6 Investing Principles Followed by Warren Buffett

Value Investing

[{"selector":"#anim-d060d106-5272-4437-88da-8c876530b1f1","keyframes":{"transform":["translate3d(-115.18988%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-cd954d6c-477e-49ef-bcb3-7d9924d5589f","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-8369e00d-2491-42b5-a5b8-1774d7e62696","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] [{"selector":"#anim-5c00c9b2-d626-4efb-af58-9a621fa73618","keyframes":{"transform":["translate3d(115.18987%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-37c5d389-75e7-49c6-9828-da643e87019e","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-a3f70c67-0d18-41ff-90fd-bec226a6a434","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] Buffett's core principle is value investing. He seeks stocks trading below their actual worth, based on future earnings potential. He buys stocks on sale, aiming for long-term growth.

Margin of Safety

[{"selector":"#anim-f8e15714-ce64-49f6-9e08-710f38c7a508","keyframes":{"transform":["translate3d(115.28663%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-85fc22f1-8181-426b-a8b1-b48e6cd285af","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-f4a3fee5-dc3c-480c-bdd7-4f4d7ee458c6","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] [{"selector":"#anim-12a208a9-beea-44ae-92d5-a167196b5c2c","keyframes":{"transform":["translate3d(-115.92356%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-7666bc87-82d5-48e7-8f1d-51e8ada34b26","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-2c1d47b8-95fa-445f-a1b6-41331e2bf8a1","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] Buffett buys stocks well below their estimated value (intrinsic value). This difference acts as a cushion (margin of safety) protecting him from price drops.

Long-Term Focus

[{"selector":"#anim-451c25bb-2f1f-4b6c-8e9b-d980bead1515","keyframes":{"transform":["translate3d(-116.02564%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-0fac6f93-2c5e-4e56-870e-f306cd4d46a8","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-2bbd9512-5024-45be-a898-d7058e074c3c","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] [{"selector":"#anim-429933bb-1699-4c49-9ad9-db395018e6e5","keyframes":{"transform":["translate3d(115.38461%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-83389cdd-184e-4485-af63-ce9aa6921ffd","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-fdaf7251-f8b7-45ff-970d-0c5e73dd3f53","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] Buffett prioritizes buying quality companies and holding them for years, ignoring market noise to gain from long-term growth.

Contrarian Investing

[{"selector":"#anim-0283d4c8-2772-4955-885d-2978a12c4374","keyframes":{"transform":["translate3d(116.02564%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-7397efeb-e50a-449d-aca9-30d7ae59face","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-8aed6679-83d6-4c15-bbb2-6be6dd35fa79","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] [{"selector":"#anim-d970f8ed-fb71-4aea-8816-6c20fe3cb9c9","keyframes":{"transform":["translate3d(-115.38462%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-94480b64-8740-4cd3-9cd1-b9537677319f","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-10070c85-6afb-44a0-ba57-71c7abdf2b89","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] Buffett buys (greedy) when others fear a crash and avoid (fearful) buying during market highs.

Invest in Businesses You Understand

[{"selector":"#anim-7b4916f8-2390-4648-95ed-e3d892f8ba3e","keyframes":{"transform":["translate3d(-115.97444%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-951caf73-1fd8-409c-8878-aab4a28d1403","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-01e2145e-d413-4a3a-bd59-29222fc39ba6","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] [{"selector":"#anim-5d5cda56-003a-4686-b8ba-a4fe36073dbb","keyframes":{"transform":["translate3d(113.37580%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-9cda60ca-bc9b-43ba-9756-f0693003ca60","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-8525c267-d22c-435e-a2e8-f45ccff44167","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] Buffett only invests in familiar businesses, avoiding complex ones. This lets him judge their value and growth potential.

Mr. Market

[{"selector":"#anim-c75d47ae-df44-4a45-8655-4639afb8a8d3","keyframes":{"transform":["translate3d(-115.14196%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-7aa6f24d-64ed-455b-a9af-0dce003d6796","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-6073910b-5e0a-43c8-b0bc-1637165aa99c","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] [{"selector":"#anim-fbef0ff9-267d-4390-bafb-20a62d118f57","keyframes":{"transform":["translate3d(115.18987%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-267601ec-4670-44a1-a9e3-240c9e079594","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-b6ebfaf5-481a-4ce3-b83b-f432a206c03f","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] Buffett sees the market as “Mr. Market,” offering daily deals. Be disciplined and buy only when Mr. Market offers bargain prices.