"Buy something cheap enough and you can not lose money in the long run"
"We simply attempt to be greedy when others are fearful and fearful when others are greedy"
"The stock market is a device for transferring money from the impatient to the patient"
"Think of a stock as buying a piece of a business"
Warren Buffett initially adopted a value investing approach during his early years, which focus's on finding companies which are selling below their true value. This is a uncommon approach yet is done through buying through markets full of pessimism and this investment approach requires courage in order to handle short term market fluctuations. This investment approach is well suited to and it is not advised to those who seek to make short term gain through stocks.
Buffett also sticks to his basic philosophy of holding onto your investment cash until you find a true value investment, when you think you've found one-you have not it is wise to keep looking. This process can takes months, you do not need many good investments in your lifetime a few will put you well on your way to creating massive wealth. Finding companies which you understand and being realistic about what companies you are able to value using your skill set, the more companies you look through the better your investment choice;
Buffett's investment strategy has evolved over the years, in a fast paced world it is vital that you are able to learn and add to your investment strategy. You can achieve massive success through value investing yet it is an investment approach which requires strong emotional discipline and patience, you should not buy a value stock unless you can hold it for 10-20 years minimum. The basic valuation skills you need can be self taught valuing a firm is not as complex as wall street makes it and doing the opposite of what goes on there will offer you greater chances of success when value investing. Being able to go against the crowd is essential in value investing and will allow you to produce better long term results than the masses.
-The importance of creating a circle of competence.
-How to choose stocks.
-Emotional and mental characteristics of investing (building the right framework).
How do you find good stocks?
Finding good stocks is a simple process, it requires discipline and work ethic-yet the steps are simple. Find a group of companies which are low P/E or low P/B: any indicator which may suggest the company is undervalued. Bare in mind that these ratios alone will not suggest a company is under valued. You need to be able to screen stocks, using simple metrics which will allow you to cut the fat when it comes to finding undervalued bargain issues. You can screen and than value the companies which you have found but to find good stocks, you have to be willing to search for a while: in the end the one who turns over the most stocks will win, you don't need to go for a stock quickly.