Warren Buffett's Advice for Investors for 2024

I don't know if you've noticed, but Warren Buffett has been very quiet for the last six months, no media interviews, very few changes to his portfolio, the guy has stayed out of the spotlight to such an extent that when his long-time business partner Charlie Munga sadly passed away in November last year. Buffer posted a two-line statement simply thanking Charlie for his inspiration, wisdom, and involvement. That was all, but today the time has come. Warren Buffett broke his silence by recently publishing his annual letter to shareholders, including a fitting tribute to Charlie Munga and also some very interesting

advice

for

investors

for the year ahead, but blue-chip business, the entire first page of this document is in really just a tribute to Charlie Munga and Buffett has some very kind words about his former business partner, remember these guys were basically best friends, they've been close friends since 1959, so here's what Warren Buffett had to say about his friend.

He begins by talking about how they met and Charlie's early

advice

to Warren about focusing on quality. of the business rather than Ben Graham's cigarette butt approach, but then goes on and talks about Charlie's actual involvement in Burkshire saying: Charlie was actually the architect of the current Burkshire and I acted as general contractor to carry out the day to day. daily construction of his vision Charlie never sought to take credit for his role as Creator, but instead let me do the bowing and receive the praise in a way that made his relationship with me part big brother and part loving father, even when he knew that I was right.

He gave me the Reigns and when I made a mistake, he never ever reminded me of my mistake in the physical world. Great buildings are linked to the architect, while those who poured the concrete or installed the windows are soon forgotten. Burshire has become a big company, although I've been doing it for a long time. I have been in charge of the construction team. Charlie should always be given credit for being the architect. I think it's a really nice tribute to Charlie. I don't think Charlie ever got much credit for his work at Berkshire, but he definitely deserves it, so Buffett's words are really nice.

Listen and with that being said, let's move on to the actual content of the letter itself and there was a lot to learn from it. He began with his usual dig at the relatively recent update to accounting rules that requires unrealized capital gains to be included. in net income and for most companies this is fine, but for a company like Burkshire, which consists primarily of wholly owned trading operations plus a giant stock portfolio, it means that the month-on-month bounce in the stock market can actually make it difficult to evaluate actual performance. results of underlying business operations, says you are seeking guidance, and is told that the procedures for calculating these profits are promulgated by a sober and reputable Financial Accounting Standards Board, mandated by a dedicated and hard-working Securities and Exchange Commission and audited by world class professionals.

At Deoe and Touche, however, we feel uncomfortable in Berkshire. Our view is that earnings should be a sensible concept that Birdie will find useful, but only as a starting point for evaluating a business now that the reference to Birdie is simply Buffett saying he likes it. write these letters so that they are easily understandable to the common shareholder, but in that passage you can definitely see how upset he gets with these rules, for example, if you had a company that makes $10 billion a year, then 20 billion and then 30, that's pretty good, but if they have an investment portfolio that bounces by $5 billion in the first year, drops by 5 billion in the next, and then drops another 10 billion in the third year, it will look like the company's profits They are going nowhere when in fact the company itself has grown its business. operations really well, it's just that stock prices bounce around in the short term now with companies that don't really have too many investments and just make and sell gadgets and gadgets, so this rule doesn't really affect them, except for a company like Burkshire , which has many proprietary companies as well as a $350 billion stock portfolio, then simple unrealized capital gains can actually swing official figures quite a bit;

In fact, Buffett points out that this can change Burk's net income by up to $5 billion a day, so the solution Buffett says is to always keep an eye on operating income, how much money your business operations are actually generating, so that's what he talked about first, but Buffett also took the time to really go over his investment strategy and what he's specifically looking for when buying a stock. He made two important points that he is always looking for companies that enjoy a good economy that is fundamental and lasting and he also expects these favored companies to be run by capable and reliable managers, so as always with Buffett, the company is analyzed remotely and then verifying that this company is run by trusted managers, but it also points out how difficult this completely simple strategy is proving for Burkshire and this was probably the most interesting part of the letter for me.

It says that this combination of the two Needs that I have described for acquiring businesses has long been our goal in acquisitions and for a while we had a large number of candidates to evaluate if I missed one and I missed many, another one always appeared, but listen Well, those days are behind us. The size made us, although competition for purchases increased. was also a factor Yes, you heard me right, this is Warren Buffett, the Oracle of Omaha, admitting that Berkshire's incredible run is probably over, they are simply too big, but what does he mean by this, why is scale a problem?

Well, he points out that there are still appointments left. There are only a handful of companies in this country that are capable of really moving the needle in Berkshire and they have been endlessly chosen by us and others, some we can value some we can't and if we can, they have to have attractive prices abroad. In the US, there are essentially no candidates that are meaningful options for capital deployment, overall we have no chance of achieving outstanding performance. First of all, how crazy is that level of honesty from a CEO, but as for the points race, we have to remember that Berkshire is the seventh largest company in the S&P 500 with a market capitalization of $868 billion. , their stock portfolio alone is worth $350 billion and they have $167 billion in cash on the sidelines.

