Warren Buffett: How To Make Millions With Little Money & Just 3 Stocks | Big Money Investing Review

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Warren Buffett his name is synonymous with wealth he’s the grandpa everybody loves that knows more about investing than we do but surprisingly enough Warren Buffett has been very open about how he’s earned his wealth the CEO of Berkshire Hathaway is here to teach us how to make millions with just a little money and even more impressive all you need is just three stocks to reach Lamborghini status I mean who needs a degree in finance when you have Warren Buffett telling you what to do right according to him the secret to his success lies in value investing which involves finding stocks that are undervalued by the market and investing in them for the Long Haul and he’s not talking about a few months or a year we’re talking about years even Decades of waiting and watching those stocks grow While most people want to get rich today those who are patient are rewarded handsomely more than those who don’t along with having patience you also have to have persistence and the ability to resist the temptation to jump ship when the stock market takes a dip kind of like right now when the recession signals are flashing red before our very eyes however some people continue to think that this time is different and a new bull market is coming so grab your calculators and get ready to take some notes because Warren Buffett is about to show us how to make millions One undervalued stock at a time let’s focus on Buffett’s investment philosophy which involves buying and holding stocks for years even decades rather than trying to time the market or make quick profits his strategy is rooted in his belief in the power of compounding he understands that the longer he holds on to a stock of a high quality company the more time it has to grow and generate returns to find this type of company as mentioned earlier Buffett employs a value investing approach and looks for companies that are trading at a lower price than their intrinsic value as determined by their financials assets and earning potential in simpler terms by buying these stocks when they’re undervalued he’s able to maximize returns when the market eventually corrects and the companies reach their true potential as he predicted leading to Rising stock prices isn’t it just amazing how he has this knack for investing in struggling companies and turning them into gold mines it’s not like he’s just throwing darts at a board blindfolded and hoping for the best instead he actually takes the time to understand the companies their potential and their risks and then makes decisions grounded by extensive analysis while avoiding the temptation of jumping from one hot stock to another but buying these kinds of stocks is only part of the equation buff it is also very selective when it comes to diversification while many investors choose to spread their money across a wide range of stocks and industries to reduce risk Buffa believes in holding a concentrated portfolio of stocks in his view the versification can actually dilute returns and Lead To Mediocre performance instead he prefers to focus his Investments on a handful of companies that he believes in and trusts there’s nothing magic we like to put a lot of money in things that we feel strongly about and that gets back to the diversification question we think diversification is as practice generally makes very little sense for anyone that knows what they’re doing diversity education is a protection against ignorance I mean if you want to make sure that nothing bad happens to you relative to the market you own everything there’s nothing wrong with that I mean that that’s a perfectly sound approach for somebody who who does not feel they know how to analyze businesses if you know how to analyze businesses and value businesses it’s crazy to own 50 stocks or 40 stocks or 30 stocks probably because there aren’t that many wonderful businesses are understandable to a single human being in all likelihood and to have some super wonderful business and then put money in number 30 or 35 on your list of attractiveness and forgo putting more money into number one just strikes Shirley and as Madness you know if all you have to achieve is is average it may preserve your job but it’s a confession in our view that you don’t really understand the businesses that you own on a personal portfolio basis you know I own one stock you know but it’s a business I know it and it leaves me very comfortable uh do I need to own 28 stocks in order to have proper diversification you know and be nonsense and within Berkshire I could pick out three of our businesses and I would be very happy if they were the only businesses we owned and I had all my money in Berkshire now I love it the fact that we can find more than that and that we keep adding to it but three wonderful businesses it’s more than you need in this life to do very well and the average person isn’t going to run into that I mean if you look at how the fortunes were built in this country they weren’t built out of a portfolio of 50 companies they were built by someone who identified with us with a wonderful business Coca-Cola is a great example a lot of Fortunes have been built on that and there aren’t 50 coca-colas there aren’t 20 if there were to be fine we could all go out and diversify like crazy among that group and and get results that would be equal to owning the really wonderful one but you’re not going to find it and and the truth is you don’t need it a really wonderful business is very well protected against the vicissitudes of the economy over time and and the competition I mean you know we’re talking about businesses that are resistant to effective competition and three of those will be better than a hundred average businesses and they’ll be safer incidentally I mean there is less risk in owning three easy to identify wonderful businesses there than there is in owning 50 well-known big businesses and uh it’s amazing what has been taught over the years in finance classes about that but uh I can assure you that if I had to bet the next 30 Years on the fortunes of my family that would be dependent upon the income from a given group of businesses I would rather pick three businesses from those we own than own a diversified group of 51. yeah what he’s saying is that much of what is taught in modern corporate finance courses is twaddle of course this approach also comes with risks if one of the stocks in his portfolio experiences a significant decline it can have a major impact on his overall returns five for Buffett the potential rewards of a concentrated portfolio outweigh the risks he also recommends that most investors who do not want to commit to finding and analyzing a stock just stick with low-cost index funds that track the S P 500 because that too will have average returns and they are reliable seven percent on a yearly basis is pretty darn good just ask the crypto Bros who seem prices drop over 50 percent since their all-time highs not too long ago now let’s find out how Buffett harnessed his investment strategy to these three stocks that made him millions and how he benefited from them so much namely American Express Coca-Cola and Wells Fargo in the 1960s Amex faced a crisis due to the salad oil Scandal and because of this