MENU

How Can You Be The Next Warren Buffett?

For many investors, Warren Buffett is the ultimate success story. After all, he has accumulated a personal fortune of more than US$70 billion mainly through a lifetime of investing.

What’s also interesting about Buffett for many investors is that the secret to his success is actually anything but a secret. Buffett has openly shared his investment philosophy and sometimes even his stock picks. But, why is there still only one Warren Buffett? What can we do to be more like him? I have some ideas on how we may achieve that.

Understand what investing is about

This may sound obvious, but the first key thing to do is to have a good understanding of what it means to be a great investor. And to do so, we can turn to a wonderfully succinct phrase from Benjamin Graham, the mentor of Buffett, on how investing can be done well:

“Investing is most intelligent when it is most businesslike.”

A true investor will constantly be thinking about a stock the way he or she would be thinking about a business if he or she was a business-person. Generally, how the stock ticker has moved over the past year or past month, or what prices it has been trading at, would have no meaning to the investor. After all, intelligent investors are basing their investment decisions on how the underlying business of a stock is doing, and not on how the share price swings.

Read and improve

Buffett is well-known to be a voracious reader. He has commented before that his job is to “just sit in my office and read all day.” According to him, that is how knowledge compounds.

Self-improvement is a key ingredient for investing success because the field of investing is a intersection of disparate subjects like finance, business, psychology, economics, sociology, technology and many others. One of the fastest ways we can gain such knowledge is by reading about them.

Buffett has estimated that 80% of his time at work is spent on reading. If that does not motivate you to read more, you might really want to consider how you can change your habits and be a bookworm.

Live long and prosper

Charlie Munger, Buffett’s long-time business partner, once said “All I want to know is where I’m going to die so I’ll never go there.”

Although it sounds like a funny joke, there’s lots of wisdom and truths in that quip. Thing is, Buffett and Munger have been so successful in investing (they’ve been excelling at the investing game for more than five decades now) because they made sure that they had investing-longevity. They stayed clear of stupid things in investing (such as using lots of leverage) so that they could give time for compounding to work.

If we can just simply stay in the game for a long time, compounding can work its magic and help grow our investments into a sizeable amount someday.

Foolish Summary

So to sum it up,  Buffett has been the roaring success that he is by understanding what investing is, by reading (and reading, and reading), and by having longevity in the investing game.

For more investing analyses and important updates about the stock market, sign up to The Motley Fool Singapore's free weekly investing newsletter, Take Stock Singapore. Written by David Kuo, it can help you grow your wealth in the years ahead.

Like us on Facebook to follow our latest hot articles.

The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own any companies mentioned above.