5 Stock-Picking Tips (the billionaire way)
Jun 28, 2025Read time - 3 minutes / Disclaimer
Picking individual stocks can:
- Boost your returns.
- Expand your net worth.
- Grow your account faster.
Unfortunately, stock picking isn't easy.
Not Losing Money
Investing in the wrong stock can be:
- Painful.
- Stressful.
- Expensive.
How the heck do you avoid it?
By learning from great investors (like warren buffett).
Warren's company Berkshire Hathaway:
- Is the 5th largest company in the U.S.
- Has grown 20% per year on average.
He's widely known as an expert stock picker.
Photo: gettyimages
During the first 10 years of my stock investing journey.
An S&P500 fund (like VOO) was my only investment.
After watching that portfolio go from $0 to $500k (which shocked the hell out of me).
I started to tinker with individual stocks.
But my biggest fear was—
Losing money.
So I studied investing in individual stocks.
Reading books, going to seminars, taking online investing classes all helped.
The more knowledge my brain absorbed, the less fearful I felt.
Warren Buffett was one of my favorite investors to study.
Here's 5 stock-picking tips the Warren Buffett way (hope it's helpful).
Let's dive in:
1. The Understanding
“Risk comes from not knowing what you're doing.”
When investing in an individual company.
Buffett says it's important to understand:
- The product.
- The industry.
- The competitors.
Buffett has owned Coca-Cola stock since 1988.
Photo: gettyimages
The company and its industry must have long term growth potential.
2. The Advantage
"If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes."
Buffett also says before investing it's important to understand a company's:
- Finances.
- Business model.
- Competitive advantage.
This info can be found inside the company's financial statements.
A company's financial statements outline its opportunities and advantages.
3. The Management
“I learned to go into business only with people whom I like, trust, and admire.”
Buffett says you want the CEO of the company you invest in to be:
- Honest.
- Dedicated.
- Successful.
Buffett is a good example.
A strong CEO is an important part of a business's financial success.
4. The Price
“Price is what you pay. Value is what you get.”
Buffett says price and value are different things.
It's important to understand:
- When a stock price is "high"
- When a stock price is "low"
There are many different ways to figure this out.
Analyzing a company's financials helps you figure out a "fair" stock price.
5. The Patience
“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.”
Buffett says after finding a company to buy, it's important to buy the stock at a fair price.
On average, stocks drop:
- 10% every other year.
- 20% every 4 years.
Sometimes they drop 30%, 40%, or 50%.
Over time, the stock market has always recovered from a crash.
Patience and market crashes can be great stock-buying opportunities.
The Bottom Line
Investing in individual stocks:
- Takes time.
And
- Takes patience.
(especially if you're doing it the warren buffett way)
The truth is—
Not everyone has time and patience to invest in individual stocks.
For those people, Buffett says:
"The goal of non-professionals shouldn't be to pick winners, rather to own businesses bound to do well, a low-cost S&P 500 index fund will achieve this goal."
It's often called "VOO and chill".
Investing in an S&P500 fund like VOO (the top 500 companies in America) has been my easiest investment.
Plus, having a smaller side portfolio of individual stocks to research and follow.
I hope Warren Buffett's tips are helpful for the individual stock investors out there.
Keep building đź’°
See you next week.
