How to invest

Warren Buffett grew up in Omaha, Nebraska, and at a young age had a knack for numbers. He could keep track of complex calculations in his head and likes to think through in a logical manner. So it was no surprise that he immediately liking to classical book, Benjamin Graham, The Intelligent Investor, where he was the first in the university. The starting point of value investing, focusing on numbers and logic, appeals to the young Buffett at multiple levels.

He was so on the ideas in the book that he would study under Graham left Omaha in New York, finally, for him in 1954 to work. After his time with Graham, the ripe age of 25, Buffett returned to Omaha and began his now legendary, limited partnership investments. He ran it mainly by the value of the techniques he learned from his mentor Graham. They succeeded, spectacularly, which also exceeded its own expectations Buffett.

Over a period of thirteen years, Buffett has increased 29.5% annual return, and that he never had one year to lose. Today, Buffett is still going strong. His Berkshire Hathaway annual reports are as entertaining as informative and gives a unique insight into the human soul that they call the Oracle of Omaha.

Some of these can teach us how to invest in Warren Buffett, while others are interesting to read but not particularly useful in a practical sense, either because they are unique to Buffett and dangle huge resources that the average investor does not have access. Yet there are many pragmatic wisdom and knowledge to keep Oracle Buffett acolytes reading and learning for many long years.

When it comes to investing like Buffett, there are three basic things you need to own and dominate, if you succeed. You are in order:

1. Control over your emotions
2. Knowledge,
3. and ability to apply knowledge.

On the emotional side, taught Buffett, who else but Benjamin Graham. Graham as a stock price will consist of two parts: an underlying intrinsic value component and a speculative component. Underlying value can be determined with exact numbers and logic. The speculative element (which may be positive or negative) was mainly due to human emotions like fear and greed, and can not be calculated in advance.

With this knowledge, Buffett was able to repeat investors who invested illogical, since the use of their emotions. He used a euphemism to describe Mr. Graham market to buy, sometimes Mr. Market in your possession at very high prices, because it gives a cheerful mood. Everything looks good for him and he is very optimistic about the future.

At other times, Mr. Market purely gloomy. He says that the bottom falls out of the economy and just want to get rid of their shares. So he offers them at very low prices. The main thing is that it should be noted that the actual existence of the intrinsic value has not changed, the only thing that changed is Mr. Market feelings and moods. At any time, you can sell your shares for Mr. Market to buy his shares, or ignore his offers, and repeat the whole process the next day. If you are really rich in the stock market, you have the advantage of people with less knowledge than you or those who have no control over their gut feelings.

If you have completed your overpriced, buy another person at the other end. If the stock falls, people lose money, maybe a lot of money. Maybe even his house and other assets. It is not what most people think of when they issue shares of trade, but it is reality. The trick is to make sure you are not the person to buy overvalued stocks and lose money.

Use other people's feelings is one thing, but to keep the lid on your emotions quite another matter. But here is Buffett. He knows how to effectively manage their feelings. It is not to say that he is a volcano. He is still a human being. And you can be sure he has the same emotional needs and demands that everyone does, but its strength is how he is with the instincts and needs.

Most people are not disciplined enough to always get it right when their emotions can run high. That is why they need a mechanical system to carry out their investment plans for them. Thus, emotions and logic are always retained. Unfortunately, most investors do not use such systems. They continue to rely on their feelings about losing money and to take more risk than they need.

That Buffett is feeling like a double-edged sword. They can hurt you if you let it, or you can enrich yourself, if you see this as an opportunity by others, not for such a firm grip on those gains. He loves the fact that he can buy large companies at large discounts, because others are blinded by fear.

And he quoted regularly quintessence of Benjamin Graham's line, "You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are correct." This is classic Buffett, breaks the market in numbers and logic.

And that's the key factor for success is: keep his emotions from his investment. If you want to invest like Buffett, you must do the same. Otherwise it is just one of the millions of so-called investors who do not have a chance to match Buffett's success.