the entire Futures and commodities markets were nearly wiped out amex’s stock price plummeted and many investors panicked however unlike the others who shied away from Amex Buffett saw this as an opportunity to invest in a great company at a low price with its solid competitive advantage and a loyal customer base Buffett temporarily ignored the Scandal and trusted his guides and his guides is worth more money than you can comprehend he bought a total of 1.3 billion dollars worth of its stock stopped in 1995 and held on to that since then Buffett’s investment in Amex has grown to over 22.4 billion dollars which is a 17 times gain with an estimated dividend rate of 23 percent this is the power of His value investing approach proven effective in Amex he applied this to his other investment decisions from then on patience is truly a virtue the next is Coca-Cola Buffett invested in Coke in 1988 when it was not as popular as it is today and was still trying to recover from the Black Monday crash with severely devalued shares Buffett saw the potential in the brand and invested a total of 1.3 billion dollars in the company to get 6.2 percent ownership by 1994. today Coca-Cola is one of the most recognized brands in the world which again proves Buffett’s Keen Eye for potential and his investment has eventually paid off in fact it is estimated that his stake in Coca-Cola now at nine percent has grown to a whopping 24 billion dollars not mentioning yet the dividends he earned over the years which is around 10.2 billion dollars or 54 annual rate up next is Wells Fargo enticed by the fact that it has a cheap price but is still a well-managed bank with so much potential he began investing in the company in 1989 and his initial investment was 290 million dollars for a 9.7 stake which grew up to 30 13.3 percent until 1994 because of continuous Investments during the housing crisis Wells Fargo is one of the largest banks in the world and Buffett’s investment in the company has been highly profitable through dividends and continuous increases in stock prices it is evident since his share in the company peaked at 12.7 billion dollars in 2016 with a market value of 22.1 billion dollars in that same year although slowly over the years he dumped a significant number of stocks and because of corporate issues controversies and the Law’s moral compass of the company both a cut ties with Wells Fargo in early 2022 and sold most all of his stake what a surprising turn of events but still he earned billions in capital gains plus the dividend stream from almost 30 years of holding the shares approximately 8.6 percent but why did these stocks fit with Buffett’s investment philosophy well they were all high quality companies with solid fundament mentals that he understood and trusted the market also undervalued the price because of various reasons which made them attractive opportunities for him to take advantage and hold on to for the long term fast forward today and these stocks are still performing well Coca-Cola and American Express are both considered Blue Chip stocks with Coke being one of the most valuable brands in the world Wells Fargo has faced some challenges recently but is still a significant player in the banking industry investing can be a tricky business but applying Buffett’s investment principles which have become a blueprint for many investors who seek to emulate his success can help guide an Investor’s portfolio to success one focus on long-term Investments Buffett is known for his focus on long-term Investments he believes that holding stocks for the long term is the best way to see significant returns emulating this means avoiding the temptation to trade frequently and focusing on the fundamentals of the companies to invest in short-term Market fluctuations should not distract an investor from their long-term goals two look for high quality companies buff it with the help of his friend in the business Charlie Munger has changed his perspective from Graham’s quantitative based investing to Quality based this means that rather than buying okay companies that are priced cheaply what they should look for is the underlying quality of the business since this will determine its long-term performance three buy undervalued stocks Buffett is a value investor meaning he looks for stocks that are undervalued by the Mr Market this involves looking for companies that have strong fundamentals but are trading at a discount to their intrinsic value buying underpriced stocks can provide a margin of safety and potential for significant returns when the market eventually recognizes the company’s True Value 4. hold a concentrated portfolio Buffett is known for holding a concentrated portfolio of stocks with a focus on His Highest conviction picks while this approach can be risky it also provides the potential for significant returns however conducting thorough research and Analysis is essential to ensure that each holding is indeed a high quality company with strong fundamentals also note that Buffett does not entirely condone diversification since it is indeed a safety net for some investors because at the end of the day risk tolerance investing skills and personal financial situation are different for each investor investing is never a sure thing however following these principles and staying focused on long-term goals can help increase the chances of investment success as proven by the Oracle of Omaha himself with a bit of an adventurous feeling investors can take a page from Buffett’s book and start doing their own research but of course they cannot expect to become a billionaire overnight in fact they cannot expect to become a millionaire overnight either investing takes time patience and a lot of hard work so when taking up this challenge start by understanding the basics of invest testing then learn how to read financial statements and research companies it is important to always invest within your circle of competence too because the Jack of all trades seldom is good at any Buffett’s investment philosophy has been widely studied and celebrated for its Simplicity and Effectiveness despite his success with just a few key stocks he says in my view for most people the best thing to do is to own the S P 500 Index Fund which provides a diversified portfolio with exposure to a broad range of companies across various Industries this is especially true for investors who just want to participate in the National Economic pie and be fine long term however for those who are willing to put in the time and effort to research individual companies it’s reasonable to Target just a handful of stocks of course this is easier said than done as it requires a deep understanding of the company’s financials industry economics and competitive landscape in addition there are certainly risks and involved in a concentrated portfolio if one of the chosen stocks takes a nosedive the portfolio could suffer significant losses on the other hand if the companies achieved their expected performance as predicted the potential rewards can be outstanding just look above its own success over the years ultimately the decision to focus on a few key stocks or invest in a diversified portfolio like the S P 500 comes down to an individual’s risk tolerance personal circumstances and investment goals

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