Warren Buffet’s firm Berkshire Hathaway became the first non-tech US company to cross $1 trillion in market capitalisation on Wednesday. Shares rose as much as 0.8 per cent to push the company’s market capitalisation above the trillion-dollar mark for the first time.
The rally this year has outpaced the gains posted by S&P 500, the benchmark index of US markets just as S&P BSE Sensex for Indian markets. It is worth recalling that Berkshire Hathaway early this month sold nearly half its stake in Apple, offloading nearly 50 per cent of the shares, leading to a rise in the firm's cash holdings to nearly $280 billion.
These are the money lessons which certainly played their part in helping Berkshire achieve a $1 trillion market cap.
I. Power of a moat: Warren Buffett is known for investing in companies which have an economic moat. His viewpoint is that you should invest for a long term and buy companies you don't want to sell. He once stated that you should buy companies which even a fool can run because someday a fool will.
II. Investing is simple: Although it takes anyone a long time to master a skill including trading, he asserts that investing is pretty simple and unnecessarily complicated by some.
He says that there are some fundamental rules which one should follow and investors should simply stick to them to ace the markets.
III. Question your decision of investing: Warren Buffett is known for asking the right questions before deciding to invest in a stock.
He is of the view that investors should learn to question his decision of every investment and stock. By doing this, you will be able to make right investing choices.
IV: Ignore the noise: Warren often said that investors should overlook the noise and invest objectively. So, it is advisable to stay invested regardless of what others are saying.
Warren Buffett’s mentor Benjamin Graham referred to the market prices as the point of view of a person called Mr Market. Everyday, he comes up with a price for your holdings which may be widely off the mark.
V. It is all about the psychology of investing: Warren Buffett often said investing is about managing emotions. He once said that investors should become greedy when others are fearful, and fearful when others are greedy.
In other words, when there is a bull run, it is recommended to be fearful since a correction may follow soon and when everyone else is selling, it is recommended to be greedy and buy stock at an attractive price.
