Warren Buffett, a global investor, is synonymous with successful investing. Today, we’ll uncover the secrets of how he achieved an astonishing 50% return.
1. Starting Small Has Great Advantages
Seventy years ago, Warren Buffett started investing with a small amount of capital. He recorded a top return of 50% back then. This is because starting with small capital structurally provides significant advantages. Buffett claimed, “Not having a lot of money is structurally a big advantage,” and “I could get 50% returns with a million dollars.”
2. Thorough Learning and Preparation Are Essential
In his youth, Buffett looked through Moody’s manuals multiple times to find buying opportunities. He recalled, “The answer was to flip through 2,000 pages,” and “At the age of 20-21, I discovered all sorts of interesting things by flipping through Moody’s transportation manual.” Thorough learning and preparation played a major role in his success.
3. Find Unique Stocks
Buffett had the ability to find unique combinations of common stocks and bonds. He stated, “I had bonds that were actually common stocks, and common stocks that were actually bonds,” and made tremendous profits through these unique stocks.
4. Learn Passionately and Become an Expert
Buffett emphasized, “You can achieve an annual return of 50% with a million dollars if you try to know everything about each little thing and find something, but you have to love the subject.” He highlighted the importance of finding a subject you genuinely want to learn passionately and becoming an expert in that field.
5. Embrace Change
Later, Buffett transitioned to acquiring competitive quality companies at fair prices, influenced by Charlie Munger. The change in investment strategy brought about by his meeting with Munger led to significant changes in his investment philosophy, eventually growing Berkshire Hathaway into an empire composed of top-notch companies.
Conclusion
Warren Buffett’s success secrets include starting small, thorough learning, finding unique stocks, passionate learning, and strategic transitions. Combining these elements enabled him to achieve remarkable performance. If you’re starting to invest, why not follow these elements of Warren Buffett?