Warren Buffett is the closest thing that the finance geeks like me have to a living legend.
If he were a baseball player he’d be mentioned in the same breath as names like Babe Ruth or Ted Williams – if he were a boxer, his name would be right next to Muhammad Ali’s and Rocky Marciano’s.
And like these other great men – Warren’s accomplishments can be measured through hard work and diligence – not just blind dumb luck.
He’s worked hard for every penny he’s ever earned…
But like ALL giants of the world, the reason Warren stands above most is simply because he’s standing on the shoulders of the giants that came before him.
He’s learned from those who came before him – both their successes and failures…
And we’d be smart to learn from his.
Before we get into those successes and failures – we need to get a little insight into the man himself.
Warren’s journey to legendary status (as well as the ranking of the 3rd richest man in the world) began at the young age of 11, when he traded his first stock – the corner stone of which his $93.4 billion fortune was built from.
What he’s done over the past 75 years is nothing short of amazing – and he’s shared the fruits of his labor with shareholders in his holding company, Berkshire Hathaway – a company that has grown at 20% annually since 1964.
For a point of reference, if you could have invested just $10K in Berkshire Hathaway at its inception – you’d currently be sitting on a $240 million fortune.
That’s DOUBLE the annual rate of the S&P…
But how and why is he so successful so often when so many fail so miserably?
Simple… he has rules.
There are 4 pillars that hold up Warren’s trading philosophy – and by adopting these pillars into our own trading strategies – we should, in theory, be able to at least succeed more often than we do now.
1 – He gets to know a company intimately before buying it – he doesn’t just follow the herd.
This means that Warren would never discount or support a company because it fits a trend. A company has to have true value before Warren deems it worthy of an investment – and he will go over its financials with a fine-toothed comb before actually pulling the trigger.
His philosophy is: a company has to be worth SOMETHING on it’s own – regardless of how well or poorly its industry happens to be performing at any given time.
There has to be more meat than sizzle and it’s the pillar that I believe is the most important in his trading strategy
2 – He’s a contrarian investor.
The second pillar to Warren’s strategy is built off Baron Rothschild famous adage, “The time to buy is when there is blood in the streets.”
Warren is a true contrarian – he likes to do the OPPOSITE of whatever the masses are doing. If the world is buying – he’s selling…
If the world is selling – he’s buying.
Going against the current has given Warren some BIG wins when the rest of the world thought he was crazy.
Like when he invested $290 million in Wells Fargo (WFC) in 1990 when the banking industry was getting hammered. People were selling off in droves – but not Warren – he bought in…
And his $290 million investment turned into a $275 billion windfall.
3 – When he buys, he buys to HOLD.
One thing about Warren Buffett is – he’s no stock flipper.
If he’s buying a company – his plan is to hold it till the day he dies. He doesn’t buy with the intention of selling.
Now, that being said – he WILL definitely sell a company if it makes sense to him – but he doesn’t buy a company thinking about the short term. He buys long term – and again – it has served him well.
4 – When he buys – he buys BIG.
One of scariest aspects of Warren’s trading strategy is that he bets BIG. When he buys, he buys a lot. He doesn’t just dabble – when he goes in on a stock – he goes all in.
For the everyday Joe – that may seem a little scary – and it is. But that doesn’t mean we should shy away from buying a lot of shares when it’s “right.”
Look, he didn’t build an empire by playing it safe – so why should we?
There you have it…
The secret to Warren Buffett’s success! The funny thing is – it’s nothing crazy – nor is it a secret. Warren has no problem sharing his trading strategies with the world…
And we’d be crazy not to follow in the footsteps of such a successful stock trader.
I’ve incorporated some of these same strategies into the GorillaTrades trading matrix myself – I figured if they helped shareholders of Berkshire Hathaway make a killing over the past 50-plus years – they’re good enough to help my GT subscribers too!
If you decide to join GorillaTrades – you’ll see just how they work in conjunction with the GT platform. We’d love to have you aboard!
Regardless of whether you join or not – please keep Warren Buffett’s trading pillars in mind when it comes to your own trading strategy…
You never know, you could use them to become the next stock market millionaire (or billionaire).
“Risk comes from not knowing what you’re doing.” – Warren Buffett
