We often run in to various thoughts and pronouncements by the Oracle of Omaha, Warren Buffett, when reading the papers, watching the news, or even scrolling through social media. The man, after all, is a financial genius and one of the richest people in the world.
A nice book by Robert L. Bloch, My Warren Buffett Bible, catalogues some of the great man’s thinking in a well-organized, easy-to-access way. There are literally hundreds of bits of good advice tucked away in this book that will help even the most novice of investors.
“Rule number one,” Buffett is quoted as saying, is “never lose money. Rule number two – don’t forget rule number one.”
He suggests that investors “buy companies with strong histories of profitability and with a dominant business franchise.” In other words, leading companies that are making profits.
“When I buy a stock, I think of it in terms of buying a whole company, just as if I was buying the store down the street. If I were buying the store, I’d want to know all about it.” The same holds true, Buffett says, when buying shares in a well-known company.
As well, Buffett states, “it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” He also notes that “startups are not our game;” his company, Berkshire Hathaway, tends to buy companies that have been around for a long time. Its oldest holdings, the book reports, are American Express, Wells Fargo, Procter & Gamble and Coca-Cola, all firms that are over a century old.
And he says he plans to increase his holdings in these types of companies. “Too much of a good thing can be wonderful,” he states in the book. “The definition of a great company is one that will be great for 25 or 30 years.”
He’s not one for making a lot of portfolio changes, either. “Inactivity strikes us as intelligent behaviour,” he notes, adding that “what the wise do in the beginning, fools do in the end.”
He is not, the book states, a big fan of bond investing. “Overwhelmingly, for people that can invest over time, equities are the best place to put their money. Bonds might be the worst place to put their money. They are paying very, very little, and they’re denominated in a currency that will decline in value.”
For those who don’t want to pick stocks, he recommends index funds (such as index ETFs). “If you invested in a very low-cost index fund – where you don’t put the money in at one time, but average in over 10 years – you’ll do better than 90 per cent of people who start investing at the same time,” he states in the book.
And for those who may think money is everything, the book closes with this quote from Buffett – “money to some extent sometimes lets you be in more interesting environments. But it can’t change how many people love you or how healthy you are,” he states in the book.
This is a fine little book that is fun and quick to read. If you are running into problems running your own investments for retirement, it’s never a bad idea to get some help. The Saskatchewan Pension Plan will grow your savings for you, using expert investment advice at a very affordable rate. When it’s time to turn those savings into retirement income, SPP has an array of annuity options to provide you with steady lifetime income. You can transfer up to $10,000 each year from your existing RRSP to SPP; check them out today.
|Written by Martin Biefer
|Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22|