Warren Buffett: Three simple stock rules from the most successful investor of all time

Entering the stock market requires careful consideration.

According to star investor Warren Buffett, three rules are particularly important. 

Warren Buffett is considered the most successful investor of all time.

His ability to evaluate companies and make wise investment decisions has earned him the nickname "The Oracle of Omaha."

The businessman has a net worth of around $107.8 billion, making him the sixth richest man in the world.

His wealth has come from shrewd stock deals like buying shares in companies like Coca-Cola, American Express, and IBM.

But the American is not only a stock exchange guru, he also runs Berkshire Hathaway, one of the largest conglomerates of companies in the world.

To this day, Warren Buffett is considered an investor icon that the whole world looks up to.

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When it comes to investing, nobody can hold a candle to Warren Buffett.

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Warren Buffett: Three Simple Rules for Stocks

His tips are considered the pinnacle of all investing strategies.

In fact, they are not as complicated as many would think.

Warren Buffett attributes his success primarily to three simple ground rules he followed.

He got the idea from the US economist and investor Benjamin Graham, who published the book “Intelligent Investing” in 1949.

Buffett even called it "by far the best book ever written on investing."

To this day, it is considered a true investor's bible.

But what are the three tips?

1. A share is a stake in the company

A famous quote from Warren Buffett is: "Stocks are simple.

You're just buying shares in a great company with the highest integrity and capable management for less than its intrinsic value.

Then you keep these shares forever.” It is therefore important to find out in advance about the company in which you want to invest.

How is the competition doing?

What is the current economic situation?

How do you rate the management?

All of these factors help to better assess the company.

After all, you own a part of the company with the share itself - no matter how small the fraction may be.

2. Don't panic about market fluctuations

The stock market is dominated by many ups and downs.

Most investors cheer when stock prices go up and groan when prices fall.

According to Warren Buffett, however, one of the biggest mistakes is to react so emotionally to market fluctuations.

He refers to Benjamin Graham's metaphor of "Mr.

Market".

This is manic-depressive and depending on the day euphoric, indifferent or deeply sad.

Because of his unreliability, “Mr.

Market" always crazy prices that do not correspond to the true value of the company.

The trick is not to get emotionally involved in these whims, but to use the manic or depressive states of mind for one's own advantage.

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Buffett advises against buying or selling stocks every time the price fluctuates.

Looking back at the year, it is finally becoming apparent that large companies are always making significant gains.

The high point is usually twice as high as the low point.

This fact should actually reassure every investor, "Mr.

Market” and its whims less seriously.

On Wall Street and in the news, on the other hand, the focus would only be on the price target.

According to Buffett, the actual value of the company is lost in the process.

That is why the star investor often looks at companies for potential investments without knowing the actual price.

Other factors such as long-term competitiveness and the evaluation of the business model are much more important to him.

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3. Observe the safety margin when investing

The so-called margin of safety is a central tenet of Buffett's investment strategy and an important factor in being successful in the stock market over the long term.

Investors should only buy a stock when the market price is well below the calculated value of the company, and is thus getting a significant discount.

Otherwise there is a risk of loss as soon as the market price corrects.

In other words, don't buy a stock until it's screaming at investors because it's so cheap.

The lower the price, the more security you have with regard to future stock market events.

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