How Warren Buffett Is Investing in This Market

Use the teachings of the greats...

Posted April 3, 2023

"Only a great master can provide a path to finding your own true answers."

— Herbie Hancock

Dear Outsider,

At a seminar a few years ago, the great jazz pianist Herbie Hancock delivered a short but powerful speech on the ethics of jazz.

He talked about about how thinking outside the box can propel your career and life forward.

If you've never listened to his work, the song "Chameleon" off the album Head Hunters is a good place to start.

He's certifiably one of the coolest people on the planet.

He's played with all the greats, including Miles Davis.

Talk about cool...

During the seminar, he told the story of how one night, while playing a gig with the Miles Davis Quartet, he felt stuck.

He was in a rut and couldn't find his creativity.

He said he felt like everything he played was exactly the same and he couldn't seem to branch out.

Then Miles leaned over and whispered, "Don't play the butter notes."

He thought about it and quickly understood what Miles meant by this.

Don't play the obvious notes.

Don't go down the same path.

Branch out and be adventurous.

For his next solo, Hancock did exactly that, and the audience loved it.

He went on to say, "I believe within this raw exploration, they felt my openness and my desire to try something imaginative... It taught me the valuable lessons of courage, conviction, confidence, and trust... ethics."

He closed out the speech by saying we shouldn't hide our discoveries.

We should share what we find with others.

He said, "Reach up while reaching down. Grow while helping others." And finally, "While we're in the process of moving forward, bring others with you."

That's what I want us to keep in mind as we enter a new phase of the market.

In the investing world, Warren Buffett is the king of sharing his knowledge with others.

But most people don't listen.

Inflation is slowing...

The market's pricing one more rate hike into the market before the Fed pauses to assess the economy...

In theory, this should be huge.

But let's look at what the Oracle of Omaha says we should do to have success in this market.

I'll paraphrase here, but this comes from an investor presentation at the Terry College of Business at the University of Georgia.

First, look for companies with integrity that are run by intelligent people. This is the foundation of all good businesses.

Second, don't invest based on emotions. Humans are constantly feeding the boom-and-bust cycle of the market, which creates irrational price swings. It also, however, creates a huge opportunity to buy shares on the cheap.

Third, don't buy "used cigar butts." Even though buying "cheap" companies is tempting and you can squeeze a little juice out of them, instead look for quality businesses that grow revenue every year and have a wide moat. Buffett says he'd rather buy a wonderful business at a fair price than a fair business at a wonderful price.

Next, buy companies within your "circle of competence." In other words, buy companies that you know, understand, and even use yourself. Buffett is famous for his ownership and consumption of brands like McDonald's and Coca-Cola. If you don't understand the business, don't bother throwing money at it.

Finally, time in the market beats timing the market. When you're confident, make your move and make it right away. You only have so much time to invest and you can only miss the shots you don't take. Not to mention, you only get so many chances in life, and once an opportunity's gone, it's likely gone forever.

He concludes with one key takeaway...

The whole point of investing is to figure out how much cash an investment is going to give you.

Buffett says, "You're laying out cash now to get more cash back."

You want to know how much cash you're going to get and when you're going to get it.

Not only that, but you need to assess your level of risk. What level of confidence do you have that you're actually going to get cash back?

This is the essence of investing.

But what if cash as we know it fundamentally changes?

What if cash in no longer king?

Even though the market reversed to the upside last week, there's still a big problem.

The Fed could throw a wrench into everything.

Rumors are swirling that the Fed might replace the cash in your bank account with something called "FedCoins."

So the cash you thought you were going to get back on that investment might not be cash at all.

It might sound harmless at first.

And many people will even WANT to use it.

But it shouldn't be taken lightly...

It's a wolf in sheep's clothing.

A Trojan horse...

This government-backed digital currency is fully trackable. 

Meaning that once these FedCoins go live, our ability to invest could be changed forever.

In fact, freedom as we know it will likely die.

The government will quite literally be able to force you to do ANYTHING it wants.

You'll no longer have control over your autonomy.

It's happening all over the world, too.

Over 105 countries are developing their own digital currencies.

And the U.S. could announce its very own version as soon as May 3.

It's scary stuff.

That’s why we're giving away a FREE step-by-step FedCoin survival plan.

The time to prepare is NOW...

For all the lessons we can learn from the great masters, it could all change in an instant.

Have a great week.

Stay frosty,

Alexander Boulden
Editor, Outsider Club

After Alexander’s passion for economics and investing drew him to one of the largest financial publishers in the world, where he rubbed elbows with former Chicago Board Options Exchange floor traders, Wall Street hedge fund managers, and International Monetary Fund analysts, he decided to take up the pen and guide others through this new age of investing. Check out his editor's page here.

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