By now, almost everyone knows about Warren Buffett and he's widely considered as the most successful investor of all time. But what is it about his approach to investing that makes him such a great investor? Is he constantly buried in the stock market news? Is he constantly on the phone with a stockbroker, furiously buying and selling?
I was reading recently that testosterone levels play a part in stock market success. Of course, the study says that too much testosterone is not good either. Yet, while I'm no authority on the subject, I feel compelled to be kind of skeptical.
All the "investing greats" have advocated the research, buy, and hold method. John Templeton, Peter Lynch, Warren Buffett, they all have the same core principles for success. A look at Warren Buffett's moves reveals three things.
He's patient and does thorough research on every company he's contemplating buying into. If he doesn't understand the business, he doesn't invest in it. That's why he never bought Microsoft. If the business model is not turning a profit, he stays out. That's why his portfolio wasn't impacted by the burst of the dot-come bubble.
He waits for the right price to buy. That's where his research proves invaluable. Once he has determined that a business's fundamentals are solid, then he looks to buy. But contrary to most people, he doesn't panic when the market goes down. Instead, he looks for those nuggets with sound and profitable business models, but whose stocks are affected by the market and don't quite reflect their true worth.
His ultimate goal is to never have to sell the companies he invests in. He says that he buys into businesses, not stocks. It's reported that he doesn't have a stock ticker on his desk because to him this information is irrelevant.
Women And Investing.
Here's a summary of women's approach to investing:
They spend more time researching their investment choices than men do. Thus they are much less susceptible to "hot tips" and other high-risk investing techniques. Also, their research methods are different from men's, because they go deeper than just the numbers. They invest in companies they feel good about ethically and personally.
They trade much less than women. Men trade 45% more often than women do. Since women trade less often, they get better returns because they pay less commissions and taxes.
As a result, women's portfolios gain 1.4% more on average than men's portfolios. Single women fare even better, besting their male counterparts by 2.3%. When you account for compounding, this seemingly small differences can add up to hundreds of thousands, if not millions of dollars over 20 or more years.
Women focus on products that meet their needs, products they can't live without, and consumer good they buy on a day-to-day basis. By comparison, Buffett's portfolio includes Coca-Cola, Gillette, GEICO, Fruit of the Loom, and so on.
Awaken The Woman Within
Even if you're a man, by focusing on the traits that guide Warren Buffett - patience, the willingness to dig deep, the ability to wait for the right price, and the desire to buy and hold instead of trading like there's no tomorrow - you can awaken the feminine side of your investment profile. You should definitely look into it. Most likely, your portfolio's returns will look a lot better because you did.
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Tags: women's issues, stock market investing, warren buffett, stock market success, women and investing