The “Golden Rules for Stock Trading” Attributed to Buffett Online? Don’t Believe Them—Buffett Doesn’t Invest This Way at All
I just saw an image circulating online listing ten so-called “Warren Buffett rules for stock investing”: do nothing if it falls 5%, buy more if it falls 15%, sell 10% if it rises 25%, sell everything if it doubles… It looks precise, like a perfect formula.
But let me pour some cold water on that: this has nothing to do with Buffett.
Buffett has never relied on rigid percentages like “buy more after a certain drop” or “sell after a certain gain” to trade stocks. He looks at a company’s intrinsic value. As long as the company’s quality hasn’t changed and its competitive moat is intact, he’s happy to buy heavily when the share price falls. But if he paid too much of a premium, or the company’s fundamentals have deteriorated, he’ll cut his losses even if the price has fallen. How long has he held Coca-Cola and Apple? He’d never sell everything just because a stock doubled.
The biggest harm caused by these so-called “ironclad rules” circulating online is that they give people the illusion that there’s a shortcut to investing. If you really could guarantee profits in the stock market with a few inflexible percentage-based formulas, everyone would be a billionaire.
Investing isn’t a math problem; it’s about putting your knowledge to work. Spend less time on these “trading mantras” that borrow the halo of famous investors, and more time researching what a company is actually worth. Don’t be taken in by this kind of toxic feel-good advice.
🧧——$SOL
I just saw an image circulating online listing ten so-called “Warren Buffett rules for stock investing”: do nothing if it falls 5%, buy more if it falls 15%, sell 10% if it rises 25%, sell everything if it doubles… It looks precise, like a perfect formula.
But let me pour some cold water on that: this has nothing to do with Buffett.
Buffett has never relied on rigid percentages like “buy more after a certain drop” or “sell after a certain gain” to trade stocks. He looks at a company’s intrinsic value. As long as the company’s quality hasn’t changed and its competitive moat is intact, he’s happy to buy heavily when the share price falls. But if he paid too much of a premium, or the company’s fundamentals have deteriorated, he’ll cut his losses even if the price has fallen. How long has he held Coca-Cola and Apple? He’d never sell everything just because a stock doubled.
The biggest harm caused by these so-called “ironclad rules” circulating online is that they give people the illusion that there’s a shortcut to investing. If you really could guarantee profits in the stock market with a few inflexible percentage-based formulas, everyone would be a billionaire.
Investing isn’t a math problem; it’s about putting your knowledge to work. Spend less time on these “trading mantras” that borrow the halo of famous investors, and more time researching what a company is actually worth. Don’t be taken in by this kind of toxic feel-good advice.
🧧——$SOL
