This is the best advice Warren Buffett can offer young people who want to
invest and want to get rich.
Namely, studying accounting. In addition, he warns investors not to become
obsessed with stock price charts and urges them to focus on buying good
businesses.
“You have to understand accounting. You have to. It has to be like a
language to you,” Buffett told Andy Serwer of Yahoo Finance in an interview
on March 10, 2021.
The 89-year-old billionaire CEO of Berkshire Hathaway, whose childhood time
selling gum and Coca-Cola door-to-door among other entrepreneurial pursuits
only to buy his first stock at the age of 11, taught himself the basics of
accounting.
"You have to know what you're reading," he added of accounting. "Some people
are more capable of it than others, but it's one thing I learned on my own.
Now, I take courses after, for example. But I learned that myself, and most
of it. So you have to do that."
According to Warren Buffett, investors should also have the attitude that
someone is buying a part of the business, and not buying something that
moves around the chart, or that has a resistance zone, or a 200-day moving
average, or that you buy a put or call on, or something.
Warren Buffett's explanation refers to technical analysis, or the study of
how stock prices move over various periods of time.
"You buy part of the business," he added. "If you buy smart into a business,
you make money. And then you have to buy something that, in my view, is what
you would do if you bought a business, that you wouldn't get offers for five
years, that they would close the stock exchange tomorrow for five years, and
that you would love to have it as a business."
For example, he points to Coca-Cola, a company in which he has held a stake
for more than three decades while remaining a loyal consumer of its
products.
"If you have Coca-Cola, it's no different in the 1920s when it went public.
What matters is what it does with customers," he said. "You'd probably be
better off without Coca-Cola any market in it for 30 or 40 years, because
then you wouldn't be tempted to sell it. And you just see the business, and
you'll see it grow, and you'll feel happy."
In Berkshire Hathaway's 1988 annual letter, Warren Buffett said he hoped to
hold onto Coca-Cola "for a long time."
In keeping with his investment philosophy, he also describes investing as a
part owner of an "extraordinary" business with "extraordinary" management.
"Our favorite holding period is forever," he wrote in a 1988 letter. "We are
just the opposite of those who rush to sell and make profits when the
company is performing well but persistently holding on to disappointing
business.
He stressed to Yahoo Finance that the right attitude towards investing is
far more important than any technical skill.
Once upon a time, Warren Buffett also once said, saving money is not the
most important thing to do in life. This he revealed when answering a
17-year-old child's question about delayed self-satisfaction.
"You don't save by not watching movies. A lot can be said about saving money
by preventing yourself from having fun. Delayed gratification is not a valid
excuse," he explained as quoted by The Economic Times.
Warren Buffett says, there is no relationship between money and happiness.
"If you're happy to get $20,000 or $50,000, you won't be happy when you get
$5 million. A lot of money can make people happier. You're happier because
you have financial security. Don't delay complacency," he explained.