They say that even idiots can make their fortune in a surging economy, but how do you do it when the economy is not so hot, to put it mildly. With the world currently in a state of economic turmoil, what do you need to do to still come out a winner on the markets. The only way to do that is to take on board some of the tactics adopted by proven market geniuses. And when it comes to the financial markets, there is no more famous, nor more sage genius than Warren Buffett.
The son of an ex-stockbroker, Warren Buffett was gifted with a talent for finance from a very early age. He started off selling soft drinks to his friends at the age of six and is now worth a cool $50 billion. If you want to invest like Warren, here are some of his tips:
(1) Only Invest in Things You Understand – this would seem obvious advice but you’d be amazed how many people don’t follow it or don’t take the time to research and understand their largest or most risky investments. Buffett is on the record as stating that he will never invest in any company that is on the outside of his confidence circle, as he know he will not be able to accurately gauge future performance if he has no idea how the company operates.
(2) Study the Management of the Company – Buffett himself will make an evaluation of the company management based on three points. The first one is whether they rationally set off reinvesting profits against maximizing their stick values. The second point is to look whether they have always been honest with their investors. And thirdly, does the management simply copy other companies or organizations or do they develop their own new ideas and their own new products.
(3) Seek Out their Intrinsic Value – Buffett will only invest in companies that have that extra special something to put them apart from other companies and from their competition.
Alex is a journalist and blogger. He writes on everything from finance to design and writes a consumer blog for Coupon Croc .