Warren Buffett said there’s one key investor trait that’s ‘far more important than any technical skills’ – here’s how it can help your portfolio

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While some investors may think that the ability to spot good opportunities and perform accurate valuation calculations are the most important skills they need, that is not necessarily the case.

At least, not according to legendary investor Warren Buffett.

In fact, the Oracle of Omaha argues that having the right temperament is actually a more valuable trait for investment success.

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“The right attitude towards investing is much more important than any technical skills,” he told Andy Serwer during an interview with Yahoo Finance.

This is why Buffett believes investment psychology and having the right perspective are so crucial.

Attitude determines success

According to Buffett, the right perspective for an investor is that of a business owner: when you buy a stock, you buy part of a company. Therefore, the underlying operation of said company is the most important factor.

“I think what you’re doing when you buy a company is (assuming) you’re not going to get a quote on it for the next five years,” he said in the interview with Yahoo Finance. “They’re going to close the stock market for five years and you’re going to be happy about it as a company.”

Buffett added, “If you owned Coca-Cola in 1920, it didn’t matter if it went public. The most important thing is what it did to customers.”

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Buffett’s focus on underlying fundamentals is an important aspect of his approach, and is echoed by other successful investors such as Peter Lynch.

“The most important organ in your body in the stock market is the stomach, not the brain,” he joked during a speech to the National Press Club in 1994.

So how can this insight make you rich?

Read more: Rich, young Americans are leaving the stormy stock market behind them – these are the alternative assets they rely on

Gaining an edge

Investors can act like Buffett, with a few perspective shifts.

First, avoid panic selling during market downturns. This could help you benefit from the recovery – and cheaper valuations – that arise in these situations.

Two: expand your time horizon. According to Ben Laidler of eToro, the average holding period for stocks has fallen from five years in the 1970s to just 10 months in the 2020s.

However, according to Wealthfront data, holding a stock for just one year had a 25.2% chance of loss. The probability of loss dropped to 4.9% if the stock was held for ten years, and 0% if it was held for twenty years.

Buffett encourages investors to ignore the daily swings in stock prices and view stocks as more illiquid assets – such as farmland and real estate – so as to avoid the temptation to buy or sell based on short-term sentiment.

Investing in real estate and agricultural land

If you have the mindset (and guts) to be a long-term investor, buying real estate and land is the way to go.

Platforms like First National Realty Partners (FNRP) allow you to capitalize on the industry with professionally vetted deals.

FNRP gives you access to necessity-based real estate, such as grocery stores or healthcare facilities. That means the properties are essential to the local community, often leased by national brands like Kroger and WalMart, and likely to remain in demand.

The best part is that they manage the entire process, from finding prime properties to dealing with tenants, so you can focus on finding your next lucrative deal.

Buffett isn’t the only billionaire who sees value in alternative assets. Recent estimates show that Microsoft founder Bill Gates owns approximately 270,000 hectares of farmland in the United States.

Over the past six years, Gates has reportedly spent about $113 million purchasing farmland in Nebraska and now owns about 20,000 acres in that state alone.

Agricultural land is an attractive investment for those who want to hedge against periods of inflation.

According to a 2023 article from Nasdaq, farmland values ​​have been shown to rise along with inflation, with US farmland values ​​reaching 10.2% in 2022, while the average inflation rate was 8%.

The thing about investing in physical farmland is that the price tags associated with large farms (or even small to medium farms) can be enormous. These are also assets for which it is not so easy to obtain financing, especially for investors and people without direct agricultural expertise.

Meet FarmTogether, a company that offers a range of funds and tailor-made investment options for investors looking to deploy some capital into physical farmland. This company’s investment offering is tailored to the needs of investors.

With over $2.1 billion in capital deployed and a conservative and disciplined investment philosophy, the company addresses many of the key needs of investors seeking exposure to this asset class.

The company’s proprietary sourcing technology and experienced team with best-in-class partnerships ensure that less than 1% of deals entering the company’s pipeline are passed on to investors.

What should you read now?

This article provides information only and should not be construed as advice. It comes without any form of warranty.