Warren Buffett’s best advice for YOU

“Wall Street is the only place that people ride to in a Rolls-Royce to get advice from those who take the subway.”

That’s amazing to think about, but Warren Buffett is right – people with money are constantly taking advice from people with no investment success. Instead, you should be taking advice from those who’ve built up wealth in the stock market.

And who better to listen to than Warren Buffett? Here’s his advice for you…

You may have heard some of these quotes from Warren Buffett already, but different lessons can be extrapolated from his words of wisdom, so let’s dig into how to apply them.

“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”

That can totally change your perspective, can’t it?

In short, don’t bet the house in the stock market. While fortunes have been and will continue to be built on Wall Street, gambling on the market is the surest way to lose what you can’t afford to.

“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”

Most investors lose money in the stock market because of one simple mistake – holding on to losers too long.

As humans, we have natural habits. One of those habits happens to be not wanting to be wrong. That attitude often pushes investors of all skills to hold onto a losing investment and trying to get it back to break-even. So when a stock continues to fall, a big chunk of money is dragged down with it when you could have simply cut the loser before it even lost 10%.

And on the flip side, we can be too quick to snatch profits as soon as our trade goes in the positive. So we cut the winners and ride the losers, justifying it by saying we won X amount and only lost Y amount of trades, even though the losers were so big that we’re in the negative on net.

The opposite should be true. Ride your winners and be strict with your losers. Don’t be afraid to admit defeat if it means losing 5% on a trade; that’s much better than your pride making you hold onto a loser until it’s finally dropped 40%.

Common sense has a habit of being thrown out the window when money is on the line, but Buffett’s simple advice could be the most important guidance you ever get.