Could Billionaire Investor Warren Buffett’s Strategy Help You?

Could Billionaire Investor Warren Buffett’s Strategy Help You?

Becoming a millionaire through the stock market may seem like a pipe dream for most of us. However, even the world’s sixth richest man, Warren Buffett, had to start somewhere. His “value investing” strategy has enabled him to amass an estimated $100 billion fortune, as of November 2022.

Take a look at how the CEO and chairman of multinational holding company Berkshire Hathaway rose from working in his grandfather’s grocery store to becoming one of the biggest investors in the world.

Who Is Warren Buffett?

Despite his vast wealth, Buffett has always lived frugally. The son of a US Congressman, he was born in Omaha, Nebraska, in 1930. He has lived in the same five-bedroom house in Omaha since 1957 when he purchased it for $31,500.

His lifelong shrewd investments in the stock market began when his father took him to visit the New York Stock Exchange. As a youth, he spent many hours watching and learning in the customers’ lounge of a regional stock broker’s office.

Now aged 92, Buffett has always championed his value investing strategy. This means buying stocks that appear to be undervalued and then selling them years later when they reach their true market value.

Stock Price Growth

By the age of 15, Buffett was earning more than $175 monthly. He had saved $9,800 by the time he finished college. After his application to Harvard Business School was rejected, he attended the New York Institute of Finance.

He has always used the value investing strategy when it comes to the stock market. He followed the advice of British-born US economist and investor Benjamin Graham, known as the “father of value investing”.

Graham said the basic idea of investing was to look at stocks as a business. Use market fluctuations to your advantage, but always seek a margin of safety. Buffett often quotes Graham, saying that “100 years from now”, this will still be the “cornerstone of investing”.

Keeping it simple is a crucial part of a successful investment strategy. Even investing in a relatively small number of the right shares can create a stock portfolio that may reach £1 million over time.

Invest In Companies You Know?

Another of Buffett’s principles is to invest in companies in an industry you’re familiar with, or who have a business model you understand. This knowledge will make it easier to judge the company’s potential.

First-hand knowledge of a particular sector or company isn’t essential. Instead, take a rigorous, systematic, fact-based approach to gather knowledge about a potential investment, rather than relying on mere speculation and gut feeling.

Buffett’s strategy is all about investing for the long term, rather than buying into a new fad or trend with a view to selling your shares a few months down the line. Invest in established companies that you believe are likely to be more successful in the future.