How Warren Buffet gets better deals than you? (And how you can do it too)

Note: This is not an article to guide you on stock picking.

You know Warren Buffet as a successful investor (and if don’t then you are probably an alien…!) and it’s no secret that he gets better deals in everything he does.  When he wants to invest in a company, the company offers him a better price for its stock and then throws in some preferred stocks or warrants. People pay millions to meet him and dine with him.

So how does he do it? And how can you do it?

1. Stick to the basics.

Warren Buffet has always only invested in businesses that he can understand well and he thinks that will remain in demand consistently; for they satisfy specific needs people have. If something is too complicated for you to understand you will probably not be able to take a right decision on it.  Stay away from things that are not intuitive to you. There will always be enough opportunities that you can understand and be comfortable with. You may have to just look around a bit.

2. Negotiate.

Do you think Warren Buffet takes the first offer he gets for a company stock? No way..! He negotiates. And you think it is cheap to negotiate even when billionaires are doing it. Negotiation is one of the best skills you can learn, it will come in handy at various points in life, right from buying your home or car to negotiation your salary.

3. Network and create a reputation for yourself.

Research may be a good source to find opportunities but the best deals are still struck by knowing people.  Warren Buffet’s network of rich and influential people who hold him in high regards helps him get to opportunities before other s.  Network with people, and care about what they think about you.

Communicate with your friends, employees, investors on a regular basis. If there is something they will come to know about you or your firm, let it be you who tells it to them. This is the best way to build trust and reputation.

4. Get there first.

Good deals don’t last forever and Warren Buffet knows that. You will never see Warren Buffet investing in what is hot now (because people have already got there). If you have missed the wave, you have missed the wave. There is nothing you can do about it.  Instead of trying to jump on it start looking for the next wave. Whether it is investing or any other decision; research and domain knowledge adds value. Spend time to gain some expertise in the domain of your interest and you will be able to spot opportunities before other people see them.

5. Adopt simplicity.

Warren Buffet still lives in the house he bought several decades ago for approximately $31,500. A carefree life style will also affect other aspects of your decision making. As long as you are able to keep it simple, you are increasing your odds of success.

6. Be confident.

Warren Buffet once said:

I always knew I was going to be rich. I don’t think I ever doubted it for a minute.

That’s confidence.  Confidence can be the difference between what you dream about and what you achieve.  Believe in your abilities and work on improving your skills and you will get there.