I’m an Investment Manager: 4 Lessons I’ve Learned From Warren Buffett
Written by
Gabrielle Olya
Edited by
Molly Sullivan
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Although not everyone agrees with Warren Buffett’s investment philosophies, his success cannot be denied. Buffett has built a net worth of about $155 billion through smart investing over the years via his company Berkshire Hathaway.
Chris Ballard, managing partner at Check Capital Management, which manages approximately $2.1 billion for 1,200 clients, said he has personally learned a lot from Buffett and Berkshire Hathaway’s strategies. In fact, Berkshire Hathaway is by far his firm’s biggest holding.
Here are the investing lessons Ballard has learned from Buffett.
Don’t Follow the Crowd
Buffett doesn’t make investment decisions based on what’s popular. He follows his own instincts and reasoning instead.
“Buffett invests with an owner mindset,” Ballard said. “He strives to educate the public to think this way about investing rather than letting the movement of stock quotes and the emotions of ‘Mr. Market’ rule your way of thinking.
“This approach is the foundation to our decision-making process,” he continued. “Without Warren Buffett’s steadfast example of the right way to think about investing, it would have been harder to come to the logical conclusion that you shouldn’t follow the crowd. It’s important to know what your own strengths are as an investor, and to emphasize those strengths when deciding which businesses and what management to partner with through share ownership.”
Ballard recommended for every investor to “tune out the noise” when making their own investment decisions.
“You need to get rid of the noise of the headline news and daily moves of stock quotes,” he said. “These tell you nothing about the businesses you are investing in; they only serve as distractions to the skills you should be fine tuning.”
Diversify Your Investments
Ballard’s firm invests heavily in Berkshire Hathaway because it contains a diverse array of holdings within it.
“You must understand Berkshire’s history, its people and culture to have a good grasp as to why it’s such a great company and a fabulous investment,” Ballard said. “You are not investing in one product, revenue stream or even one industry when investing in Berkshire Hathaway. You are investing in an entity that gushes cash from insurance, railroads, energy, retail, restaurants and candy.
“You are investing in a company that has full control over 189 subsidiaries, and a huge amount of liquidity to either earn interest on or make a very large deal.”
Invest In Companies You Trust
Instead of chasing trends, Buffett suggests investing in companies you trust.
“Berkshire is one of the most trusted entities in the world, if not the most trusted,” Ballard said. “It feels like you can’t go wrong whether the stock goes up or down. If it goes down, we feel very comfortable buying more. If it goes up, we reap the benefits of partnering with some of the greatest group of shareholders anywhere.”
Always Think Before You Act
Before making any investment decision, do your research and think it through.
“Warren’s success has come on the back of a dozen or so very good decisions in his entire lifetime,” Ballard said. “If you wanted to be extreme about it, you could hand someone a punch card with 10 punch holes available. Tell them that each of the 10 punches represent an investment they can make in their entire lifetime — they only get 10. This will help an investor conjure the maniacal focus necessary to start down the path Warren started down when he was 11 years old.”
It’s important to take your financial decisions seriously.
“Warren’s late business partner, Charlie Munger, once said, ‘Take a simple idea and take it seriously,'” Ballard said. “Do that.”
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