 Warren Buffett arguably the best investor of all time with a net worth of $80 billion here in 2019 this man bought his first stock when he was 11 years old and as you guys can see is net worth since that point in time Has grown Exponentially now he's the CEO of Berkshire Hathaway, which is a holding company with a market cap of $500 billion So this is a person that has solidified himself as one of the best investors of all time If not the best investor of all time So I want to take some of his principles and talk to you guys today about those principles So we can understand how you can invest like Warren Buffett in 2019 the way he's been investing his whole entire life since he was 11 years old So if you guys enjoyed this video if you find value in this video hit that like button Consider subscribing if you want to see further content involving the stock market and investing and let's get right into it So the first of five principles that I want to talk about here in this video is Invest in what you know This is Warren Buffett's biggest principle one of his biggest principles is invest in what you know, right? Let's say you're a beginner out there in the stock market You have no idea what you're doing. You don't know what to invest in whether it's tech Healthcare tobacco right whatever it may be you don't really know what to do The first thing you should do is take a look at your own life and see what you're interested in What are you very knowledgeable about? Let's say you're a big video game guy You play the new Call of Duty's NBA games Madden whatever it may be you're very knowledgeable About those companies well you can invest in video game stocks like EA stock electronic arts Activision Blizzard. That's another video game stock. Let's say you know a lot about beverages consumer trends Maybe you can invest in Coca-Cola ticker symbol KO Which obviously makes Coca-Cola branded items and a lot of other products as well So you kind of have to view your own life and see what you're extremely knowledgeable about what you understand and maybe Expend on that to start out and then once you start to learn about other industries other sectors Let's say you don't know much about tech to start out But you start to dive into it you learn more about it you become more comfortable with the companies Maybe you can jump in and buy some tech stocks Maybe Facebook Amazon Apple Google Netflix whatever it may be You know once you get the grasp of those companies and this also allows you to mitigate risk in a sense because if you Invest in something that you have no idea about what if that company changes something up? What if that company goes into rough times and you're not going to understand what's going on with that company? What could potentially happen to their financials this will completely ruin you in terms of that investment right if you don't know What to do if you don't know about the company if you don't know what's next what happens in that industry in certain time periods This can completely crush your position and you can lose a lot of money So it's really just not worth investing in things you don't understand Just stick to what you know invest in what you know and I would recommend as well as Warren Buffett to just look around in your life What are you involved with? What are you most knowledgeable on and stick to that? So the second of five principles that I want to talk about today is invest in businesses find businesses That can stand the test of time and a lot of the times guys these businesses that can really Fend off competition and be around for 10 plus years 20 plus years 30 40 50 years in some cases these businesses have something called an economic moat They have a competitive advantage whether that be their brand right? We see this a lot with Apple Apple products when people go to Apple It seems like they never return or at least a lot of them don't return because they're caught up in that Ecosystem they become very loyal to that brand a lot of companies have patents Infrastructure that allow them to be extremely competitive versus other companies another Competitive advantage another economic moat could be pricing right Walmart for example is very good at pricing And that keeps them very competitive in the retail space against let's say a Costco a Target right companies and businesses like that So find a company that can stand the test of time and that won't just be disrupted Once another company rolls around because they have that economic advantage They have that competitive advantage the economic moat whatever it may be and that will be great for Businesses that want to stand the test of time 10 20 30 40 years out So the third of five principles on how you can invest like Warren Buffett in 2019 that I want to talk about is to find Cheap stocks and invest in companies when they are considered undervalued So there's a lot of different ways that you can value a company One of the most popular ways is the discounted cash flows model right where you're pretty much Extending those cash flows you're expanding them at a certain growth rate over the next five ten years And then you really discount them at a certain rate to figure out what the company's stock price is worth Today and if that price that you find out through your calculations Let's say it's lower than what the current stock price is at that means that that company at that point in time is Overvalued right you're not going to buy that stock Well, let's say you do the discounted cash flow You come to a number and let's say the stock at that