Speaking of investing for yourself, as sad as it is to admit, there is only one Warren Buffett and he isn’t getting any younger. Buffett’s successor has not been named and Buffett himself has always admitted that Berkshire Hathaway has gotten so big that it’s hard maintain the 45 years averaging 20% returns per year. As Buffett explained one time: “It’s much bigger than it used to be, and with the law of large numbers it takes a bigger investment to move the needle”. How will Berkshire Hathaway perform without the mastermind at the helm and with Berkshire becoming such a behemoth?

With the stock split of Berkshire baby stocks to more affordable levels to the average investor, is the stock still a good buy? Some would say that Berkshire is becoming more of a defensive play with its investment in railroads and utilities which can hardly be qualified as growth stock picks. However, let’s look at the number one rule of invest: never lose your money. This rule is reinforced by the second rule which is to never forget the first rule.

Buffett’s investment strategy has definitely changed throughout the years. This is normal as one gets older and wiser but the stock advice never changes. That is, to invest in good companies for the long term.

At first, Buffett was buying cheap stocks of undervalued companies. He learned value investing from Benjamin Graham. Then he started investing in growth companies based on what he learned from Philip Fisher. For this, sometimes you have to pay good companies what they are worth. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”. And now the latest trend for Buffett is to buy stable blue chip stocks whose reach will be still felt for years to come even after Buffett is long gone but the legacy of stock portfolio will remain.

Think about that for a minute when the norm nowadays is to make quick money with day trading. Compare this with Buffett’s portfolio and how he made his billions by looking into the future.

It might be hard to believe that young adults would be capable of picking winning stocks but if you know basic math and can read, that’s all you really need.  Sometimes, people get ahead of themselves and overthink.  They are persuaded by the latest news and hype.  Perhaps the best way to pick stocks is through the eyes of an amateur and what go with what they can understand. After all, the stock market is the trading ground for everybody – investing beginners and so called experts.

Understanding a company’s business is fundamental in picking the best stocks.  So often, people hear about a hot stock tip and trust the investment advice of others rather than doing their own homework.  If you don’t understand what a company does, it becomes very hard in judging the intrinsic value of a company.  You want to know the true value of a company so you know when to buy in and when is a good time to sell.  If you don’t know at least that much, then it would be very hard for you to make money in the stock market.  In fact, it becomes more likely that you would lose money.

The investment strategy of buying stocks at fair value or below came from Benjamin Graham and was further reinforced by Warren Buffett and the margin of safety investing method.  By buying companies trading below its intrinsic value, it leaves room for error – or a margin of safety.  And since Warren Buffett’s stock pick advice is to hold stocks for the long term, an investor with a cheap blue chip stock pick has the luxury of waiting it out until the price goes up again.

Most newbies looking for investing advice often wonder why they don’t just buy penny stocks and wait it out for the long haul if it is a simple matter of a waiting game.  However, penny stocks are meant to be fast money in the stock market but it also carries a lot of risks as well.  When the market is turbulent, the first thing that people will sell is their penny stocks (they will keep their blue chip stocks for as long as possible).  If you are one of the traders trying to unload thousands of shares, good luck in finding a buyer.  You just might be left in holding the bag.  You can make lots of money day trading penny stocks but you can lose a lot of money too because of the sheer volume you would need to buy and sell to make it profitable on the smallest of fluctuations in stock price.

Another reason that penny stocks are not meant for the long term is that it is very hard to do fundamental analysis on new companies as that is generally what happens when start-ups want to generate money.  With no track record, you cannot do proper stock analysis and that is why penny stocks are meant for trading and not investing.

And just like day trading penny stocks, there are other methods of making lots of money in the stock market quickly such as shorting stocks, buying and selling options and playing with currency arbitrage.  Obviously, these ways of making money in the stock market work or else people won’t be doing them.  As mentioned however, fast and easy money is obviously not without risks.  And people often get far too ahead of themselves and create these complicated investment strategies when simple methods work best.  Have you ever seen a monkey making stock picks?  Sometimes, they beat the so called stock pick professionals so imagine what a young person can do with a little bit of knowledge and stock analysis.

