In 2009 economic downturn , warren buffett bought BNSF for 44 billion dollars , now its hovering around 150 billion in valuation, earns 24 billion dollars in revenue.
Is warren buffett not paying attention to predictions (guesses!) of economic experts. Why warren is not doing what everyone is doing by selling the shares and safe guard his investments. The results are astonishing! Lets see what is the stand of warren buffett on recession.
Also learn how to invest like warren buffett during bad times.
During recessions even the brave hearts are calloused by listening to the experts economic predictions on TV channels. You would become familiar of hearing phares like” Nothing like this ever happened before, inflation is all time since the age of Roman rule, We are doomed” (That’s the favorite one of so called experts).
When all these experts instill fear in our lives and heart. Legendary investor warren buffett soothes his listeners with his timely wisdom.
All right then, Lets set our eyes and minds to see how to invest like warren buffett on recession.
Invest in your skills
“The best investment is investing in yourself” – Warren buffett.
Upgrading one skills can pay you massive returns.
Skill is something that can’t be robbed or taken away from you…
Skills can’t be affected by inflation like money. The more you practice, the more skilled you will be. It will appreciate over a span of time.
Your pay check is determined by the degree of problem you solve or the results you produce by using your skills.
Skills could be learning new programming languages, communication skills or learning new languages, Selling etc.
As long as your skills benefits your employer, Client etc. you will never find hard time in making a good living. Above mentioned skills can be picked up quickly in a shorter time.
Eg: People always need to consult a doctor when they fall sick , irrespective of the state of economy.
Be at the top of your field! It equates to more pay, not easily replaceable.
Let S&P 500 give that 10 percent ROI , but investment in yourself S&P ME gives 3x – 5x return.
Do you see a man skilled in his work? He will serve before kings; He won’t serve obscure men.
Such is fate of a man who is skilled in his work. Even Warren buffett himself invested in Dale Cargnie’s public speaking classes to improve his public speaking skills.
Always invest in yourself. Recession or stagnation , Doesn’t matter! You can’t help getting paid more or find gigs in top companies.
If you want to invest like warren buffett, start off with horning your skills!
Invest in business people buy
Be a part of business where people buy always irrespective of the economy.
How to invest like warren buffett? Invest in products which has pricing power, also the products should be cheap to the buyer.
Buying a coke every month cost you a fraction on your monthly grocery bills. People don’t think twice to buy those items.
Also Coke will be bought and consumed by people even in poor economic conditions. Bad economy can’t keep people away from their favorite carbonated drink.
Having these thought process and buying these quality companies at market down prices is a game changing factor.
This one of the reason almost no weightage given to investment decision by warren buffett on recession.
Even at times of recession, take a look at the balance sheet of these companies. They produce stable income unlike car manufacturers.
Be a part of those business. This will do a magic to your investments in long run. Investing in habitual stocks like cigarette manufactures, candy stocks is another wealth creation vehicle.
Its cost less money to buy, so literally people never stop buying them regularly.
Habits are hard to break , so invest in business where in which its products are always bought by people.
Large ticket items like cars, jewellery, housing will take a back seat in recession, but not the stuffs you find in grocery store shelf. Also the departmental store/ supermarkets chains.
If you want to invest like warren buffett, focus on individual business , how it will do over time? will people buy it? Not on economic predictions, and recessions etc.
Low cost S&P 500 index.
If you are a person who wants to avoid the leg work finding great business yet who is fond of creating wealth ( Who doesn’t like to?).
Then one solution is Index fund!
Index funds always sucks in profitable companies in and kicks out the companies of which the market cap is shrinking.
The companies which dominate index fund always changes over a period of time.
If you want to invest like warren buffett on index fund , then read this article: why buffett favors Index fund: 3 terrific reasons
If you have a long time horizon to invest and hold , an average 10 to 12 percent annual return can throw a spell cast to your investments.
Also the low expense fee and market average return puts your portfolio return above active fund managers return who tries to beat the index with higher expense fee.
As the market matures, it is becoming exceedingly difficult for most of the fund managers to beat the index returns in long run.
Buying and holding S&P 500 is a no brainer approach but a powerful way to build wealth.
Keeping one thing in mind! During market crashes, index fund value shrink but eventually it will rebound after a while.
Keep buying index fund during thick and thin times, Especially during thin times!
If you want to invest like warren buffett, Be greedy in bad times!
Warren buffett on recession in his own words:
Something different happens all the time. And that’s one reason economic predictions just don’t enter into our decisions. Charlie Munger – my partner – and I in 54 years now never made a decision based on an economic prediction. We make business predictions about what individual businesses will do over time, and we compare that to what we had to pay for them.
But we have never said yes to something because we thought the economy was gonna do well in the next year or two years. And we have never said no to anything because we were right in the middle of a panic… There’s so many variables. I mean, in the hard sciences, you know that if an apple falls from a tree, that it isn’t gonna change over the centuries because of anything or political developments or 400 other variables that go in. But when you get into economics, there’s so many variables, and the truth is, you’ve got to expect good times and bad times in business.
The bitter truth is good times and bad times can’t be avoided in life and business. Its happens.
Instead of listening to all bad news in TV channels in between commercials, we can turn our ears away from it. A person can be a better investor if he doesn’t listen to news. (Its my opinion)
As humans we are resilient. we endured to 2008, COVID 19, wars, floods etc. we have overcome it.
If humans are resilient, the good business which humans create also be resilient. Lets not mind about recession like our guru and invest like warren buffett (take advantage of bad times).
Lets stick to the process during thick and thin times, to reap the fruits of investment.
Thank you for reading! Happy investing.