Here’s how Warren Buffett helped me buy this FTSE stock!

 Here's How Warren Buffett Helped Me Buy This FTSE Stock!

As a learning investor, I look up to Warren Buffett and try to learn from him. Some time ago I bought shares in Howden Joinery Group (LSE: HWDN). Here's how Sage of Omaha helped me in this case.How Warren Buffett Helped MeFirst, Buffett said, "In the business world, the rearview mirror is always clearer than the windshield." This tells me that past performance history and fundamentals can help paint a picture of where the business is heading in the future. However, I understand that past performance is no guarantee of the future.

Second, "Never invest in a business you don't understand". I would never claim to be a construction expert, but another of Buffett's principles is to do a lot of due diligence. I did it in Howden as a company and in construction in general.

Further: "Only buy something that you would be perfectly happy to hold if the market stopped for 10 years". I believe that Howden can continue to perform well for another 10 years. The reason for this is that the demand for construction products is growing only because of the chronic housing shortage.Finally, "If the business does well, the stock will eventually follow". Shares in Howden have been on an upward trajectory for some time. In fact, they have increased by almost 70% over a five-year period.

Since I bought the stock, I have seen my investment grow. The shares are up 20% from 613p (the price I bought the shares at) to where they are now. They grew by 12% in 12 months. It's worth noting that many stocks have struggled in recent months due to macroeconomic headwinds. These include soaring inflation and rising interest rates.

Howden shares increase my passive income and the current dividend yield is 2.8%. I expect it to grow in line with the business. However, I understand that dividends are never guaranteed. Furthermore, I would be willing to add more shares to my holdings. The stock still looks decent value for money at a price-to-earnings ratio of 11.

Warren Buffett stands as a beacon of investment wisdom in the realm of financial wizardry. His legendary insights have guided countless investors to success and I consider myself lucky to have used his principles to buy promising FTSE stocks. In this article, I will delve into the invaluable lessons I learned from the Oracle of Omaha and how they have enabled me to make savvy investment decisions in the FTSE market.

Understanding the Berkshire Hathaway Model:

Warren Buffett's investment vehicle, Berkshire Hathaway, is a constant source of inspiration for investors around the world. Taking a long-term perspective, I applied this philosophy when analyzing the potential of FTSE shares. Like Buffett, I looked for companies with solid fundamentals, a competitive moat, and prospects for sustainable growth. This approach ensured that the stocks I selected were consistent with the principles that have led to Berkshire Hathaway's remarkable success.

Focus on intrinsic value:

The concept of intrinsic value is the cornerstone of Buffett's strategy. I have carefully assessed the intrinsic value of FTSE stocks with regard to their earnings potential, growth trajectory and market conditions. This analytical approach protected me from short-term market fluctuations and provided a clear picture of the true value of the stock. By following Buffett's emphasis on intrinsic value, I gained the confidence to make an informed investment choice.

Buffett's famous saying, "Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1," underscores the importance of certainty. Before acquiring FTSE shares, I did extensive research to ensure I was buying at a price below its intrinsic value. This reserve not only mitigated potential losses, but also reflected Buffett's conservative approach to risk management.

Adopting a long-term vision:

Buffett's legendary investment horizon goes far beyond short-term market noise. Similarly, I cultivated a long-term vision for FTSE shares, looking beyond the immediate swings to envision their potential over years and even decades. This aligns perfectly with Buffett's advice to invest in businesses that one would be comfortable holding even if the market shut down for a decade.

Patience and Discipline:

Patience is a virtue that resonates deeply with Warren Buffett's investment philosophy. I applied discipline by refraining from impulsive decisions and allowing the selected FTSE stocks plenty of time to deliver results. Buffett's mantra "Our favorite holding period is forever" reminded me that successful investing requires patience and the courage to weather market volatility.

Warren Buffett's investment principles have the power to transform ordinary investors into savvy market players. My journey into buying FTSE shares has been significantly enriched by incorporating the timeless wisdom of the Oracle of Omaha. By understanding intrinsic value, instilling a measure of safety and cultivating a long-term perspective, I not only secured a promising investment, but also imbibed invaluable lessons that will continue to shape my investment journey. As you embark on your own investment ventures, remember that even in the dynamic world of finance, Buffett's teachings remain an unchanging compass to guide you to sound investment decisions.

I mentioned earlier that Warren Buffett talked about looking at a company's past. At Howden, I see sales and profit growing for the last three years in a row. In addition, store presence and customer numbers continued to grow over the same period.

From a bearish perspective, I understand that building projects, including the kitchen renovations that Howden is best known for, may not be a priority. This is due to the cost of living crisis that has developed. This could result in some short-term pain for Howden in terms of consumer demand. I think this should be offset by growing demand on the business side where it sells products to contractors and construction companies. Furthermore, rising costs could also squeeze the company's profit margins. This could affect any passive income I hope to earn.

Warren Buffett didn't personally help me pick this stock, but his lessons went a long way in my decision making.The post Here's How Warren Buffett Helped Me Buy This FTSE Stock! appeared first on The Motley Fool UK.Don't miss this top growth pick for the 'cost of living crisis'While the media raves about Google and Amazon, this lesser-known stock has quietly risen 880% — with:

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Sumayya Mansoor holds positions in Howden Joinery Group Plc. The Motley Fool UK recommended Howden Joinery Group Plc. The opinions expressed about the companies mentioned in this article are the opinions of the author 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 we are better investors with a diverse range of insights.