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5 Warren Buffett Investing Moves I Will Make in 2025

5 Warren Buffett Investing Moves I Will Make in 2025

5 Warren Buffett Investing Moves I Will Make in 2025

Image source: The Motley Fool

After decades in the stock market, billionaire Warren Buffett continues to prove how a smart yet simple approach to investing can help people build wealth.

This year, Buffett has been anything but idle. One notable step was reducing his company’s stake in Apple (NASDAQ:AAPL).

Here are some steps from Warren Buffett that I expect to take in 2025 when it comes to managing my own portfolio.

Don’t ignore the obvious

Sometimes a great idea hides in secret.

Buffett has made tens of billions of pounds thanks to his Apple stake. But a decade ago he didn’t own a single share in the technology company, even though it was already very established and successful.

Just because a company is well known and many people already think it’s a good investment idea, doesn’t necessarily mean it’s too late to get in.

Focus on the business model

Buffett likes good management, but he doesn’t rely on it when investing. As a long-term investor, he understands that management changes over time – and not always for the better.

When it comes to investing, Buffett really focuses on how powerful a company’s business model is. For example, how big can the market be, and what competitive advantage or “moat” can help differentiate you from the competition?

Here too, Apple is a good example. Demand for phones and tech products is enormous, and Apple has built competitive advantages ranging from a large installed user base to proprietary technology.

Make more money with money

Apple, like many of its other investments, pays dividends to shareholders like Warren Buffett.

In fact, his company earns billions of dollars in dividends every year. Instead of using these funds to pay a dividend to its own shareholders, the company reinvests them. This is called compounding.

Buffett compares the process to pushing a snowball downhill. As it goes on, it picks up more snow, which in turn kicks up more snow. Over time, this can lead to exponential growth.

Stick with what you know

Buffett is the first to admit that he has expertise in some industries, such as insurance, but not others.

By holding on to his “Circle of Competence“The aim is to improve your chances of success on the stock market. I will do the same in 2025.

Risk management

Buffett says that the first rule of investing is not to lose money, and the second rule is to never forget the first.

Of course, this is easier said than done, but it highlights an important point about risks and opportunities. It’s easy to focus on potential benefits, such as the huge gains Buffett made due to a skyrocketing Apple stock price. But it is also important to take risks appropriately into account.

Apple’s success led to the company dominating Warren Buffett’s portfolio. Reducing its stake has improved its diversification. This helps reduce the potential impact of risks on it, such as lower-cost phone companies eating up Apple’s market share.

Diversification is a simple but important risk management tool – and one that I plan to use in 2025 and beyond.