, the economy, or stock price movements.
• Time in the Market, Not Timing the Market: Holding stocks for the long term allows compound interest to work its magic. Frequent buying and selling prevents this compounding effect, leading to missed returns. Buffett's strategy involves buying quality businesses and holding them for decades.
• Understand What You Invest In: Risk in investing stems from a lack of understanding. Invest in companies whose businesses you can comprehend. If you are interested in a particular sector (e.g., e-commerce, automotive), research companies within that sector that you can understand.
• Be Contrarian (Fearful When Others Are Greedy, Greedy When Others Are Fearful): During bull markets, widespread greed can inflate stock prices, making good deals scarce. In such times, it's wise to be fearful and cautious. Conversely, when panic sets in and stock prices fall, it's an opportunity to be greedy and buy stocks at a discount.
• Buy Below Intrinsic Value: A stock is only worth investing in if its purchase price is below its intrinsic value. Even a wonderful company with excellent management is not worth an infinite price. Understanding how to calculate intrinsic value is crucial for making sound investment decisions.