This is a shocking headline to come across for sure, but Warren Buffet says that the average investor should not take advice from people like him about their investments. The man is in the top five wealthiest human beings on Earth and yet he doesn’t believe that we should follow his investing advice. What is up with this?
Buffet Doesn’t Believe In “Experts”
Although it is plain to see that the Oracle of Omaha as Warren Buffet is sometimes referred to is clearly a very wise investor, it is also clear that he does not believe in people entrusting something as important as their investments in the hands of those with no direct connection to them.
Do you consult an expert when you go to purchase groceries for your family? Of course not. You make educated choices about the things that your family needs and purchase your items accordingly. The same needs to be true for your investing choices. You cannot blindly follow the actions of another person simply because that individual has had success in their investing life. It is better that you learn from what they have done right and try to apply it to your own strategies.
Following Trends Doesn’t Work
It is a natural human tendency to want to follow trends in the stock market. We like to feel that we are in on some big secret and that we are going to be able to profit from it as a result. It tends to make us feel a bit smarter than the average person out there, and that feeling is good. However, as an investment strategy this method is very poor.
The problem with trying to follow trends in investing is that you never really know what part of the cycle you are looking at with the trend. Is the hottest item on the market right now about to turn around and go out of fashion? Have the latest “hot” stocks already run up as high as they are going to go? It is very hard to predict this kind of thing. It is better to invest in things that you know something about and companies that have strong and reliable records of growth from the past.
Long-Term Investing Is Key
You truthfully won’t get very far if you are always chasing your tail when it comes to investing. A lot of people react constantly to the changing moods of the stock market. They do so because they have fear that they will get left out of the rain so to speak if they don’t make certain moves to help protect their money. Ironically, moving in and out of trades too frequently is often what causes a person to lose more often than they win to begin with. Investing for the long-term is the best way to ensure that you will gain wealth and see the kind of returns that you want from your money in the first place.