CHICAGO (Reuters) – For as long as I can remember, the investment maxim that most evokes a mix of adulation and performance anxiety is “Invest like Warren Buffett.”
How can mere mortals emulate an investing deity? In truth, most of us will never come close to “the Sage of Omaha.” He’s done all the things a stellar investor should do: He buys when there’s blood in the street, finds solid companies at great prices and keeps them “forever.” Lacking Buffett’s phenomenal verve and mettle, though, most of us won’t do this. But that doesn’t mean we’re doomed to failure.
Fortunately, the multibillionaire chairman and chief executive of Berkshire Hathaway Inc. has been generous with his wisdom and two recent books published in November compile and analyze it elegantly: “Tap Dancing to Work” by Carol Loomis, a long-time Fortune writer and Buffett friend and “Think, Act and Invest Like Warren Buffet” by Larry Swedroe, principal and director of research for Buckingham Asset Management, LLC.
What key advice resonates most?
1. Stick with index funds
Although you probably won’t get the returns of Berkshire Hathaway with index funds, you can still get pretty close to market returns without having to be an oracle yourself.
“If individuals “aren’t going to be an active investor — and very few should try to do that — then they should just stay with index funds. Any low-cost index fund,” Loomis quotes Buffett as advising. “And they should buy it over time. They’re not going to pick the right place and time.”