Anyone paying attentions to the news knows that the country has been through a major financial crisis that it is only now starting to wade its way out of. This has probably turned off a lot of prospective investors from learning skills like how to invest. But the thing is, now is probably the best time to invest in a decade, as lots of great companies have stock that are still priced for depression.
Learning how to invest is best done through studying both financial theory and looking at what the most successful investors have done over the long term. Investors like Warren Buffett has stayed true to a simple, but time-tested, style of investing that has made him the richest man on the planet. His investment style is a form of value investing first popularized by the grandfather of investing, Bejamin Graham. He taught his students, which Warren Buffett was one of, to look for companies that had liquid assets that were worth more than there stock price alone. He also taught them to look for companies in depressed and possibly dying sectors, with strong balance sheets, and wait for a last “puff” up of the stock price. He called this cigar butt investing.
Warren Buffett has of course evolved over the years, investing in companies with strong moats, like Coca Cola and Gillette. But his fundamental principles have stayed the same: Look for value where others are blind, either because the company or sector is temporary unpopular, or because the stock market is on a large downswing in general.
If it works for him, why shouldn’t it work for you? Whatever you do, only invest money you can spare, and remember to invest in companies you understand. Speculating will only get you broke fast.
Tags: Financial