The Sounds of Warren and Charlie In My Sleep.
. This weekend was like many from the past year's questions, with different people.
. Many Investors wanted to know the secrets of Warren and Charlie.
. Warren said, “ The market is very cheap if rates stay low like today.”
. They like holding a bunch of cash.
. Buy in your circle of core confidence.
. They are both a year older yet even wiser.
. They both do nothing most of the time.
The only way to get seriously rich is to buy and hold stocks for the long-term. The real way to do in it today's world is different from when they Warren and Charlie started. In today's world research is a fingertip away, so within an hour, you can get a fair price on almost any company if you know what you are doing.
In the old world, it took weeks to learn one company, and you had to visit them. Then find reports in books and read and call competitors.
So how can you get an edge today, you must know a lot of companies cold. When they get hit on a earnings report or market sell-off, you have to jump in fast with both feet, that’s your edge today, be ready and be fast. It happens each quarter in today's world. Usually, there is plenty to buy or “short.”
For example, Oppenheimer (OPY) just reported an earnings beat by 68% over the same period prior, but no firm but us is covering them for over three years now, so the stock opens up unchanged, we jumped in. Today a week later it is up 7%, and it had almost no downside risk from when we got in. I knew the company cold and was ready.
Usually, the stocks pop up or down 5% or even 10% these days even the bigger names with 25 people covering then so you can win, but it is harder. The first print will never be unchanged on any large-cap stock, like MSFT or AAPL. So if you follow the smaller and mid-cap names no one covers you have a real competitive advantage, this is when Buffet always buys, here with OPY we had the benefit of the work done beforehand.
So the main point do your homework like Warren says but be ready when something you know comes your way. Warren waited 50 years to buy Goldman Sacks (GS), then in the crash, he went all in 5 minutes he had already done the work for 50 years, Warren just waited for the right prices.
Sometimes you know, that’s a cheap stock, if you followed it forever. Then you can jump in without even thinking about it. Warren and Charlie Usually know this.
It is always about price, and if you don’t get in near the bottom a lot of times, you will get shaken out, before the big move up. Price, price, price this is the most critical factor.
Like Warren and Charlie say that diversification does not work unless you are already rich and they still would never do it. I would listen to them, and it is just common sense.
Charlie owns just three stocks, BRK, COST, and a few others. Charlie loads up on 2-5 issues, no reason for more than that and one may be more than 50% of all their funds that’s how you get rich, load up on something you know cold at the right price.
The theme of the Meeting for 2019:
As usually people just wanted to thank them, learn from them and be like them, going to the meetings is well worth it just talking to other investors, you learn a lot. There are some brilliant people each year, and most are very friendly, and they will speak to anyone for a few minutes, be sincere.
Today the overall market is red hot as is the IPO market:
So today it is even more essential to remember Warren’s number one and two rules.
- Don’t lose money
- Don’t forget rule number one.
- Then buy 2-5 stocks at great prices that you know cold and hold them till they are taken over or become fully valued, that’s it.
- If you make a mistake, sell it and move to the next one.
- If a material change happens at one you own, make a new plan of what to do.
- If they get hit after you buy them and nothing has changed, keep adding.
Warren and Charlie say all the time you must buy when there is panic and at least don’t sell in a panic. Never use margin, unless you can afford the losses.
The hardest thing is to hold and buy when things look bad.
Even if you can't buy in a crash, you must do nothing then. Doing nothing most of the time is probably the hardest thing to do, just sitting there in a high paced world is tough; that’s why Warren is in Omaha.
But you must sit and wait, then add, when the prices are right. Do your homework and have your list ready for the next market opportunity to happen, sometimes it happens each month, sometimes you have to wait years.
When you do trades call your broker, it will reinforce that this is the right time, if you use the computer you can become a trading addict. I know this does not sound right, but in today's world, you can get addicted to a lot of things, why risk trading too much, call your broker.
Make sure there is substantial insider ownership. Otherwise, we almost always stay away.