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Warren Buffett turns 91, what can retail investors learn from him in the age of FOMO?

Buffett’s net worth is estimated at around is nearly $104 billion. It has taken some time building—he bought his first stock at 11. Play it long, keep it simple and be disciplined, perhaps best sum up his approach

August 30, 2021 / 11:36 AM IST

The world's best-known investor turns 91 on August 30—Happy Birthday Warren Buffett.

Buffett caught the investing bug young—he bought his first stock at 11 and was filing tax at 13. His net worth is estimated to be around nearly $104 billion, as per Forbes.

The Oracle of Omaha enjoys unparallel fame in the world of investing. His every word, every move is watched carefully. His success makes him a cult figure but his words of wisdom are not limited to investing alone.

A key proponent of value investing, compounding

The secret of Buffett's astonishing success is pretty simple. He is a staunch proponent of value investing and one of the most successful.

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His investing style is heavily influenced by Benjamin Graham, widely known as the father of value investing and the author of the classic The Intelligent Investor.

Buffett picks stocks whose valuations are unjustifiably low against their intrinsic worth and buys them for the long term.

"If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes," he said.

Before buying a stock, understanding its business and assessing its growth prospects are the most important factors one should keep in mind.

Buffett has said many times that before investing in a company, he reads its annual reports and tries to understand how it has progressed, what is its strategy and how far can it go.

"Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market," Buffett said.

A large portion of Buffett's current net worth was accumulated after his 50th birthday. This is how compounding works.

Compounding is a sure way to reap the benefits of your investment as you not only gain the interest on the money invested but also on the interest that keeps getting added to it.

Lesson for retail investors?

The most important lesson—there is no shortcut to success and one cannot be rich overnight.

The post-pandemic world is witnessing a strong influx of new retail investors into the market. As the market is trading at record high levels and looks to gain more in days to come, it may be fairly easy for most of them to make money.

However, in the long-term, what matters is discipline, good research and a decent understanding of the market cycle.

Buffett's words can serve as the guiding light for investors.

His investing approach highlights that patience and discipline are keys to successful investing.

"Successful Investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant."

Be wary of herd mentality. In the era of social media, there is a lot of free advice as to where to invest or what to buy. One should never invest without understanding a company's strategy and assessing its growth prospects. The lure of short-term gains can be harmful.

"Be fearful when others are greedy and greedy when others are fearful,” Buffett said.

His biggest achievement is not only his enormous wealth and astonishing success in investing but also his legacy.

Buffett is a legend whose success shows the importance of sticking to the fundamental rules of investing. A disciplined and simple approach to investing can create wonders too.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.

 
Nishant Kumar
first published: Aug 30, 2021 11:36 am
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