How To Invest Like Warren Buffett

Warren Buffett is highly regarded as the most successful investor to ever live. In this article, we will look at the key strategies Buffett uses to choose investments and analyze how the common investor can practice these same principles.

Circle of Competence

  • Invest in businesses and industries that you fully understand.

Think about the Business and not Stock Price

  • Don’t worry about what happens day to day in the stock price. Focus on the company, fundamentals, and new products.

Low P/E Ratio

  • Price vs earnings.
  • Warren Buffett likes to invest in companies under the market (S&P 500) P/E Ratio average.

Strong Balance Sheet

  • 2:1 Ratio of assets/cash to debt/liabilities.

Trustworthy Management

  • Invest in companies with CEO’s you feel you can trust.
  • Also invest in companies that “any idiot can run.”

 

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