4 Enduring Warren Buffett Lessons That Guide Smart Investors

Not everyone agrees with Warren Buffett’s investment philosophies, but his results cannot be denied. The “Oracle of Omaha” is one of the most successful investors in history, with a net worth that hovers around $150 billion to prove it.

With a legacy built through his company Berkshire Hathaway, he continues to influence financial professionals and everyday investors alike. For example, Chris Ballard, managing partner at Check Capital Management, said he has personally learned a lot from Buffett and his company’s strategies. In fact, Berkshire Hathaway is by far his firm’s biggest holding.

Here are four timeless investing lessons Ballard has learned from Buffett.

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1. Don’t Follow the Crowd

Buffett isn’t one make investment decisions based on what’s popular. He’s historically followed his own instincts and reasoning instead.

“Buffett invests with an owner mindset,” Ballard said. “He strives to educate the public to think this way about investing rather than letting the movement of stock quotes and the emotions of ‘Mr. Market’ rule your way of thinking.”

He continued, “This approach is the foundation to our decision-making process. Without Warren Buffett’s steadfast example of the right way to think about investing, it would have been harder to come to the logical conclusion that you shouldn’t follow the crowd. It’s important to know what your own strengths are as an investor, and to emphasize those strengths when deciding which businesses and what management to partner with through share ownership.”

Ballard recommended every investor “tune out the noise” when making their own investment decisions, as he noted headline news and daily moves of stock quotes don’t necessarily tell you anything about the businesses you are investing in.

2. Diversify Your Investments

Ballard’s firm invests heavily in Berkshire Hathaway because it contains a diverse array of holdings within it.

“You must understand Berkshire’s history, its people and culture to have a good grasp as to why it’s such a great company and a fabulous investment,” Ballard said. “You are not investing in one product, revenue stream or even one industry when investing in Berkshire Hathaway. You are investing in an entity that gushes cash from insurance, railroads, energy, retail, restaurants and candy.”

3. Invest in Companies You Trust

Instead of chasing trends, Buffett has often suggested investing in companies you trust.

“Berkshire is one of the most trusted entities in the world, if not the most trusted,” Ballard said. “If it goes down, we feel very comfortable buying more. If it goes up, we reap the benefits of partnering with some of the greatest group of shareholders anywhere.”

4. Always Think Before You Act

Before making any investment decision, do your research and think it through.

“Warren’s success has come on the back of a dozen or so very good decisions in his entire lifetime,” Ballard said. “If you wanted to be extreme about it, you could hand someone a punch card with 10 punch holes available. Tell them that each of the 10 punches represents an investment they can make in their entire lifetime — they only get 10. This will help an investor conjure the maniacal focus necessary to start down the path Warren started down when he was 11 years old.”

It’s important to take your financial decisions seriously.

“Warren’s late business partner, Charlie Munger, once said, ‘Take a simple idea and take it seriously,'” Ballard said. “Do that.”

Caitlyn Moorhead contributed to the reporting for this article.

This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.

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