Image source: The Motley Fool
We have experienced great volatility in 2023. And as we approach 2024, I need some inspiration. Who else should we turn to but Warren Buffett?
In his eight decades of investing, the legendary investor has provided great advice. During his tenure, the 'Oracle of Omaha' has amassed a fortune of more than $100 billion. He started his investing journey with a small sum when he was just 11 years old.
Under his leadership, Berkshire Hathaway, a former textile company that he originally invested in in 1962, has seen tremendous growth. Since then, his shares have returned about 20% annually on average. That is amazing.
I hope to take some of his wisdom and apply it to my portfolio. Here are three lessons I will learn through 2024.
Remembering my goal
First of all, I will remember why I invest. And that's for long-term profits. I suspect there will be a lot of talk about the stock market in 2024. We are in for a rough few years. Interest rates remain high. And there are also other factors that can be added to the mix, such as the UK general election. All of that combined could create a cocktail of volatility.
However, I won't worry about this. As Buffett once said: “If you're not comfortable owning a stock for 10 years, you shouldn't own it for 10 minutes.”. The stock market has proven time and time again that investing for the long term is the best way to reap your rewards. Buffett has taken this approach in several of his investments. It's safe to say it was worth it.
be greedy
That said, I will also look for opportunities in the market. He once said that it is good “be greedy when others are fearful”. And with the volatility we may see in 2024, I think it will be a smart time to put that into practice.
What he essentially means when he says this is capitalizing on opportunities that other investors are passing up. The current economic environment has seen many investors abandon their stock positions in favor of cash. I hope this continues. But that suits me. It means I can buy quality companies at cheaper prices.
I put this into practice this year, using it as an opportunity to pick up some cheap stocks. For example, with a price-to-earnings (P/E) ratio of just four, earlier this year I bought some Barclays Share. With a P/E ratio of around six, I have also increased my position in Lloyd's.
The power of capitalization
Finally, I will be consistent with my investments. I have gotten into the habit of saving some money at the end of each month to achieve my investment goals. And I will continue doing this in 2024.
By doing so, I can benefit from compounding, which means I will earn interest on both my original investments and my returns. This will allow me to build my planter faster. Buffett has pointed this out on numerous occasions as one of the main reasons for his accumulation of wealth.
I'm ready
It is unknown what 2024 holds. But if I follow this advice, I am confident that I will be able to navigate the market.
