Warren Buffett's investing tips (infographic) - Monevator (2024)

• 1David StuartApril 9, 2013, 2:04 pm

  He thinks about money 18 hours a day?

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  Is that healthy?

• 2AlexApril 9, 2013, 3:04 pm

  1. I agree – that is fun.

  2. However, it seems quite slanted in places. It appears to be exhorting the public to pick individual stocks – but didn’t Buffett recommend index-trackers for most of us? Well, I keep on reading the quote everywhere.

  3. Extra marks, too, for timeliness: it appeals to and feeds the personality cult around Buffett. Rather like a lot of the current media coverage of and reaction to Thatcher’s death, then. Hagiography is alive and well.

• 3JuanApril 9, 2013, 3:15 pm

  If I remember rightly, the quote is something like: “Indexed investing protects against ignorance”

• 4SimonApril 9, 2013, 3:41 pm

  I’m with Alex in feeling a little uncomfortable at the recommendation that plebs like me should pick stocks.

  Unrelatedly, I wonder if we’re soon going to need a new version of Godwin’s Law pertaining specifically to Thatcher.

• 5The InvestorApril 9, 2013, 4:42 pm

  Hey all! 😉 Yes Buffett suggests index trackers for what he calls “know nothing” investors, who he says will beat the majority of “know something” investors, ironically enough.

  Which is pretty much The Accumulator’s message here, too. And others of course.

  Even Ben Graham the father of value investing said most investors would be better off buying equal portions of the top however many stocks — this was in the days before index funds could be bought, of course.

  Both men believed that value investing could beat the market, but even with that mindset they are accepting most by definition cannot be value investors, so are better off not trying.

  I agree. I invest plenty of my money via stock picking but 98% of the articles on Monevator and all my friends I talk to hear the passive message. In my experience most people are nothing like obtuse, contrary, and instinctively self opinionated — not to mention naturally cheapskate — enough to even suggest they go near value investing. And most have absolutely zero need to in order to have the best chance of capturing their share of the gains from equity.

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  @Simon — I’m sure you’re joking with ‘plebs’ but don’t do yourself down if not. 🙂 Index funds are the smart person’s choice in most cases. Of the reasons I actively invest, knowledge and ‘smarts’ and even experience come way down the list. The Accumulator once told me he feels some handful of people simply ‘need’ to actively invest, even when they know and promote the index gospel from every angle. I think he’s right, for good or ill.

  Re: Mrs Thatcher, I am running multiple pitched battles on Facebook currently. Can’t decide whether to post on her or leave well alone! Not much light in all the heat being generated.

• 6MoneymanApril 9, 2013, 5:31 pm

  “Even Ben Graham the father of value investing said most investors would be better off buying *equal portions* of the top however many stocks — this was in the days before index funds could be bought, of course. ”

  Just to underline that most index funds DON’T do this as they are weighted by capitalisation. You would need an equal-weighted index fund.

  By the way, the equal-weighted fund would have done a lot better that the cap-weighted one – in the US at least
  http://www.the-diy-income-investor.com/2013/04/dont-buy-s.html

• 7The InvestorApril 9, 2013, 7:31 pm

  @Moneyman — Yes indeed, worth mentioning. That said I’m not sure Graham would have had a view as to the superiority of one method over another — he was free styling what was just a hypothetical in his era.

• 8Grumpy Old PaulApril 9, 2013, 9:00 pm

  Investor,
  I found the infographic almost impossible to read. Sensory overload and all that. But then most of my friends think I have Asperger’s syndrome.

  No offence intended.

  I’m staying well clear of any on-line debate about Thatcher. However, I did collect some statistics on historical rates of basic rate income tax, NI and VAT from the IFS website.

  From 1979-80 to 1982-3 the changes were as follows:

  a) Basic rate income reduced from 33% to 30%
  b) NI increased from 6.5% to 9%
  c) VAT increased from 8% to 15%

  So despite the rhetoric and conventional wisdom, some pretty hefty tax increases which were not fully reversed until 1987-88. The total equivalent taxes today are still below the 1987-88 level. But my analysis is very crude and does not take into account changes in personal allowances, NI thresholds/ceilings, abolition of MIRAS and, perhaps, most important of all, the threshold for higher rate tax which I suspect has plummeted when measured as a multiple of average earnings.

  It is also evident that governments of all political hues have played games with NI and the basic rate of income tax in order to capture headlines by reducing the latter. The main beneficiaries will have been pensioners with taxable income (exempt from NI) and people with incomes well above the NI ceiling.

• 9BenApril 10, 2013, 10:50 pm

  Is there not an enormous asymmetry of information for Buffet vs “the rest”?

  Back when Buffet started were company accounts more transparent than now? Would Buffet like to invest now with just the annual report to go on?

• 10IoannisApril 16, 2013, 3:13 pm

  Intuitively I somehow followed Buffet rules and I started saving from a young age…unfortunately I invested in the Greek Stock Market (I am Greek) back in 2007. And I made my choices very carefully however, as you would expect I am losing 90% of the money invested and I do not even need to adjust this to inflation.

  However, I will go for what Buffet says and I haven’t sold any of these shares as I hate losing money. I hope that I will see first profits from the shares in 10-15 years from now and maybe a few dividends.

• 11The InvestorApril 16, 2013, 3:23 pm

  @Ioannis — Sorry to hear about your misfortune. I know it’s a bit late for you, but your story is another reminder why we need to always consider international diversification. I hope your portfolio recovers sooner rather than later, and the Greek economy, too.

• 12IoannisApril 16, 2013, 3:38 pm

  Thank you for your reply,

  I do not see this as a misfortune. I have to admit that it happened at the right time, because otherwise I would have lost much more. It showed to me that it is not that easy to make money and you need to work hard for it either as an investor, businessman or employee. So I am happy!

  I agree with you that international diversification is a must, but I didn’t invest such an amount of money that would justify that, so I decided to diversify locally.

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