Advice from Warren Buffet

This week on my blog, I will be sharing some advice from some incredibly successful people. While entire books could be (and have been) written about these people and their careers, in each post this week I will focus on just extracting one jewel from these deep mines of wisdom.

Ready to get started?

Then let me begin with the Oracle of Omaha himself, Warren Buffet.

Warren had this simple advice when it comes to investing: think long-term. Talking specifically about buying stocks, he said the following in his annual letter to investors:

When Charlie Munger and I buy stocks — which we think of as small portions of businesses — our analysis is very similar to that which we use in buying entire businesses. We first have to decide whether we can sensibly estimate an earnings range for five years out or more. If the answer is yes, we will buy the stock (or business) if it sells at a reasonable price in relation to the bottom boundary of our estimate. If, however, we lack the ability to estimate future earnings — which is usually the case — we simply move on to other prospects. In the 54 years we have worked together, we have never forgone an attractive purchase because of the macro or political environment, or the views of other people. In fact, these subjects never come up when we make decisions.

I like two things about this quote: 1) Warren Buffet thinks long-term when purchasing cash producing assets, and 2) he doesn’t let himself be overly influenced by what those around him are saying or doing.

Forevercashers can apply these rules when purchasing their cash flow assets – focus on the long-term numbers and don’t be overly influenced by those around you. As long as the numbers of the deal make sense, you can invest confidently.

Warren Buffet has been among the richest people in the world for years – and for good reason. The principles he is guided by are solid, and we would do well to imitate him.



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