Worlds richest man interview on how best to invest

I was enthralled watching a TV interview with Warren Buffet the worlds greatest investor and richest man. For those that dont know him, he has been in the richest rankings for decades so this is'nt some evangalistic here today gone tomorrow guru type and he has consistently outperformed all other investors over the long term.

He boils things down to thier simplist essence and is so different in this sense. He does'nt get bogged down or taken in by industry speak or faddish investing such as Hedge funds.

In a nutshell it all boils down to this:

1) Buy shares directly and do not use middle man organisations (ie fund managers) unless they are GUARANTEED to have minimal charges. Note many fund managers themselves sub contract to the plethora of little known investment management firms so although the main fund managers charges might appear low, the sub contracted investment specialist firms only pass on a proportion of the gains made on equity investments, afterall these specialist firms are run by people that send thier kids to public school and live in large houses - someones somewhere pays for all that.


2) Dont bother trying to time markets and ignore all the day to day panic and noise. He has held this claim for decades and been proved right. Market timing jittery in and out types never produce great returns in the aggregate over the long term.

3) Buy shares in firms that make stuff people always want - such as razors and chewing gum (not oil firms, for example as 2000 oil firms have gone out of business in the last few decades). Avoid firms that rely on stuff thats running out.

4) If possible buy when others are panicing - so for example Brit Airways or M & S when they suffered a few years back.
ITS ODD THAT MANY PEOPLE BUY WHEN OTHERS ARE - THIS IS EXACTLY NOT THE TIME TO BUY. Be a counter crowd follower, but dont get too hung up on the timing.

5) Buy for yield - forget capital growth - it cant be relied upon or predicted.

6) HOLD long term.

7) DO NOT BE BLINDED BY THOSE THAT ARE SURROUNDED BY COMPLEXITY AND WIZARDRY. A prime example are Hedge Funds which essentiall buy the same stocks Mr Buffet does, but take hugely leveredged positions to so do. They not only must therefore pay massive interest each month but they are always high fee chargers.
Buffet says this simply isnt possible, and that few hedge funds will to do well in the aggregate - they are simply making promises they are'nt likely to deliver upon although a few will produce momentary exeptional returns which blinds everyone else into wanting a piece of the action.


So, keep it simple, buy big well run established firms that make stuff we always need / want, hold, forget day to day ups and downs and enjoy a high long term yield. Capital growth will likely follow from such a stratergy anyhow.