The STRIDE Blog

7 Lessons Value Investors Should Learn from Businessmen

stride-7-lessons-value-investors-should-learn-from-successful-businessmen-socialSince a young age Warren Buffett had a knack for business. Years before he owned any shares in Coca-Cola, he bought six packs at 25 cents and sold it to his friends for 5 cents per bottle. He made a 5 cent profit on each six pack he sold, amounting to a 20% gain.

He firmly believes being an investor and businessman simultaneously, attributed to his success. Warren Buffett once said: “I am a better investor because I am a businessman, and a better businessman because I am no investor.”

Buffett is currently the 3rd richest person in the world, with a net worth of 72.2 billion US Dollar. It would seems that being a businessman and investor has its benefits, an entire 72 billion of them.

What can aspiring investors learn from successful businessmen? They have the following seven qualities that investors can greatly benefit from:

1. Education

Businessmen are educated and qualified in the field of business and in the specific industry which they work in. Without deep knowledge of their industry they run the risk of losing money.

The same applies to all investors. Warren Buffett only invests in industries, sectors or companies that he understands. To help you understand these things, you need to educate yourself. Do sufficient research and learn how to read an earnings report or financial statement.

The most important is to never stop learning. You can never know enough about the stock market.

2. Efficiency and tenacity

A successful businessman is a hardworking man. He has to build his own empire from the ground up. Putting in extra hours of work is a common occurrence for any avid businessman.

Phoning your broker to buy or sells your shares isn’t hard work. Doing the necessary research beforehand is hard work. Investors should, at all times, make decisions that are based on solid financial data. If you cannot justify your investment decisions with data, you are most probably making a huge mistake and will be regretting it in the near future. Rather put in the extra time and do a little more research so that you can be 100% confident in your investments.

Efficiency is a must if you want to manage your portfolio effectively. Adapt your portfolio around changing circumstances by knowing when and how to rebalance it. If you are uncertain how to create, manage or rebalance your portfolio, download our free eBook on effective portfolio management.

3. Passion

As with all things in life, you need passion to keep you motivated. If you want to achieve success you have to be passionate about what you are doing. Successful businessmen overflow with passion for making money.

Investors have that in common. The main goal of any investor is to make money. The only way to effectively earn money from the stock market is to put in heaps of time and effort. Investing is effortless if you have a true passion for it. Be passionate about your investments and you will make less mistakes and achieve better returns.

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4. Discipline

“Discipline is the bridge between goals and accomplishment” – Jim Rohn

Businessmen are disciplined people. Their industry demands it, especially if they want to be successful.

Value investors need to be disciplined at all times. The crucial mistake most investors make is reacting to the movement of the market. The market fluctuates regularly. If you react to every movement you won’t be making gains, but only claiming losses. Value investors buy undervalued stocks and hold them for as long as possible. If you pick winners you don’t have to worry about the short term performance. Don’t panic-sell your shares at a loss. Rather ride the wave and enjoy great returns when the market recovers.

5. Planning skills

Having the ability to plan your business is a basic quality needed to be successful. A good planner makes the best decisions.

When you invest you should have an entry and exit strategy. Decide at what time you will be entering and exiting the market. Determine your entry strategy by valuating companies and identifying undervalued shares. Your exit strategy should revolve around a percentage gain calculated from the share price at the time of purchase. Stick to your strategies and you will be achieving your investment goals.

6. Decisiveness

There should be no delay when an important decision needs to be made. A businessman needs to make a lot of decisions regarding his business. Making the right decisions at the right times directly effects the success of the business.

Investors need to be quick on their feet and ready to make the call when needed. An equity might be undervalued for just a day. For instance if you have a company on your watch list and its share price reaches your entry point, you need to move fast. If you don’t act quickly enough you might have to pass up a great value opportunity. Independent investor, Sally, uses the STRIDE platform to pick her stock and manage her portfolio. She missed out on a buy she had her sights on because she didn’t act swiftly enough. She wrote an article about the affair, stating the importance of timing when investing.

7. Foresight

Thinking about the future of a company is the most important quality of a successful businessman. A company needs to constantly evolve to stay ahead of competition. If businessmen don’t think forward their companies won’t grow and will eventually cease to exist.

It is crucial for value investors to be visionaries because of their long-term investing approach. Value investors invest now to see great returns later. Being able to foresee the performance of a company in its reports and financial statements, will result in buying strong and sound companies. You won’t benefit from looking at the past, because past performance doesn’t guarantee future success. Do the math and calculate the future growth of a company before you invest.

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Topics: Buffettology

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