I really look up to Warrent Buffet. I love this quote from him "Investment must be rational; if you can’t understand it, don’t do it.” He really knows what he is doing, that's the key to his success.
When news anchor and Emmy award-winning journalist Liz Claman debuted on FOX Business Network in 2007, she did so with a bang. Well, more specifically, with an exclusive interview with legendary investor, Berkshire Hathaway CEO, and world’s third richest person Warren Buffett. And since then, she’s interviewed him many more times about his investment tips and advice (most recently, this morning on FOX).
It’s rare to have the access Claman does to one of the world’s most successful investors, so we were quick to take the opportunity to ask what she’s learned from Buffett over the years. Whether you’re an active investor or you’re just considering dipping your toe in the stock market—who better to learn from than the best?
For starters, Claman says that what makes Buffett’s approach to investing different than the way the majority of us think about our money is how we deal with fear. “Most of us run away when fear is the greatest. It’s in our genetic makeup. Just as the market starts tanking, most of us hide in a cave and keep the financial powder dry,” she explains. “That’s when Buffett puts his to work. He fills his musket (or ‘elephant gun’ as he calls it) and starts firing away. If more of us could do the ‘fight’ and not the ‘flight’ during times of market turmoil, we might make more money. It’s a risky game though.”
What else can we learn from Buffett’s success? Claman shares the three best pieces of investment advice she’s taken from their interviews.
1. Be the Non-Conformist
Buffett’s philosophy shows the benefit of being the black sheep. Claman clarifies:
Avoid the herd and be an original thinker. Buffett never gets caught up in the hype of trends or the flavor-of-the-month stock or sector. He was eviscerated during the dot-com bubble for ‘missing out’ on skyrocketing stocks. By missing out on the hype, he also steered clear of the disaster that felled investors when the bubble popped.”
When choosing your investments, remember that nearly all of them take time to pay off. You can’t react to every dip in the market, hot trend, or buzzed-about stock that comes along. Sure, keep your eye on investment trends. But more importantly, trust your gut, your experience, and your situation. Set longer-term goals that work for you—and stick to them.
2. Never Over-Pay for a Stock, Even if You’re Dying to Own It
Or, in other words, don’t run out and buy Apple stock the day it announces its next iSomething. Instead, wait until it’s un-loved and less expensive. Claman says:
He put it to me this way once: ‘Liz, you don’t want to pay for the quarterback who just won the Super Bowl. He’ll cost you a fortune and there’s nowhere to go but down for him. Pay less for the guy in the hospital with his leg in the sling. You know he’ll eventually heal and be hungry for the win.’”
When the market (or a certain stock) is at its peak, it’s easy to feel most confident in your investments. But buying when it’s low—even when it feels riskier—leaves you more room to profit as prices rise. Keep this perspective in mind even when you’re convinced the hot stock of the moment has nowhere to go but up.
3. Invest in Yourself
Because even Warren Buffett has room for improvement. Claman recalls:
When money was tight back in the day, Buffet forced himself to pay enrollment fees for Dale Carnegie’s course, ‘How to Win Friends and Influence People.’ He was terribly shy and knew that he’d never reach his potential unless he worked on that weakness. Figure out your weaknesses and then go about trying to improve.”
Sure, this tip applies to your finances: If you want to get started investing but don’t know a lot about it—get out there and learn. But also apply it to your career and life. If there’s a skill that could make you more qualified, more confident, or more marketable, go get it. It’s an investment that will certainly pay off in the long run.
As we closed our conversation, Claman shared one final takeaway: Sometimes you’re right to break your own rules. She explains:
Warren recently did something he’d never done before: He invested in technology companies. Granted, they were IBM and Intel, not ‘new kids on the block,’ but they were tech companies nonetheless. He always said he’d steer clear of technology because ‘he didn’t understand it,’ but I’d argue he understood it just fine by investing in companies that use technology to win, like Burlington Northern and MidAmerican Energy.”
It may have taken “this rare Nebraska leopard,” as Claman calls him, a little prodding from two new investment managers to change his spots, but it’s a good lesson for all of us. Don’t be afraid to periodically evaluate your own financial plan—and if you need advice, seek it out.