If you truly want to learn how to invest in stocks, the person you should learn from is Warren Buffett.   As mentioned, he thinks ahead in the future with his long term stock picks.  There are a few reasons for his.  He doesn’t get flustered and forced into selling when the stock market falls.  In fact, recession stock picks are great when everyone is selling and you are buying because people are in a panic.  This is a great way to buy undervalued stocks.  That being said, is it a stock you’d be happy to hold in your portfolio for the long term?   Buffett says that you should only buy something if you’re happy to hold if the stock market were to close for 10 years.  Given this criteria, how many people’s stock picks would be filtered out?  There are other criteria for Warren Buffett stock picks such as: does the company have a branding advantage over its competitors?  In the case of one of Buffett’s most famous stock pick Coca Cola, “Coke” is synonymous with soft drinks.  Pepsi and other brands cannot compete with it as a brand without throwing huge money into it.  Coke is way ahead of the game in terms of being in the consciousness of its consumers worldwide.  This is what Buffett calls his business moat and it is far reaching across the globe.    This is how a huge behemoth of a soft drink company can still grow worldwide when you think it’s already plateaued.  Buffett’s portfolio picked it up as a value growth stock in the late 1980s and it has done very well for him since then.

For this reason, this is why amateur investors can do quite well managing a do it yourself stock portfolio with their own stock picks.   You don’t have to be on the lookout for the latest break out stocks.  Truly, a portfolio composed of blue chip stock picks purchased when they are undervalued will make you rich once they rebound.  It does take research to find these gems and patience but Warren Buffett has made a career of doing something just as simple instead of worrying about the noise of the market.  If the greatest investor in the world imparts such wisdom to us, who are we to argue with Buffett’s stock picks?

So perhaps the notion that Warren Buffett is only a value investor is a bit misleading.  Sure, there is nothing wrong with finding undervalued cheap stocks but Buffett usually doesn’t sell once his holdings have rebounded to fair value.  In fact, Buffett has stated numerous times that his favourite holding period is forever.  This is because his stock picks have growth potential as well.  To put it in Buffett’s terms, he wouldn’t care if the stock market closed for the next five years because he’s not concerned about the macroeconomics.  He’s concerned with the company itself in that if it is a good business, the stock will eventually follow.  That being said, “time is the friend of a wonderful company and the enemy of the mediocre”.

For beginning investors (and perhaps “sophisticated investors” as well) time and patience is perhaps the downfall of most.   It is great that technology has allowed investors to take control of their finances and invest for themselves with stock trading programs and stock filters.  However, while these can be very helpful tools and help drastically cut down research time, one has to ultimately apply the teachings of value and growth investing and add a human element.  If the stock market could be distilled into a perfect mathematical formula or if the market was truly efficient, then people like Warren Buffett would not be able to make so many winning stock picks in his career.  That being said, it only takes a few top stock picks to make one rich and investors don’t need to make so many trades with buy and sell commissions that eat away at the returns.

So if you want to be rich like Warren Buffett, you now know the formula to his success: invest in value stocks with long term growth potential.

After suffering a financial set back, it might be hard for some investors to rebuild their fortune but the same investment advice can be applied to those who are beginning investors. Before you begin to invest, you need to have your personal finances in order. This means you need to have your emergency funds in place so you won’t feel obligated to sell your best stock picks because you need the money. It is generally regarded that you should put away enough money in your savings account for six months to a year if something goes wrong and you are out of a job. As an investment tip, it is recommended that you only invest with money you won’t need for a period of five to ten years. Even though you can make fast money in the stock market, you can also easily lose money too. The way to reduce these risks is if you think for the future with long-term stock picks. You want to invest in growth stocks that are trading cheaply for their future potential as opposed to hot penny stocks that are more erratic and risky.

