Legendary investor Warren Buffett has exited his role of chairman of Berkshire Hathaway (NYSE:BRK)(NYSE:BRK), a role that he held for decades at the conglomerate. The exit comes nine months after Buffett stepped down as CEO of the company he led for more than 60 years.
While Buffett won’t be as public with investors anymore, many will remember his investing principles and some will use them in their trading. Here are three simple rules from Buffett that investors can follow.
1. Long-Term Investing Strategy: The Power of Patience Among Buffett’s investing principles is to buy and hold stocks.
Buffett bought his first stock at age 11 for $38 per share. Buffett sold the stock at $40 for a gain on his purchase.
The share price would climb to over $200 later, and he cites that as when he learned a lesson in investing patience. " Buffett bought shares of Coca-Cola (NYSE:KO), one of his largest holdings, back in 1988.
"Our favorite holding period is forever," he has said. Today, Berkshire Hathaway owns the same large stake in Coca-Cola stock that it has held for decades.
Read Also: Warren Buffett Says You Don't Need 20 Right Calls To Get Rich — '4 Or 5 Will Probably Do It' 2. The ‘Buy What You Know’ Strategy: Research and Familiarity Buffett invested in Coca-Cola as a fan and consumer of the product.
When Buffett became a student of renowned investor Benjamin Graham, he sought to learn more about GEICO, which Graham chaired. Buffett took a train to GEICO headquarters and was admitted by a janitor.
Buffett met with Lorimer Davison, the only person working that day. Davison, who would become the CEO of GEICO, answered Buffett’s questions and gave him the knowledge needed to later invest in the insurance company.
3. Value Investing: Finding Economic Moats at Fair Prices Buffett believes in investing in companies that have reasonable valuations and are profitable.
" In 2016, Buffett invested in Apple Inc (NASDAQ:AAPL) after years of shying away from the technology sector. Buffett believed Apple’s business was the best in the world and the valuation was proper to start a position.
Apple is now the largest stock holding by value in the Berkshire Hathaway portfolio. While Buffett’s investing principle is to buy and hold stocks forever, he is willing to sell them if valuations are not aligned with his expectations.
Buffett bought airline stocks, an industry he had avoided for years as unprofitable, and then sold them in early 2020 during the pandemic. Buffett believed it would take years for the airline industry to recover and that there could be an oversupply of planes.
Read Also: If You Invested $1,000 In Berkshire Hathaway Stock When Warren Buffett First Did, Here's How Much You'd Have Today This article was previously published by Benzinga and has been updated.
