Instead of focusing on Warren Buffett's stock-picking skills, try to follow his long-term mindset.
Instead of focusing on Warren Buffett's stock-picking skills, try to follow his long-term mindset.
There will never be another Warren Buffett. From 1964 to 2024, the CEO of Berkshire Hathaway (BRKA +0.09%)(BRKB +0.04%) achieved legendary returns of 5,502,284%. That amounts to compounded annual growth of about 19.9% -- nearly twice the gains of the S&P 500 (^GSPC +0.41%), which delivered 10.4% annualized returns during those six decades.
It's highly unlikely that anyone reading this can apply exactly the same playbook that Warren Buffett used to get rich. But there are a few key mindsets and model behaviors from Buffett's career that any investor can emulate.
Buy great companies that you believe in
Warren Buffett was not a penny-stock buyer. He didn't chase trends or follow fads. Instead, he bought stocks in companies that were often undervalued by the rest of the market. He owned stocks in high-quality companies with steady cash flows, strong business models he understood, and often sold products he personally used and/or enjoyed, like Coca-Cola (KO -0.51%).
How to be like Buffett: Buy stocks in companies that you understand, that you believe in, that you're rooting for, and that you think can generate long-lasting returns.
2. Hold onto your investments for the long term
Buffett was not a short-term speculator or day trader. When he bought a company's stock, he typically intended to hold it for years. For great companies that Buffett really believed in, he said that his "favorite holding period is forever."
Does this mean that you should never sell stocks? No. Sometimes investors need to take profits or cut losses. But this mindset shows how a long-term investing approach can help all kinds of investors build serious wealth -- even if they never reach Buffett's level of annualized returns.
How to be like Buffett: Keep investing consistently and hold your stocks for the long term -- for 60 years or more, if you're lucky.
Averytin News Financial update.