Billionaire Warren Buffett, considered by many to be the world's most successful investor, this week has been airing his views on everything from the minimum wage to public pension plans.
The reason for Buffett's ubiquitous presence this week? The Berkshire Hathaway (BRK.B) chairman issued his eagerly anticipated annual shareholder letter on Saturday, in which he writes about his company's performance and provides his usual folksy advice on investing. Since then, he's also appeared on CNBC to discuss some of his views and ideas, ranging from Bitcoin (he's not a fan) to the Keystone pipeline (he's definitely a fan.)
Like a trusted mentor, Buffett's plain-spoken views on the economic scene are cherished by both seasoned investors and novices alike. Below are seven key investing tips gleaned from his letter and his TV appearances this week:
1. You don't need to be an expert to invest successfully. This is the type of advice would-be stock pickers probably don't like to hear, but the "typical investor" doesn't need deep analysis skills to succeed, Buffett writes in his letter. "The goal of the non-professional should not be to pick winners ... but should rather be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal," he notes.
2. Don't bet against America. Investing in U.S. companies is "very close to a sure thing," Buffett says. "Indeed, who has ever benefited during the past 237 years by betting against America?" he asks. "America's best days lie ahead."
3. Check in with your trusted co-workers. Not everything came up roses for Buffett last year. He lost $873 million on a bet in Energy Future Holdings, a power utility. He made the initial investment without consulting his vice-chairman and long-time investing partner, Charlie Munger. "That was a big mistake," Buffett writes. "Next time I'll call Charlie." (Quartz notes that Buffett's favorite three-word phrase in 37 years of his letters is "Charlie and I.")
4. Don't focus on daily valuations. Investors should keep the long view, focusing on what you expect an investment to produce rather than fixating on daily price fluctuations. "Games are won by players who focus on the playing field -- not by those whose eyes are glued to the scoreboard," Buffett writes. "If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays."
5. Bitcoin isn't a solid, long-term investment. "It's not a currency. It does not meet the test of a currency. I wouldn't be surprised if it's not around in 10 or 20 years. ... It is not a durable means of exchange. It's not a store of value. ... It's been a speculative -- a very speculative -- kind of Buck Rogers-type thing," Buffett said on CNBC.
6. Public pension plans are going to bedevil the U.S. One dark cloud facing local and state governments are public pension plans that made unsustainable promises, he notes. The "gigantic financial tapeworm" of public pension plans will result in a lot of "bad news" in the next decade. Investors need to understand that "prompt remedial action" is necessary in some cases.
7. Don't get panicked during a crash. Resist the urge to panic when the market crashes or dips, Buffett writes. "Indeed, tumbling markets can be helpful to the true investor if he has cash available when prices get far out of line with values. A climate of fear is your friend when investing; a euphoric world is your enemy."