Realistically, they want to invest tens of billions of dollars in businesses. at a time, but there are a limited number of companies to which you can do that while still being a less than 10% shareholder, as Buffett likes to do, you immediately need a business with a market capitalization of more of a hundred billion wrists for the shock absorber to even take notice and even though we talk about multi-billion dollar companies these days, there still aren't that many companies with a market capitalization of hundreds of billions; In fact, at the time of recording, there are only 92 companies in the United States with a market cap that high, and obviously, as you go international, once you move away from the largest stock market in the world, these opportunities become less and less, but that does not mean that Buffett has given up hope of finding these opportunities because there is one more factor that always will.

Buffett says that occasionally markets and/or the economy will cause the stocks and bonds of some large and fundamentally good companies to be surprisingly mispriced; In fact, markets can and will seize up unpredictably or even disappear as they did. For four months in 1914 and for a few days in 2001, if you think American

investors

are more stable now than in the past, think back to September 2008, the speed of communications and the wonders of technology facilitating instant global paralysis and We have come a long way. So, since the smoke indicates that such instant panics won't happen often, but they will happen, many people say that the stock market could never fall again like it did in the 1920s or like it did in 2008, but I'm According to Buffett, I think it's actually easier for the stock market to suffer big losses very quickly in the current environment because of the accessibility of the markets to everyone.

Panic may strike faster than ever and will certainly cause market crashes in the future, but the key is to stay calm and understand where the high quality is. Companies lie and watch them closely on their watch list; Then, when markets inevitably fall off a cliff, you can take decisive long-term action. Buffett points out that although the stock market is enormously larger than in our first few years of current activity. The participants are no more emotionally stable or better educated than when I was in school. For some reason, markets now exhibit much more casino-like behavior than when I was young.

The casino now resides in many homes and daily tempts the occupants and ultimately that highlights the game we are playing as long term investors wait for Wall Street and gamblers to panic buy the good stuff on the dip. short term and maintain them for long term recovery, that's really all there is to it, but you have to stay. The rational buffer continues in this letter talks about the number one investment rule of his. He says one investment rule at Berkshire hasn't changed and won't change. Never risk a permanent loss of principal thanks to the American tailwind and the power of compound interest.

Trading has been and will be rewarding if you make a couple of good decisions during your life and avoid serious mistakes, essentially don't get caught up in gamblers and always make decisions with a long-term mindset, but that quote in particular brings up a concept that I've been talking a lot lately about how to focus on sticking with those few good decisions and sticking to Compounds for the long term and Buffett continues to talk at length about the power of sticking to Compounds for the long term. Through two examples, Coca-Cola and American Express, he says that American Express began operations in 1850 and Coca-Cola was launched in an Atlanta drugstore in 1886.

Berer does not like newcomers. Both companies attempted to expand into unrelated areas over the years and both had little success there. attempts in the past, but definitely not now, both were even poorly managed, but each was highly successful in their base business, remodeled here and there as conditions required and, most importantly, their products traveled. Both Coke and aex became recognizable names around the world, as did their core products and consumption. of liquids and the need for unquestionable financial confidence are timeless essential elements of our world during 2023, we did not buy or sell a share of either AEX or Coca-Cola, extending our own rip vanwinkle torpor that has already lasted more than two decades, Both companies rewarded themselves again in fact, our share of ax's profits in 2023 significantly exceeded the $1.3 billion cost of our long-ago purchase.

Both aex and Coke will almost certainly increase their dividends in

2024

by approximately 16% in the case of AMX and we will certainly leave our holdings intact throughout the year. Could you create a better global business than the one these two enjoy? Birdie will tell you no way Cen aex lesson when you find a truly wonderful business. businesses can make up for the many mediocre decisions that are inevitable straight from the horse's mouth no trading signals no options no profit betting no jono stock tips that passage is essentially a buffer that says: find businesses with an intrinsic and lasting competitive advantage so there is something in your business that keeps you ahead of the competitors and then from there buy it at a fair price and if it holds up well keep it locked in your wallet that's it the success of your entire business Your investing career will probably come down to three or four stocks that you simply hold on to through thick and thin.

Those stocks, if you hold them for a long time, will take care of all the other mediocre decisions you make. Remember that Buffett has made hundreds of investment decisions over the years, but he says that all of his success comes down to about 12. Of them, that's the way Buffett tells us to think and generally, guys, are my conclusions from Buffett's annual letter to shareholders. One last thing I want to mention is that if you are stillhere, hopefully that means they should follow Warren Buffett's investing approach well. He wanted to take it seriously, learn how to read financial statements correctly, understand how you can calculate whether a company is a month old, and also learn three stock valuation techniques.

Check out New Money Education Introduction to Stock Analysis, which is a complete 6-hour course. A one-hour step-by-step tutorial of Warren Buffett's entire strategy, literally from start to finish, is everything, so if you're interested, check it out and you can also use the code save50 to get $50 off your buy if you want, so thank you very much. A lot if you decide to watch it of course all proceeds will go towards creating more content here for free on YouTube so I really appreciate it but that being said guys that'll do us for today please leave a like on the video if you enjoyed it, subscribe. if you haven't already and see you next time