Respect your circle of skills For Warren Buffett, “The risk comes from not knowing what you're doing. " Only invest in companies that you understand well. It seems obvious, but many people mistakenly think that they will miss opportunities if they restrict their investment scope. Yet Warren Buffett insists: “There are all kinds of businesses that Charlie [Charlie Munger is Warren Buffett’s senior business partner] and I don't understand, but we don't lose sleep over them. It only means that we move on to the next one, and that is what the individual investor should do.
" Warren Buffett admits that he does not understand computer technology companies. That’s why he doesn’t invest in such companies, even though many of them were phenomenal successes like Microsoft in the 1990s, Google in the 2000s or, more recently, Apple. Invest in quality companies “Better to buy an extraordinary business at an ordinary price than an ordinary business at an extraordinary price. " Patience then! You don't have a gun to your head. No hurry. Be patient and invest in high quality companies when their prices become reasonable.
You will take less risk while achieving better results. Avoid trendy companies According to Warren Buffett, “Most people are interested in stocks when everyone else is. The time to be interested is when no one else is. You cannot buy what's in sight and be successful. " Don't buy shares of a company after reading a glowing article. Everyone will have the same idea! And above all, beware of fads, they created the internet bubble! Don't fall for the current social media craze today. Finally, don't take the recommendations of financial analysts, which are often contradictory and rarely correct, too seriously. Make up your own mind and don't hesitate to think outside the box of CAC 40 stocks: for example by diversifying your investments with ETFs, which can be a good way to start on the stock market. Choose simple companies that are faithful to their core business Warren Buffett says, “I invest in companies that are so wonderful they can be run by an idiot. Because sooner or later it will happen.
" Invest in businesses that are easy to understand and easy to manage. If the business of a business is too complex, stay away. You will not be able to evaluate it. Choose companies that stay true to their core business like Coca-Cola. Be patient, very patient! Warren Buffett is adamant, “Buy only what you would be perfectly happy to keep if the market were to close for 10 years. " Avoid keeping up with day-to-day stock market news, as you may find that stock prices are not moving fast enough. And the temptation to use leverage will be greater. However, while it allows you to multiply your gains, it also multiplies your losses! It's hard not to think of real estate, the favorite investment of the French when you hear this little phrase from Warren Buffett: "Our favorite investment horizon is forever.
" Real estate is indeed a tangible asset, decorrelated from the financial markets that it is good to consider in order to diversify its assets in additional investments in the stock market! If you got it wrong, don't persist, sell! Warren Buffett puts this common sense idea in these words: “If you ever find yourself in a sinking boat, the energy to change boats is more productive than the energy to plug the holes.
" In other words, do not be obstinate, sell! Stay away from the madness of fluctuating markets “See market fluctuations as your ally rather than your enemy; profit from the madness rather than participate in it. " Warren Buffett insists on the importance of a certain detachment and goes even further by suggesting to reverse the trend: “We just try to be worried when others are greedy and greedy when others are worried.
" In conclusion, we invite you to analyze your successes as well as your mistakes. According to Warren Buffett, “In the business world, the rearview mirror is always brighter than the windshield.