The Wisdom of Warren Buffett
"I want to be able to explain my mistakes. This means I do only the things I completely understand."
With those words, Warren Buffett is telling us that: If you don't understand what you are doing, then why are you doing it?
The proper investment approach is not intuitive - it is rational mixed with the right temperament. Ignorance is bliss unless you are investing. Then it usually leads to nightmares.
If you want to be able to explain what you did wrong, you need to know how to explain what you did right, and why you did it in the first place.
You need to know a good business from a bad one, and you need to be able to determine if a company is underpriced or overpriced. If you can't do that, then you should find someone who can do it for you, otherwise you are just throwing dice at a craps table where the odds are always stacked against you.
* * * * *
With those words, Warren Buffett is telling us that: If you don't understand what you are doing, then why are you doing it?
The proper investment approach is not intuitive - it is rational mixed with the right temperament. Ignorance is bliss unless you are investing. Then it usually leads to nightmares.
If you want to be able to explain what you did wrong, you need to know how to explain what you did right, and why you did it in the first place.
You need to know a good business from a bad one, and you need to be able to determine if a company is underpriced or overpriced. If you can't do that, then you should find someone who can do it for you, otherwise you are just throwing dice at a craps table where the odds are always stacked against you.
* * * * *
posted by Bob Moser at
7:41 PM
0 Comments:
Post a Comment
<< Home