Warren Buffett is known as one of the best investors of all time, and he’s amassed a multi-billion dollar fortune investing through his company Berkshire Hathaway. But he’s not only a great investor, but he’s also a great wit, and Buffett enjoys sharing his folksy wisdom with fellow investors.

His advice runs the gamut of topics, not only about investing but also about life. But today, let’s stick to Buffett’s advice that could help make you rich. The surprising thing is Buffett’s wisdom seems commonsense and practical, yet it can lead to great wealth. Below are seven of Buffett’s more widely known aphorisms and what they mean for investors.

1. “Rule No. 1 is never losing money. Rule No. 2 is never forgotten. Rule No. 1.”

Buffett’s point sounds simple here, but it’s disarmingly complex. Of course, as an investor, you’re trying to profit in the market, but one of the best ways to do that is by avoiding loss.

When you eliminate decisions that expose your portfolio to loss, what’s left is more likely to be a gain. You can compound your gains even faster when you have more money in your portfolio.

This approach has implications for how you invest. Buffett’s quote suggests that instead of looking for the highest upside, you should be looking to avoid loss first and only then look at gains. That’s a different mindset from investors who view the stock market as a slot machine.

2. “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”

Here Buffett suggests that you must act quickly and decisively when you see an opportunity. When the odds are stacked in your favor – such as when stock prices are down significantly – you need to invest heavily because reasonable prices might not come along again soon.

Buffett often takes this approach when markets are down significantly. He amasses a ton of cash during the good times and then invests aggressively when stocks plunge. Having a lot of safe money allows him to use this strategy.

3. “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

While some investors think investing is a lot about numbers, Buffett suggests that investing has much to do with the behavior of investors themselves. When investors are greedy and push the prices of stocks to the sky, Buffett becomes fearful because a market plunge may soon follow.

In contrast, Buffett becomes more interested when investors run away from the market or a specific stock because prices are lower. When stocks are cheaper, they don’t have the same risk as when they’re expensive. And this is how Buffett thinks about avoiding losses. In early 2020, the market plunged as coronavirus worries rattled investors. However, some investors dove into the market amid the fear, and the market rallied furiously off its lows.

4. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

While some value investors focus on buying only the cheapest companies, Buffett suggests a better course of action is to buy “wonderful” companies – those with better economics and competitive positions. Part of the difficulty here is that whereas fair companies may go on sale relatively frequently, great companies rarely look cheap.

But a company with a tremendous competitive advantage will likely continue to make money over time, and it can bail you out if you purchase at a too-high price. That may not be the case for a fair company, which may falter and never return to your purchase price or beyond.

Along these same lines, Buffett has been a long-time buyer of Bank of America, a bank with branches across the country and an enviable deposit franchise. As of the third quarter of 2020, it occupies the second-largest position in Berkshire Hathaway’s portfolio after Buffett acquired more than $1.7 billion more at the end of July.

5. “The most important quality for an investor is disposition, not intellect. You need a disposition that neither derives great pleasure from being with or against the crowd.”

Then again, Buffett touches on the value of disposition for a successful investor rather than intelligence. Rather than trying to go with or against the crowd, investors should dissect what’s going on in the request, anyhow of who likes what stock. By fastening the objective data, investors can make opinions relatively free of emotion and make better choices.

6. “The stock request is a no-called strike game. You don’t have to swing at everything — you can stay for your pitch.”

This quotation is one of Buffett’s most notorious, offering the substance of picking your occasion. You needn’t invest until you find an event that you find seductive, one that meets your norms of implicit price for the threat you’re taking. Again, Buffett counsels investors to stay until they find a doubtful occasion to lose them, plutocrats. You don’t have to take any chance on a stock that you don’t find seductive.

7. Still, do it, “If you like spending six to eight hours per week working on investments. However, if you don’t, bone-cost normal into indicator finances.”

Buffett has long advised most investors to use indicator finances to invest in the request rather than trying to pick individual stocks. You’re working against the pros with expansive intelligence on companies by picking individual stocks. In discrepancy, if you buy an indicator fund grounded on the Standard & Poor’s 500 indicators, you’ll enjoy the request, the target that everyone is aiming to beat.

By all means, if you enjoy investing, also do it, but utmost investors will be well served by using an indicator fund and especially by avoiding trading in and out of stocks. Another advantage of using indicator finances – is immediate diversification, which lessens your threat. ( See rule no. 1.)

Bottom line

While Warren Buffett may be one of the most successful investors ever, his investment approach can be participated by numerous investors if they don’t want to spend much time on the request. Focus on enforcing Buffett’s principles; you, too, could come fat or increase your net worth.

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