To be honest, any stock picking advice can be reduced to one golden rule: buy low and sell high. However, it is important to note that it doesn’t cover the time line. You can make money on the stock market within a few minutes or you can make money over a period of years. Perhaps this is why famed billionaire investor Warren Buffett has his number one rule of investing as well: never lose money. His second rule of investing is never forget rule number one. Warren Buffett’s investment advice might sound glib but surprisingly, so many people do lose money in the markets. This is because while they might have a few winning stock picks, the vast majority of them were losers. So they understand the concept of buying low and selling high but they don’t do it consistently to make money in the stock market. And perhaps this is due to their time horizon.

If there is one person you should take investment advice from, it is Warren Buffett. He has an incredible financial mind and yet he can distill concepts to teach investing for beginners. So while you can make money from day trading, foreign exchange arbitrage, shorting stocks, buying and selling options and warrants, Warren Buffett does it the old fashion way with long term stock picks. Buffett’s investment strategy simply reduces the risk by buying good companies at a fair price. Again, this might seem like a very simplistic stock tip but it is amazing that so many people cannot understand the concept.

According to Buffett, price is what you pay, but the value is what you get. For example, a company’s share price might be the lowest that it has been in a year but is it worth it to begin with? There have been lots of stock market bubbles in the past with certain sectors being overvalued only to come crashing down again. When looking for best stocks to invest, it is important to look past the hype and realize a company’s intrinsic value. You should also invest in something you understand as well. If you don’t understand a business, how can you do your stock analysis? You need to do your stock pick research by going through a company’s annual reports and financial statements. This is called fundamental analysis. If you can identify top stock picks that are trading below their intrinsic value, you can keep them in your portfolio for the long term. And if you can find cheap stocks that are mispriced you will have the luxury of time for the long term horizon which gives you a margin of safety. Therefore, let this be another stock pick advice: when a company is overhyped, its stock price is probably overvalued. When a company’s stock is trading below its intrinsic value and the pundits are tell the public to sell, that is when you should go against the grain and buy. Again, the point of making money investing is to buy low and sell high. Therefore, even though a lot of people are scared to invest in the stock market because of the economic crisis, this is the best time to invest in recession stock picks.

If you follow Warren Buffett’s stock picks advice of applying a margin of safety when buying a few good companies and waiting patiently for the price to go up again, you will make money in the stock markets. The Warren Buffett strategy is also called focus investing. You put your focus on finding a few winning long-term stock picks. For some people, this might seem risky as it goes against the popular thinking of diversification. However, the point of diversification is because you want to reduce risks but what are the risks if you do your due diligence? This is very important advice for beginning investors to adhere to as well. It is easy to make money on a few hot stocks but it is hard to make money consistently in the stock market so always do your research.

As a final word of advice for stock market beginners, if you don’t have time to learn how to invest in the stock market, the next best thing is to invest in index funds instead of managing a stock portfolio yourself. An index fund is a low cost mutual fund that tracks a particular stock market index by buying the same companies that make up the index. Since markets rise over the years, this takes care of your long term investments. Of course, you will only do as well as the market and you won’t have the fun of watching break out stocks but the truth is most mutual funds are closet index funds anyway. If you look at the mutual fund stocks, most funds will be a duplicate of some index so why pay the extra management costs that eat away at your return? And for those high profile money managers, do you really trust them with your money after all that’s happened in the news with the financial scandals? While there are undoubtedly honest money managers out there, how do you separate the good ones from the bad? The bottom line is that no one will have your best interest at heart and care about your long term investments more than you. You might as well learn about investing for yourself.

In order to understand how Buffett finds his long term stock picks, you have to understand that he is a student of Benjamin Graham – the father of value investing.  The name of the game in the stock market is to buy low and sell high.  Obviously you would be on the lookout for cheap companies who are (for whatever reason) undervalued because but whose books are sound when you do some fundamental analysis.  The current global recession is the perfect example.  Some external source of macroeconomics is affecting a perfectly good company and reducing its stock price.  Even though it is a scary time to invest, if you have done your due diligence, you can pick up some great blue chip company stocks for cheap.

Now, you can try to time the market for the exact lowest price but frankly, small fluctuations aren’t worth the hassle if you look at the bigger picture.  It will be easier if you pay what you calculate to be fair value as sometimes good companies are worth it.  If you look at a sell-off in the market, it’s always the small caps and penny stocks that slide through loose hands first but the more stable blue chip companies usually hold their ground.  This is not to say blue chip stocks will never drop down in value but they usually have better fundamentals to prop them back up when things go back to normal.

