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How to Invest Successfully Like Warren Buffett

To the new investor, there may be a mental image of a sagely Warren Buffett picking companies to buy and sell on a daily basis. The truth about Buffett’s investing habits is much more simple though: It simply involves a lot of daily reading to prepare himself for the next investment opportunity.

In fact, as much as 80% of each day for Buffett is dedicated to two simple things: Reading and thinking.

Reading up a storm

According to a newswire, Buffett spends each day reading at least 500 pages of materials like company reports and trade publications to glean useful information out of it. Much like how investing for the long term works, Buffett believes that knowledge will build and compound over time too.

For instance, if you were interested in the retail industry in Singapore, then materials from a real estate investment trust (REIT) like CapitaMall Trust (SGX: C38U) could be a good place to start reading. The REIT owns 16 malls within Singapore and provides a good overview of the retail industry.

But hey, don’t stop there.

You may want to expand your reading circle to other retail-oriented REITs like suburban mall owner Frasers Centrepoint Trust (SGX: J69U), and Starhill Global Real Estate Invmt Trust (SGX: P40U). The latter owns landmark malls on Orchard Road like Ngee Ann City and Wisma Atria. Going through the earnings presentation on Frasers Centrepoint Trust could lead you to this slide – which shows the top ten tenants within its malls:

2015-01-28 Fraser Centrepoint Slide

Source: Fraser Centrepoint Trust’s earnings presentation

There might be value in understanding the other side of the story as well.

In this case, reading about top tenants such as Metro Holdings Limited (SGX: M01) and Courts Asia Ltd (SGX: RE2) (number 2 and 3 on Frasers Centrepoint Trust’s list of Top 10 tenants) could provide the investor with a more holistic view of the retail industry in Singapore from both the perspective of the tenant and the landlord. In this way, the dynamics of the industry may be better known compared to reading one company report alone.

Why read so much?

Look, my job is essentially just corralling more and more and more facts and information, and occasionally seeing whether that leads to some action.

— Warren Buffett

The objective of reading is not just for the sake of it. Reading helps prepare our mind for any future investment opportunities that may come our way. After all, it would not make sense to begin haphazardly reading only when an opportunity appears – it may be too late by then.

If we are able to build up our investing and business knowledge day by day, we might find courage and be more decisive – backed by all the information we have from our studies – when an investment opportunity knocks on our door.

Foolish take-away

The investor’s daily diet may well consist of almost no trading action, but simply the judicious accumulation of knowledge for future use. If we would like to invest successfully like Buffett, then perhaps we should start by cracking open a company report and begin compounding our knowledge.

Our investment portfolios may thank us in the future when our chance to act arrives.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.