Warren Buffett is a legendary investor and one of the most successful businesspeople in the world.
He has shared many valuable teachings throughout his career, here are some of his most famous teachings:
- Value investing: Buffett is famous for his approach to investing based on value investing principles, which involves buying high-quality companies at a reasonable price.
- Circle of competence: Buffett encourages investors to focus on industries and companies that they understand well and have expertise in, rather than trying to invest in areas they don’t understand.
- Margin of safety: Buffett believes in always having a margin of safety when investing, by buying stocks that are undervalued or have a significant discount to their intrinsic value.
- Long-term focus: Buffett emphasizes the importance of having a long-term focus when investing, rather than trying to time the market or make quick profits.
He often holds investments for many years, even decades.
- Conservative leverage: Buffett believes in using leverage conservatively and responsibly, and only when it can generate significant returns without taking on excessive risk.
- Management quality: Buffett emphasizes the importance of investing in companies with high-quality management teams who are honest, competent, and have a long-term focus.
- Avoiding speculation: Buffett advises against speculating in the market or trying to make quick profits by trading frequently. He believes in taking a long-term, value-based approach to investing.
- Staying humble: Buffett is known for his humility and emphasizes the importance of remaining grounded and humble in the face of success.
He has famously said, “Success is getting what you want, happiness is wanting what you get.”
Overall, Buffett’s teachings emphasize the importance of investing in high-quality companies with a long-term perspective, while avoiding speculation and taking on excessive risk.
He believes in staying focused on what you know and understand well, and remaining humble and grounded in the face of success.
Charlie Munger is an investor, businessman, and philanthropist who is best known for his role as Vice Chairman of Berkshire Hathaway.
Munger’s teachings are wide-ranging, but here are some of the key principles he advocates:Develop a “latticework” of mental models: Munger believes that the best investors are those who have a deep understanding of a wide variety of disciplines, and who can use this knowledge to make better investment decisions.
He encourages investors to develop a “latticework” of mental models, which can help them make sense of complex information and see the world in a more nuanced way.Use a “circle of competence”: Munger advises investors to focus on areas where they have a deep understanding and expertise, and to avoid areas where they lack knowledge.
He suggests that investors should create a “circle of competence” and only invest in businesses or industries that fall within that circle.Be rational and objective: Munger believes that emotions can often cloud our judgment and lead us to make irrational decisions.
He encourages investors to approach investment decisions in a rational and objective manner, and to avoid making decisions based on fear, greed, or other emotional factors.Seek out and value different perspectives: Munger emphasizes the importance of seeking out diverse perspectives and challenging one’s own assumptions.
He believes that by considering a wide range of viewpoints, investors can make better decisions and avoid pitfalls.Have a long-term perspective: Munger encourages investors to take a long-term perspective and avoid being swayed by short-term market fluctuations.
He suggests that investors should focus on the underlying fundamentals of a business and hold onto investments for the long haul.Overall, Munger’s teachings emphasize the importance of developing a deep understanding of the world around us, using rational and objective thinking, seeking out diverse perspectives, and taking a long-term approach to investing.