Some investors might argue that blue chip stocks are not good stock picks because they lack growth potential but if you look at what Warren Buffett is buying, you will notice that he only buys companies with a big competitive advantage.  This is what he calls his business moat.  He doesn’t want his competitors to erode the brand of his investments which has the chance to go multinational.  How is that for growth?

So if you want to invest in the future, do yourself a favor and see whichs blue chip stocks are undervalued.  In the end, blue chips are good long term stock picks because they hold their value and can be a growth stock too.

Buffett’s best stock picks are ones in which he picks up shares of a well managed company which is undervalued.  That might be easier said than done but despite any efficient market theory, as Buffett himself said, if the markets were always efficient, he’d be a bum on the street holding a tin cup.  And in spite of Buffett’s continued modest living arrangements, he’s far from a bum on the street.  So what are Buffet’s stock tips on the way to riches?

As he had preached in the past, the first rule of investing is never to lose money.  This is followed closely by rule number 2 which reinforces the first rule not to lose money.  Judging by the war chest of cash that Berkshire Hathaway holds (40 billion), you can tell that the Oracle of Omaha is careful with what goes in his portfolio.  The moral of this story is that despite excess cash don’t feel that you have to invest in it right away.  Look for the proper investment opportunity.

Another tip for picking winning stocks is to understand the business in which you are investing.  Buffett preaches a concentration in holdings.  While this might be against standard investing methods of diversification, it actually lessens the risk if it motivates the investor to dig deeply into the business he/she wants to invest.

As a final bit of stock advice, Buffett picks stocks for the long term.  Again, using some of his folksy common sense, he sums it up by saying “We don’t get paid for activity, just for being right. As to how long we’ll wait, we’ll wait indefinitely”.

Due to the ease of use of stock trading programs, amateur stock traders are increasing and trying their hand in day trading.  However, due to the in and out trading, it is eating up their principal in fees if they don’t make a profit.

Overall, you can see that Buffet’s investment advice is geared towards long term stock picks: he buys good companies in which he understands and ones in which are undervalued.  Buffet waits long term until they are in favour again by the stock market.

These are the guiding factors of Buffet’s best stock picks which are easy to understand but it takes a disciplined person to follow.

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

In other words, the recession is the perfect time to buy cheap stocks that are below their fair value.

Critics might argue that the stocks and shares in Berkshire Hathaway itself are losing value in the recession.  To that, I would argue that the man is still worth tens of billions of dollars and is consistently in the top 3 of Forbes’ World’s richest list.   How can you argue with that kind of success?  But what is grating is that so called talking heads still criticize Buffett’s investment strategy as being old fashion and not current with today’s market.  To that, I say let’s take a look at their bank account balances.  Warren Buffett has survived the tech bubble and he will also prevail against the current credit crunch crisis in which “finance specialists” contrived complex investment vehicles that no one could understand which eventually unraveled into a big mess.

Given Buffett’s stock picks of consistently beating the market through decades, I’d put my hard earned money on him and trust Buffett’s recession stock picks advice.

It is well known that Buffett’s investing portfolio is to buy and hold forever.  Warren Buffett is thinking for a long term investment strategy and if you have money to invest in the recession, this is the perfect time to put your money in the stock market!   Let’s remember, Buffett survived the tech bubble and he will once again survive the credit crunch and housing bubble.  The buy and hold, long term investment strategy is in stark contrast to the greedy fast money thinking that got us into this problem in the first place.

Once again, let’s take a look at what Warren Buffett’s advice on stock picking.

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

So, to sum up Warren Buffett’s advice on investing: buy and hold for long term and go contrary to popular opinion.  Buy stocks that are in steep discounts right now because of the recession and watch it pay off in 10 years time.  Read and learn advice from Warren Buffett’s recession stock picks.

