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Ladies and gentlemen, gather around for some finance fun! It's time to talk about the man, the myth, the legend - Warren Buffett! You all know him, you all love him, and you wait for his yearly teachings like a kid waits for the Tooth Fairy. This investing guru has been delivering whopping annual returns of 19.8% since 1965 - that's better than the S&P 500's 9.9% returns over the same period. And just when you thought he couldn't get any better, he pulls off a 4% return in 2022 while the S&P loses 18.1%. Talk about a mic drop! So, let's get ready to hear what this financial wizard has to say in his 2023 shareholder letter.
This year, he dropped some serious knowledge bombs, so let's break it down in a hilarious way.
First of all, Buffett wants you to focus on business-picking, not stock-picking. Apparently, his success comes from identifying businesses with long-lasting favorable economic characteristics and trustworthy managers. So, if you're trying to buy and sell stocks like a maniac, you're doing it all wrong!
But don't worry, folks. Market inefficiencies still exist! In other words, stocks often trade at foolish prices, both high and low. So, there are still opportunities for investors who are willing to look for undervalued companies. Just don't get too crazy, okay?
Buffett also dropped some truth bombs about success. Apparently, it comes from a few good decisions, made about once every five years. That's it, folks! Just a few good decisions, and you'll be swimming in cash like Scrooge McDuck.
Long-term investing is the key to success. According to Buffett, you gotta be in it for the long haul. He cites his investments in Coca-Cola and American Express as examples of long-term investing success, with both companies providing increasing dividends every year. So, if you're impatient and looking for a quick buck, you might wanna sit this one out.
Let's not forget the wisdom of Warren Buffett himself! He said, "Let's say I made a big investment mistake back in the 90s and it didn't grow at all, just stayed at $1.3 billion. (For example, if I invested in a 30-year bond with a fixed interest rate.) Well, now that investment is only 0.3% of Berkshire Hathaway's net worth and is still making us $80 million per year. The takeaway for investors is this: the small losses don't matter in the long run when you have big winners. It also doesn't hurt to start early and live a long life." So, keep this in mind when you're considering your investment strategies.
Here is some additional wisdom from Warren and Charlie: Investing can be a real pain in the butt, am I right? But fear not, it's not rocket science. As Warren and Charlie say, "The world is full of foolish gamblers, and they will not do as well as the patient investor." So, if you're looking to be a successful investor, you need to start thinking about the long haul.
But don't get intimidated! You don't have to be a genius to make good investments. All you need is a bit of patience, and that's something you can totally learn. If you can stay focused and committed, you can achieve some truly great things.
And let's get one thing straight - investing isn't just about keeping an eye on the stock market's daily highs and lows. What you really need to do is look for solid, long-term investments and hold onto them tight. Don't try to get rich quick, because that's a surefire way to end up with nothing.
At the end of the day, successful investing comes down to being adaptable and willing to learn. The world is always changing, so you need to be ready to change with it.
And that's it, folks! Warren Buffett and Charlie Munger dropping some serious knowledge bombs. So, go out there and invest wisely, my friends!
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