point in time is worth Less than that number that you just found that could be an Undervalued company that you look at right another way that you can really value a company a Simpler way that a lot of people look at and one of the key metrics is the price to earnings ratio Which which takes the stock's price at that point in time and it divides it by the company's Earnings right so let's say for example You're looking to compare a stock in health care to the overall market at the S&P 500 level the 500 largest publicly traded companies in the US So let's say the overall market in terms of the S&P has a PE ratio at a 20 and let's say this company in health care Has a 17 PE Hypothetically speaking here. This company is Undervalued compared to the S&P 500 Hypothetically right but when you're doing analysis on companies in terms of price to earnings ratio It's important to see what it is compared to the overall market But it's even more important to compare stocks within their Industries and within their sectors to see what are the other stocks in that industry and sector price that in terms of PE and let's say, you know that company with the 17 PE is the lowest in health care Let's say all the other health cares are 22 PE 23 PE and obviously guys the higher the PE the more I guess you can say overvalued a company is well That's 17 PE stock is going to be Undervalued in that health care space. So it's just very important Warren Buffett Preaches this is to just buy stocks when they're cheap when they're undervalued after you've done your analysis in terms of metrics and other valuation formulas so step number four out of five is to be very aggressive in Times when others are extremely fearful, right? This is kind of a Contrarian point of view doing what others are not doing going against the grain So let's say an industry is getting killed But you see potential in that industry in the future while others are selling out of their stocks in that industry You can be buying in if you have that long-term perspective and then ultimately get a stock Whatever it may be at a cheap price and then in the next five ten years You make a lot of money, right? Another way you can be a contrarian here Be very aggressive in harsh times is to invest during recessions guys invest during the recession in 2008 the S&P 500 hit a low of 650 $660 and what is it priced at the time that I'm recording this video? $3,000 so while people were selling out people were dumping stocks They had no long-term vision at that point others the contrarians They were buying into the stock market loading up on stocks and then five ten years later the bull run hit What happened and those stocks doubled tripled four X five X some even 10 X and above guys You know these are returns that people got from investing at the bottom of the great recession were Unbelievable so point four out of five be a contrarian be aggressive in times When the markets are down do not be scared because that's where the real value comes in going back to the third point That's where stocks are going to be very undervalued. So don't be scared be aggressive So the fifth out of five steps kind of ties into the previous one and it is to have a long-term Mindset understand that in the short term a lot of different things can happen right a company can report bad earnings The trade war which is happening right now a trade war a big economic event can cause the stock market to go down be Extremely volatile right, you know interest rates the economy slowing down all these different things play huge effect Into the short term of the stock market, right? It's going to cause again a lot of volatility a lot of ups and a lot of downs But you have to understand that again going back to that fourth point This could be some of the best times to a load up on companies for B Having that long-term Mindset that five ten fifteen year mindset that you believe in the US economy to continue to go up So the gist of it is we're buying stocks out here in the stock market or at least Warren Buffett is buying stocks in the stock market and me personally as well with a vision of holding those stocks for five ten 15 plus years to take advantage of multiple things including well, you know the stock price going up, right price appreciation and Dividends guys a lot of these companies that Warren Buffett invests in and me personally as well They pay dividends and what can you do with those dividends? Well, you can live off of those dividends one day if your portfolio is large enough if you have enough shares But you can also if you're in the growing phase of your portfolio You can reinvest those dividends back into those companies that paid them So the next time a dividend payout rolls around you get more money than you did the previous time So it's pretty much a snowball where if you keep reinvesting these dividends compound interest kicks in and 10 15 20 years your initial investment is going to grow massively kind of like Warren Buffett's net worth did from the time that he began investing to well right now in 2019 so overall guys those are the five ways I guess the five steps five tips to invest like Warren Buffett in 2019 so if you enjoyed this video feel free to go down below hit that like button Consider subscribing if you want to see further content involving the stock market investing in stocks dividend investing Trading stocks. This is the channel for you. I'll catch you all in the next video I appreciate again for all of you guys watching taking that valuable time out of your day to watch this video peace out