The annual letters which are written every year by the legendary investor of the world Mr. Warren Buffet became a must read when it comes to stock market investment wisdom.

This letter is exactly what we need in order to learn from such a wealthy, superabundant, successful personality after all he is one of the richest man on planet earth. This letter is not just a tool that discloses you the best investment wisdom in Stock Market but it is much more than that.

Let’s discuss the most precious Lessons which will prove to be emerald for Investors investing in Stock Market.

1. “Our goal in both forms of ownership is to make meaningful investments in businesses with both long-lasting favourable economic characteristics and trustworthy managers. That point is crucial: Charlie and I are not stock-pickers; we are business-pickers.”

It is a crucial lesson that Mr. Buffett explains to Investors here is that he makes investments in businesses with a combination of favourable
economic characteristics, long-term, value-oriented approach seeks companies with an underlying durable competitive advantage, superior cash flow potential and honest management with trustworthy managers. Many investors think of them as stock-pickers, but they are actually business-pickers. He clearly stated that they (Mr. Buffett & Mr. Munger) intend to seek such types of opportunities that are somewhat like if they are starting a business with the intent of becoming an owner by making an investment for business ownership.

2. “It’s crucial to understand that stocks often trade at truly foolish prices, both high and low. “Efficient” markets exist only in textbooks”.

Here he is explaining those Investors who thinks that Stock Market is Efficient but in reality the Efficient market exists only in books. Why so?? As the stocks in market is often trading at really silly prices (either very cheap or very expensive) that do not make sense. Because the reason is there is no such thing as a perfect market. It is a place where investors act on information, opinions and majorly on emotions that may or may not be rational. In short, the stock market can be very irrational at times.

3. “The lesson for investors: The weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders. And, yes, it helps to start early and live into your 90s as well”.

In the Secret Sauce Paragraph of the Annual Letter where Mr. Buffett discussed about his investment in two companies i.e Coca Cola & American Express. The lesson is weed-like stocks that don’t grow will eventually be replaced by the flowers of growth stocks. If you start investing early and keep doing it, your portfolio will become very valuable. And the more you learn about investing, the more likely it is that you’ll be able to avoid the weeds and find the flowers.

4. “The world is full of foolish gamblers, and they will not do as well as the patient investor.”

Investors can make a lot of money, but they have to wait a long time patiently to see if they make money. Gamblers can make a lot of moneyquickly, but they might lose it just as quick. Therefore in Investing always focus on being a calm composed Investor rather than a gambler.

5. Ben Graham said, “Day to day, the stock market is a voting machine; in the long term it’s a weighing machine.” If you keep making something more valuable, then some wise person is going to notice it and start buying.

The stock market is a voting machine, It tells people if a stock is more valuable or less. But in the long term, it’s a weighing machine as you can weigh all your investments by their prices.

6. “A great company keeps working after you are not; a mediocre company won’t do that.”

A good company is a great investment because it makes money for you while you are sleeping, eating and drinking. A mediocre company will not do that for you so its a must that you do proper research and analysis to go for a good company.

7. “Warren and I don’t focus on the froth of the market. We seek out good long-term investments and stubbornly hold them for a long time.”

Warren and I try to find good investments that will make us money and we hold onto them for a long time. We do not try to buy and sell things a lot and very often. Investors who want to make really good amount of wealth from market should rely on long term Investing with good Investments done in them.

So, Readers I hope you agree with me the fact that the annual letter is a treasure trove of knowledge for everyone to learn from. Anyone who invests anywhere in the world will find something useful in it. There are many valuable lessons to be learned from it, and if you ever plan to venture into investing, you should read this letter at least once. It’s truly an invaluable experience.