Investing in stocks is one of the fastest ways to become a millionaire. Warren Buffett is a good example of a billion dollar investor. To be a successful investor like Warren Buffett, you must first understand his beliefs about the market and his investment strategies.

1. The market is irrational

Warren Buffett believes that the market is irrational. He is often driven by greed and fear. Do you know people who buy when the market is up and sell when the market is down? Or are you one of them? If he has done his research and understands the true value of the shares he has purchased, he will feel secure and no longer worry when prices go up or down.

2. No one can consistently predict the market

Take a moment to remember, have you heard stories about someone spending money to buy mysterious trading systems, hoping to make a good profit but only to be disappointed? Average investors try to predict the next move in the market. When they can’t predict, they give money to so-called experts who claim they can. Warren Buffett believes that successful investing has nothing to do with predictability. Savvy investors know that no one can consistently predict the market.

3. High returns with little risk

While many people talk about “high risk, high return,” Warren Buffett believes in high returns with low risk. In fact, Warren Buffett is a risk averse investor. His first rule of his investing is “Never lose money” and his second rule is “Never forget the first rule”. People think investing is high risk because they haven’t learned how to do it correctly. Just like driving, don’t you think it’s risky to drive on the road if you haven’t learned how to drive properly? If you know the correct way to do it, you can significantly reduce the risk.

4. Invest in few big companies

Most investors are taught to “diversify, diversify, diversify.” Therefore, they bought many mutual funds and held small holdings in many stocks. Warren Buffett believes that diversification is for people who don’t know better. By investing in the entire market, you will go up and down with the market. The key to outperforming the market is to identify great companies and focus your investments on them.

5. Make decisions based on strict criteria

Many investors make decisions based on emotions. They are tempted when they hear good advice or see their friends making quick profits. They then sell immediately when they see the stock price drop the next day. Successful investors follow a strict set of criteria to determine when to buy and sell. Investment criteria are rules you follow to decide which stocks to buy, when to buy, and after buying, when to sell. Here are some examples: the company must have increasing sales and profits for the last 5 years, the return on equity must be more than 15%, the long-term debt must be less than 3 times the net profit, etc.