Warren Buffett's Rules for Success for Investors

He is perhaps one of the most successful investors in the world: Warren Buffett. His great performance is not magic, he strictly follows the rules of value investing he learned from Benjamin Graham. These are his principles:

1. the top brands have priority

If you have to choose between a top brand and a no-name company, you always choose the top brand. Warren Buffett focuses on sound and successful companies that follow a proven business model even in times of crisis. Like Coca-Cola, for example: Warren Buffett not only likes to drink Coca-Cola, he owns a substantial portion of the shares in the beverage company.

2. obtain knowledge

Wishful thinking or real facts? This is a question an investor should always ask himself. Warren Buffett spends a lot of his time reading and analyzing business reports. This is exactly what he recommends to his fans. If you want to be successful, you should get knowledge about the hard facts (e.g. the company's sales development over the last years, the development of the different business units, international distribution, etc.). ). 

3. buy when the masses don't.

Warren Buffett is a firm believer in buying stocks when the rest of the market is not interested. Buffett's credo on this is, "Don't buy something that's popular right now." In his view, if you go with the flow on the stock market, you lose. A good example: the golden age of Telekom. When the hysteria around Telekom stocks was at its peak and really every investor wanted to buy the "people's stock," there was no money to be made in it.

4 Only invest with understanding

Only buy what you understand. Simple and straightforward is better than complicated. Buffett, for example, did not get involved in the Internet hype at the turn of the millennium. Because the experienced shareholder only invests if he really understands the investment. Anyone who invests in company shares should therefore be able to answer at least the following three questions:
- What does the company produce?
- How does it earn its money?
- What opportunities can the future bring?
Only plausible answers to these questions make it possible to realistically assess the opportunities and risks of an investment. That's why Buffett has never invested in pure technology stocks in https://exnesscom.com/accounts/, because this industry is too fast-moving and he doesn't understand it.

5. "Buy a stock and go to a desert island".

Another Buffett rule: have very long staying power. If you are not willing to hold a stock for 10 years, you don't need it for 10 minutes. An investment in a company only makes sense if the long-term perspective is convincing. It is called "investing instead of speculating". Warren Buffett thinks long-term. The companies that want his money should do the same.

6 Focus on a few good stocks

Investors are advised to focus on just a few investments - in Buffett's opinion, this brings them more success than spreading their money widely and getting tangled up in the process. The maverick stock market guru likes to compare the situation to the very catchy - and perhaps politically incorrect - image of a harem: "If you have a harem of 40 women, you won't really get to know any." On the other hand, the focus must not be too small either. Focusing on just one or two titles is also dangerous. A single misstep cannot be ruled out. That's why Buffett's Noah's Ark principle is ideal: The portfolio should never resemble a motley zoo, but should consist of investments that complement each other and minimize risk as much as possible.