Do as Buffett: what principles of the legendary investor will allow Ukrainians to earn

The legendary American investor Warren Buffett is world-renowned for his unique ability to successfully earn money on financial assets for many years. His experience shows that, having a good understanding of the stock market, you can invest your funds much more profitably than simply placing them in bank deposits. What strategy does Buffett follow and how can you participate in his success?

Success strategy

Buffett is the benchmark of a successful investor, whose experience has been sought by people from different parts of the world for several decades. He ranks fifth in the ranking of the richest people in the world according to Forbes magazine with a fortune of 105 billion dollars. From 1965 to the start of the coronavirus pandemic, Berkshire Hathaway’s ego fund grew in price by 20% annually, while the American stock index S&P 500 grew by only 10%. During this period, the price of Berkshire shares increased more than 27 thousand times.

When choosing assets for investment, Buffett adheres to the following very important rules:

Long-term investment. The legendary investor prefers to invest in the securities of one or another company for a long time – sometimes for years or even decades. So, Buffett bought shares of Coca-Cola back in 1988 and still hasn’t sold any of them. But, for example, in the last 6 years alone, these securities have increased by more than 56%.

Ignore volatility. Buffett urges investors not to pay attention only to current quotes and often change their portfolio. In his opinion, the company, whose shares have been decided to be purchased for the portfolio, should be evaluated in a complex way and a long-term forecast should be made. It is not necessary to get rid of securities in a panic during periods of decline and crisis, it is necessary to hold them and wait for the recovery of the market price.

Invest in what you understand. The American investor advises investing money only in those financial assets in which a person really understands something. That is, it must be an industry familiar to him, and the company’s development prospects must be predictable and transparent. In particular, Buffett refused to invest in cryptocurrencies and “dotcoms”, and as a result did not lose anything from their fall.

Buy during a crisis. Buffett prefers to buy discounted shares of promising companies during crises. In his opinion, this is the best moment to buy securities at a bargain price. So, for example, during the 2008 crisis, Buffett invested in Goldman Sachs Group and General Electric.

Investments can be learned. Anyone can become a competent investor, according to Buffett. But this, like any other profession, needs to be studied.

Invest only your own money. In order not to burn out on the financial market, you need to invest only your own funds in securities, without taking them into debt. Investment is always associated with risks, and it is better to risk one’s own money, rather than borrowed money, according to Buffett.

Buffett’s investment portfolio for 2022

TOP-10 instruments in Berkshire Hathaway’s portfolio as of September 30, 2022

Company	Share in the portfolio, %
APPLE INC	41.76
BANK OF AMERICA CORP	10.30 a.m
CHEVRON CORP	8.02
COCA COLA CO	7.57
AMERICAN EXPRESS CO	6.91
OCCIDENTAL PETROLEUM	4.03
KRAFT HEINZ CO	3.67
MOODYS CORP	2.03
ACTIVISION BLIZZARD INC	1.51
TAIWAN SEMICONDUCTOR SA	1.39

In the investment portfolio of Warren Buffett’s company Berkshire Hathaway in 2022, there were 49 securities with a total value of slightly more than 296 billion dollars.

Among them are shares of financial giants such as Visa, Mastercard, Citigroup, Bank of America, technology companies Apple, T-Mobile US, as well as such world-famous corporations as Amazon, Coca Cola, Procter&Gamble, Johnson&Johnson.

The largest share in the portfolio was held by the IT sector (44%, the main part is Apple shares), followed by finance (25.6%), consumer goods (13.4%), energy (10.9%), communication services (2.9%) and healthcare (1.3%). That is, for investments in the crisis year of 2022, Buffett chose corporations with a world name and good prospects. Surely their shares, which have lost 10-20% since the beginning of the year, will rise again after the end of the global economic crisis.

The return on Buffett’s portfolio has been 83% since 2013, and 8% over the past 3 years. True, in the last 12 months, the profitability was negative – minus 13%, but if you take into account that the legendary investor invests money for the long term, then this fits well into his strategy.

In the first quarter of this year, he made a large purchase of securities for his portfolio, bought shares of Activision Blizzard, Chevron, Occidental Petroleum, HP, Citigroup and Paramount. At the same time, Buffett completely sold shares of Verizon, Bristol-Myers, Wells Fargo and Abbvie.

The fund also fully sold its stake in Royalty Pharma, whose shares it acquired for its investment portfolio in 2021. Then 13 million shares with a total value of 475 million dollars were bought. As a result of the growth of the market price during this time, the profitability was 13%.

Do like Buffett

Buffett’s investment strategy today may well be applicable to Ukrainians as well. After all, now, from the point of view of the legendary investor, is just the right time to buy shares of the world’s largest companies, which have greatly fallen in price.

“Buy in a crisis” – this slogan can become a motto for an investor from Ukraine. After all, it is possible to earn much more by investing money like Buffett than by simply putting money in a traditional bank deposit. With the current average interest rates on hryvnia deposits in the range of 14-22% per annum and inflation exceeding 30% by the end of the year, the yield on bank deposits will not allow saving money from depreciation. By investing in shares of the world’s largest companies, you can get much more impressive returns. So, for example, over the past 3 years, Apple shares have increased in price by 81% — from $74 to $134, and Visa securities — by 48%, from $150 to $222.

Of course, the optimal option would be a combination of various tools. No one prevents you from putting part of the available money on a bank deposit, and investing the rest in securities or precious metals.

This is exactly how many Americans behave. They are not afraid to invest in the stock market and do not put all their money exclusively on deposits. After all, interest rates on deposits in US banks, as a rule, do not exceed 1% per annum, and inflation in November reached 7.1% per annum.

With the support of experts

Another important principle of Buffett’s strategy, which is as applicable today as ever, is that investing can and must be learned. Anyone can become a successful investor, but it is necessary to enlist the support of professionals.

This can be done with the help of specialists of the International Academy of Exchange Trading, a partner of Forex Club in Ukraine. Forex Club has more than 25 years of experience in financial markets and provides investors with the opportunity to earn money by investing in the most promising financial instruments. Among them are shares of the world’s largest companies, raw materials, precious metals, currency pairs.

You can start investing and form a profitable investment portfolio using the trading platform Libertex from Forex Club. In this platform, more than 300 different financial assets are available to investors, including shares of the world’s leading companies, stock indices, currencies, metals and other assets. This platform also includes instruments from Buffett’s portfolio, such as Chevron, Visa, Mastercard, Citigroup, Apple and many others. Just open and top up an account in Libertex, choose a suitable financial instrument, and also decide on the amount and direction of the transaction. After that, you will only have to click “buy” or “sell” to get the opportunity to earn on the growth or decline of the asset, respectively. Having invested in this way, in several of the most attractive assets, you will be able to form a portfolio that can bring you a good profit.

Working with Libertex, you can trade both with the help of only your own funds (as advised by Buffett), and with a “multiplier” that allows you to multiply the effectiveness of your investments. At the same time, trading “on his own”, the investor assumes minimal risks, because he can lose the invested money only if the company whose shares he bought collapses completely. But this is unlikely to happen with such giants as Apple, Microsoft or Visa. For example, Apple for the third quarter of the 2022 fiscal year received a record revenue of $83 billion — that is, everything is more than good financially.

So, in the current economic realities, it is not worth wasting time. The world crisis is precisely the period when it is worth entering the financial market and buying shares at attractive price levels.

Leave a request for a free consultation with specialists of the International Academy of Stock Trading, and experts with many years of successful investment experience will tell you how to choose a financial asset for investment and invest in it to form your “Buffett Investment Portfolio”.

Source: Ministry of Finance

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