You might argue that lots of people have made money on the run up of gold especially during the recession.  That would be true but also look at the tech bubble – and then there was the housing bubble.  At some point, people are going to realize and say this yellow, shiny metal is not worth it.  Buffett was right about the tech bubble and he also side stepped the credit crunch miraculously.  Can he be right about gold as well?  Remember that the way to make money is to have the guts to do the opposite of what everyone else is doing.  If everyone else is buying gold, maybe that’s fool’s gold and it is not the best play available.

So if Buffett is not buying gold in the recession, what is Warren Buffett buying?  Buffett is a follower of Benjamin Graham and likes to buy companies on the cheap – actually, who doesn’t when the point of playing the stock market is buying low and selling high. But judging by Berkshire Hathaway’s immense cash position, you can see that he doesn’t buy companies on a whim.  There are few companies that pass his tests for having good intrinsic value.  However, according to a recent interview with Buffett, likes Burlington Northern Santa Fe very much.    This is his hedge against a weak dollar and inflation – by buying a railway company that he predicts will perform better than the trucking industry due to the high cost of fuel in the years ahead.  Now that’s an interesting view on things but then again, that’s why he’s Warren Buffett and you can about his long term stock picks.

We have all heard of the investment advice of invest in what you know.  It is surprising how few people actually follow this advice and this goes for financial wizards as well.  A case in point at what is being blamed for the current collaspe of the mortgage industry and of the top American banks is the complicated investment vehicle of derivatives.  Loans were packaged and repackaged to spread the risk amongst many players.  However, this too came as a pitfall as the financial firms could not retrace what they actually owned.  And with the risk being wide spread, everyone was affected by these “financial weapons of mass destruction” as coined by Buffett.  If the investment firms had taken Buffett’s investment advice, then we would be in a better place financially than we are at now.

Now of course, you might be saying that you would never have invested in something as complicated as derivatives.  Of course not, these investment vehicles are not available to the retail investor.  However, the principle of common sense is still the same.  Most of us do not do the due diligence required when investing.  How many of us havellistened to a “hot investment tip” from a supposed insider and then bought shares in a company that you have no idea what it is they do?  If you don’t know what they do or it can’t be explained easily, the chances are you didn’t go over the stock fundamentals as well.  Warren Buffett might be a genius but there’s no secret in his investment advice.  1) Buy in companies you understand and 2) have the intention of keeping it longterm.  3) Buy in well established companies that has an advantage over it’s cometitors and 4) make sure you buy it at a good value.  If you didn’t go through the stock analysis, then you wouldn’t know if what you bought was cheap or expensive.

If these investment advice seems simple to you, then congratulations, you should be on your way to investing like Warren Buffett and have his success in stock picks.

Buffett built Berkshire Hathaway in the property and casualty business.  With the premiums, it generates a lot of float for Buffett to invest in other companies.  However, the P&C industry is also cyclical in nature.  Buffett himself warned to expect “lower insurance earnings during the next few years”.  So the Oracle of Omaha obviously knew what was coming and notified his Berkshire investors not to panic.  This is in contrast to other funds and investment bankers who got caught with their pants down in the credit crunch.  And people are still complaining?  Sure, stock investments in the insurance and the banking industries are soft but Buffett is also sitting on more than $40 billion in cash just waiting for the opportunity to pick up some under valued companies in the recession.

And lets not forget that every time the U.S. sneezes, the rest of the world catches a cold.  The world’s biggest economy still has a lot of influence in the rest of the world and it is likely that the next additions of stocks to buy could be from abroad.  Here is another Warren Buffett quote to shed some light on Buffett’s views on the U.S. economy: “But, we are still very important in the U.S., and we are still very linked in many ways. But we aren’t as important as we used to be relative to the rest of the world.”

Last year, Buffett went on a highly publicized trip to China and South Korea where he visited the plants of a Berkshire Hathaway subsidiary – Israel’s Iscar MetalWorking.  Obviously, the 77-year old is not being complacent and is looking to add more companies in the Warren Buffett portfolio even if he has to look outside of U.S.

So despite the fact that Warren Buffett’s stock picks and stock investments are being questioned, don’t count the man out.  He clearly has a pulse on the world markets and we should all heed Buffett’s investment advice.