Invest Like a Billionaire: Investment Tips from Warren Buffet

Investment is a very risky gamble: you either gain much or lose much. One man who made a billion-dollar empire by simply risking his money on all the right stocks is Warren Buffet: investment icon and (after taking the top spot from IBM CEO Bill Gates in the Forbes Magazine 2008 list) richest man in the world. Here are some simple Buffet-style tips to help you make the right investment decisions:

* Think long-term prosperity, not short-term

Fluctuations are inevitable in the world of investment: one day the prices are high and the next day the prices are low. Do not panic when the value of your stock starts decreasing. The sudden decrease in a stock’s value, after all, is not enough reason for you to sell it. So as long as the business you invested in is doing well, do not pull out your stock just because its market value is not as high as before. For all you know, it is just warming up to an unbelievable skyrocket of value.

* Consider business potential, not market value

Mr. Buffet believes that “Bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.” By judging the outcome of his October 1987 gamble, Mr. Buffet might just be right. On October 1987, the financial industry witness how all global stock markets crashed into the ground. In a desperate attempt to redeem their financial condition, many stock holders started selling their stocks for unbelievably low prices. Mr. Buffet, however, did the opposite: he bought stocks. Because he believes the company has a great business and a bright future, Mr. Buffet bought 10% of the Coca Cola Corporation on October 1987: the largest stock purchase of his life. Mr. Buffet’s gamble did pay off. By 2006, Mr. Buffet’s investment in Coca Cola earned him over US$11 billion.