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Now's the time to act correctly. In this video, we want to look at the most important statements from Warren Buffett, one of the greatest investment legends, and how you should behave in the current climate, not only with regard to stocks but also in general when making investment and financial decisions.
We'll look at this in this short series. As always, please give this video a thumbs up if you'd like to see more installments of this short series, in which we repeatedly look at the most interesting quotes and, of course, trading strategies from Warren Buffett. With a total of 67.5 billion US dollars, which landed him on the Forbes list, he certainly has a lot we can learn from him.
Accordingly, we'll start right now with the first instructive sentence: Berg Scheuer. So, his company buys when the lemmings run in the other direction. This means we're currently seeing how he behaves in the current market phase. We have many young tradersโmany lemmings in quotation marksโwho now see great opportunities in the stock markets, and He personally only starts running when the lemmings disappear, so to speak, when things start going downhill again.
That's why he's currently sticking to his rule of having as much liquidity as possible available. So, if it should crash, he'll be the first to do the exact opposite: not panic and sell, but rather buy in at a low price. Another important point in this context, and I find this very interesting, is this quote: During a stock market boom, one should avoid making the mistake of the proud ones who, after a heavy downpour, loudly boast about having made it to the top thanks to their panel skills.
What this saying reflects is exactly what's happening right now: this heavy downpour is, above all, the money from the ECB. This means many people think they now have really good stock market experience and are next in line to Buffett because they've already had a performance of 50 or 60 percent since last year, and that's not due to personal skill at all.
In other words, he says... It's also quite clear that we need to stay grounded now and not become overconfident, thinking, " Nothing can happen to me now, it's all uphill from here, and I can really assess the market perfectly." The real reason the stock markets recovered so quickly was precisely this downpour, namely the ECB's money.
And that has nothing to do with skill. Those who were invested benefited, while those who weren't didn't. And in the initial situation, it almost didn't matter what you invested in; apart from tourism, pretty much everything skyrocketed. So, even there, you might be tempted to talk about your own skill, but according to Warren Buffett, you simply shouldn't make the mistake of being a proud fool.
Then we come to another point, which is also very interesting to apply to the current situation. Most people become interested in stocks when everyone else is interested, but the right, the true time to invest is when no one else is interested. You ca n't buy what everyone wants and expect success that way.
And that's a golden key phrase about how not to behave in these times. Because what's going on now? You could almost say every taxi driver has heard about GameStop, every new or younger person has already looked into stocks and wants to invest. It's similar to the real estate market; everyone wants to build a new home right now, everyone wants to buy a condo or realize their dream of owning a house.
And he clearly says to act counter-cyclically. If we take advantage of this moment and keep investing, we could bitterly regret it. In any case, he says you should wait until the next crash. By the way, he made a video where we see things a bit differently than Warren Buffett, explaining why we wouldn't wait for that but would invest now.
You should definitely check it out here on the success channel. Of course, the next important thing is action. You don't have to be a genius. Investing is n't one of those things where someone with an IQ of 160 beats someone with an IQ of 130. The crucial thing is to act sensibly, and that's pretty much the gist of it.
In the video, the importance of acting correctly now means being sensible, and this is based on looking at the figures, data, and facts. What is the real state of the economy? What does the future hold for interest rates? Will there be further negative interest rates, or will interest rates rise again?
We tend to assume the former, that we will indeed experience an era of negative interest rates, also due to Christine Lagarde. This means it is crucial to act with sound common sense on the stock market or with investments in general, and unfortunately, the current outlook is not favorable for stocks.
Valuations are higher than ever before. Many stocks are at record highs; some are trading at 100 times their turnover, which is extreme. Even companies like Tesla can no longer be justified by their fundamentals. Only the future matters, and how the company can meet expectations. The One Love It Index is also currently sounding the red alert.
Ultimately, the ratio between the total market capitalization of US stocks and the gross domestic product in America is even higher than before the dot-com bubble of 2000. Several analyses on this topic have already been published here on the channel, so one should be very careful. And now we come back to the GameStop phenomenon of getting rich quick.
What is the reason for this, according to Warren Buffett? It's simply that the tendency to gamble always increases when a large sum is tempting and the stake is low, regardless of how low the odds of winning actually are. This is why casinos in Las Vegas advertise with large jackpots and state lotteries everywhere offer high prizes.
In other words, it's the well-known phenomenon: I want to invest 10 euros at the beginning, like with Bitcoin, and in the end, I want to have 10 million euros. And of course, the probability of this happening with big money or with a penny stock was also a factor. With a one- euro investment, this happens very, very rarely, even though one has the feeling that many penny stocks are being bought up due to these new market participants.
What's similar here is that the stock market is currently also a kind of gambling. This means trying to gain money with a small stake. We see this with leveraged products. For example, I myself invested 500 euros with a leverage of 10, meaning I suddenly had 5,000 euros invested, or with a leverage of 100.
Sometimes it's even possible to invest 50,000 euros. Of course, the risk is also leveraged on the other side. This should give one pause for thought, and often such deals end in total loss. Therefore, one should also ask what the stock market is currently using to lure investors, especially these small, secondary stocks that entice with quick profits, sometimes with truly insane volatility figures.
The fluctuation intensity of individual batches is currently enormous. Of course, one can become incredibly rich during this time, but one can also lose money if one backs the wrong horse. And in times when stocks can easily gain 30 percent in a single day, one should definitely take a good look at oneself and not get too greedy, because, according to him, that's always a very bad advisor.
Just like fearfully panic-selling is also very wrong in the current climate. Therefore, I'm curious about your favorite quote. Feel free to write your favorite quote from Warren Buffett in the comments below, or other quotes or stock market wisdom that have helped you a lot. What do you think about these statements?
Do you also believe that one should act cautiously in the stock markets right now, or do you say the exact opposite, that it's all just pessimism? Let's discuss this further; there are no wrong opinions, and I'll see you here in another video on this success channel.
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