I Follow These 3 Stock Market Rules to Earn £30,000 Per Month

Because whenever things appear to be going in the right direction, we end up in financial trouble.

But, unlike everyone else, one gentleman appears to have a secret formula for investing. Throughout his life, he consistently made successful investments, and he is widely regarded as the greatest investor of all time.

He was so good that by the age of 16, he had already made over $53,000. It still amazes me that Harvard did not accept him; they must be kicking themselves now.

But that doesn’t matter because the focus of this article will be on how Warren Buffett invests. Many people want to invest, but they don’t know which companies to invest in.

So I thought, let’s take a look at a step-by-step process of how Buffett chooses a stock. He doesn’t invest at random; if you look at all of the companies he’s ever invested in, you’ll notice that they’re all interconnected.

They have similar characteristics, values, and functions, so let’s find out why he prefers one stock over the other. Why does he choose this company over others?

1. Direct and simple

Warren Buffett is a long-term investor who is unconcerned about how the company performs today, tomorrow or even next year. His primary concern is where the company will be in ten years or fifteen years. However, if the company is overly complicated, it is difficult to predict. As a result, he only looks for businesses that are straightforward and straightforward.

This is the product, these are the customers, and this is why they will buy it; you don’t have to be a genius to understand their business model; it is so simple that even a child could understand it. That’s what Buffett likes because the simpler the business model, the easier it is to predict whether their products will be relevant in 10 years.

2. Will the customer repurchase the product?

The second characteristic is whether or not the customer will buy the product again, and if so, why. And this is crucial because if you have the type of product that sells once and the client no longer requires it, your market is limited. A great product is one that your customers keep coming back for, whether it’s every day, every week, or even every year.

If you sell bread, you can expect the same customers to return tomorrow or next week again and again, and people will still need bread in ten years. You might sell it in a different way or form, you might improve the quality, you might package it fancier, but it’s still the same product that people will return for.

And that, by the way, is what makes the iPhone one of the greatest products in history, because people kept coming back for it every September, although it isn’t a necessity like bread. That is the reason for the subscription business model, in which businesses charge you a small fee every month, such as Netflix, or once a year, such as Amazon Prime. because it is a more long-term strategy

But, in the end, it all boils down to how much value you get for your subscription. A typical book costs around $15, but if someone could distill the best insights from thousands upon thousands of nonfiction books into a 15-minute read and listen for half the price of the book. That’s a subscription worth trying!

Fortunately, there is an app called Blinkist that provides that much value for such a small fee! It is difficult to sit down and learn in this day and age because we are surrounded by so many distractions, and social media is just wasting hours upon hours of our time, and you need Blinkist to get the best ideas from the greatest nonfiction books.

Now I’m listening to The Future of Capitalism, which Bill Gates recommended. It explains why and how Capitalism worked and how we ended up with a society that only benefits the few at the top. The author provides his perspective on how capitalism will look in the future by analyzing the past and present, and those who understand it will be able to take advantage of it.

But let us return to Warren Buffet.

3. Trademark

The third element is the brand. People are more likely to buy from companies with which they have a connection or are familiar. Which sneakers would you choose? The first is from a brand you’ve never heard of, while the second is classic Nikes.

Even if they appear fancier or, you are likely to be hesitant to purchase them because you have never heard of that brand before. On the other hand, Nike is a well-known brand that is easily recognized, and they are known for producing high-quality sneakers.

What would you choose if you already owned a pair of Nike shoes?

That is why, before investing billions of dollars in a company, Buffett pays close attention to the strength of its brand name. He understands how much of an impact it will have on the consumer’s decision. If a company’s brand is strong enough, customers will buy almost anything it produces. Warren Buffet is a major shareholder in Coca-Cola. He began investing in Coca-Cola in 1988, and his investments have grown by more than 16 times since then. Coca-Cola is one of the few companies that possess all of the characteristics that Buffett considers before investing.

First and foremost, their business model is so simple that anyone can understand it. What do they sell? A beverage! Who are their potential clients? Anyone thirsty! the entire globe! Is it a one-time product, or will their customers return for it from time to time? Of course, they’ll keep coming back; some people consume four or five cans per day. It’s a product that meets one of our most pressing needs! And once you’ve gotten used to it, it’s addictive, and it’s difficult to stop, even if it’s unhealthy!

However, it has a lot of competitors; I mean, the shops are filled with an infinite number of soft drinks; there are so many of them that it appears that a new soft drink company emerges every other day! However, the Coca-Cola brand name is so powerful that you can easily recognize it among 20 or 30 options. The majority of people would probably choose Coca-Cola without even thinking about it. And if it’s out of stock, you’re probably going to another store rather than picking one of the 30 other options they have. Consider this: every day, 1.8 billion cans are sold. If the company earns a penny from every can sold, that’s 18 million dollars per day or $6.57 billion per year. However, because they have such a strong brand, they can charge more than a penny for each can.

That is why, in 1988, Buffett invested $1 billion in Coca-Cola stock. It was his largest investment, and he was confident that ten, twenty, or even thirty years later, this company would just keep growing, regardless of whether the economy crashed or another financial crisis loomed on the horizon. Let us look at another example. In the year 1989,

Warren made a 600 million dollar investment in Gillette. The company that manufactures razors. If you take a closer look. Gillette is in the same position in the shaving industry as Coca-Cola is in the beverage industry. They are similar to twin brothers.

People will shave regardless of what happens. And their products are simply meeting basic human needs. You don’t need a 150 IQ to understand why people buy razors or why they will continue to buy that product even ten years from now. Of course, Gillette isn’t the only company in its industry; it has many competitors; however, if you ask people to name a razor brand other than Gillette, 90% of them will be unable to do so.

Do you see how it perfectly matches all of the buffet’s requirements? It is a simple product that people will continue to buy, and it has a strong brand name. The same thing happens with See’s Candy. It has proven to be one of his best investments to date. Even though the company wasn’t as profitable as Buffett desired, it had a very strong brand, which made all the difference. Buffet realized that most candy is purchased as a gift for others rather than for themselves. As a result, people would return for Christmas, Valentine’s Day, and birthdays. So, in 1972, he paid $25 million for the company, which was turning a profit of about $4 million at the time. Over the next 35 years, the company’s profit increased 20 times. Their profit in 2007 surpassed 82 million dollars.

Buffett has always avoided the tech world, but he recently made a large investment in Apple. We live in a time when technology is more of a necessity than a desire. And Apple continues to develop the type of technology that keeps people coming back for more. Apple has a devoted following.

who upgrade their iPhones every year Of course, Apple isn’t the only tech company, but it does have the most recognizable brand.

Of course, you must still examine the company’s financial statements and consider other factors that will influence the company’s future. and while each company has its own set of circumstances, these are the three most important factors to consider when deciding where to invest your money.