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2 simple Warren Buffett habits anyone can apply

Warren Buffett at a Berkshire Hathaway AGM

Legendary investor Warren Buffett is known for his outstanding investment track record. But unlike rivals at top investment firms, he doesn’t have hundreds of analysts working for him. Buffett doesn’t use complicated algorithms to identify shares to buy for his portfolio.

In fact, the investor uses a couple of techniques to find investments that I think anyone can use when looking for shares to buy. That includes me.

Asking people for suggestions

Over the years, Buffett has repeatedly asked people for suggestions about shares or businesses he ought to buy.

That comes out in his annual shareholders’ letters, where he lays out specific criteria he considers when looking for businesses to buy. Buffett has even included a specific request for people to contact him if they are selling a business they think meets his criteria. It has also informed his approach when it comes to repurchasing shares in his company, Berkshire Hathaway. Again, Buffett has appealed directly to potential sellers of large stakes to contact his company directly.

In other words, Buffett is not too humble to ask for others’ help in finding things to buy. In fact, one might say that he actively encourages it.

As a private investor, how can I apply a similar approach? I can ask other people for suggestions on shares they think are worth looking at. Now, that doesn’t mean that they will be good for me. Other investors’ criteria and needs may be different to my own. But eliciting investment ideas from other people could help broaden my own thinking. Even if I don’t end up investing in any of them, it could help me deepen my knowledge of the market. That would enable me to keep re-examining my own investing ideas from a fresh perspective.

Warren Buffett reads a lot

One of the main ways Buffett has come across investment ideas over his long career is through reading. From investment articles to financial reports, Buffett reads – a lot. In fact, reading is the activity that takes up most of his working day.

How does that help him get investment ideas? It fills gaps in his knowledge and inspires him. Buffett sometimes reads about companies for decades without investing in them. That means that, if he does decide to buy their shares at some point, he is doing so with a very deep knowledge of the company’s historical performance. These days it is easier than ever to read a lot of financial information online, often for free. I am applying Warren Buffett’s approach to my own hunt for investment ideas, reading widely and regularly.

Applying the lessons

I may never have the investing success Warren Buffett has enjoyed. But that doesn’t mean I can’t benefit from applying some of the principles of his approach.

Looking for more information on investment, especially from a diverse range of viewpoints, could help me become a more considered investor. Whether it’s staying in touch with other investors about their ideas, or reading about companies in which I have some interest, I think Buffett’s approach could helpfully inform my own.

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Christopher Ruane has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.