Warren Buffet's 9 investment principles

8/8/2019 Warren Buffet's 9 investment principles

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BOOK REVIEW ON

WARREN BUFFETT

WEALTH

BOOK REVIEW ON

WARREN BUFFETT

WEALTH


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PENNED BYPENNED BYPENNED BYPENNED BY

Robert P Miles is an investment advisor,International speaker,author andacclaimed Warren Buffet expert.

He is a graduate of the University of MichiganBusiness school.

Miles is also the author of Warren BuffettsBerkshire Hathaway, The Warren Buffet CEO .

www.robertpmiles.com


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THE SECRET OF WEALTHTHE SECRET OF WEALTH

This book is all about a man who,without any inheritance,without taking over a family business created abundant

wealth and plans to give it back to society.

Forbes Richest Man of the year 2008(U.S.$62.0 billion). Who Forbes readers think should be the next U.S.

President.


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An Australian writer and businessman from Hong Kong

Founder of the investment news letter World Money

Analyst

The nature of market cycles..

How to get a second passport.

He also coaches investors who want to

transform their Investment results.

Mark Tier.


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Deadly investment sin.

# Believing that you have to take big

risk to make big profits

But remember Risk is contextual


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The sage of Omaha

Warren Edward Buffet

Born : 1930,Omaha.

Occupation : CEO, Berkshire Hathaway

Salary : US$ 100,000

Net Worth : US $ 62.0 billion

A 20% return at the age of 6

A new business venture at the age of 20

Early career as a stock broker

Berkshire Hathaway


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Turn off the stock market.

Dont worry about the economy.

Avoid risk.

Manage a portfolio of business.

Maintain a circle of wealth.

Buffets key tenets


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THE NINE

SECRETS

OF

BUFFET

THE NINE

SECRETS

OF

BUFFET


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Secret # 1: Invest in quality businesses,not stock symbols

Playing bridge without looking at the cards.

Buffet says: when I buy a stock, I think of it in terms ofbuying a whole company

Just as if I were buying a store down the street.


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Secret # 2 : Dont invest for ten minutes

if you are not ready for ten years

He stresses the importance of long term investing.

As investors, we focus on the medium to longbusiness features of companies.

Be a cautious investor.

Like stress on growth rate and stability of growth.


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If (the investment) doesntIf (the investment) doesnt

scream at you,its too closescream at you,its too close

Secret #3:Secret #3: Scan thousands of stocksScan thousands of stockslooking for screaming bargainslooking for screaming bargains


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Secret #4: Calculate how wellSecret #4: Calculate how well

management is using the money theymanagement is using the money they

havehave

Good returns on equity while employingGood returns on equity while employinglittle or no debt.little or no debt.


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Secret #5: Stayaway from glitterSecret #5: Stayaway from glitter

stocksstocks

Most people get interested in stocks whenMost people get interested in stocks when

everyone else is. The time to get interested iseveryone else is. The time to get interested is

when no one else is. You cant buy what iswhen no one else is. You cant buy what is

popular and do well.popular and do well.


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Secret #6: Know whata fat pitch is andSecret #6: Know whata fat pitch is and

what to do with itwhat to do with it

Home run stockHome run stock

Small no. of companies in portfolioSmall no. of companies in portfolio

Knowledge and ConfidenceKnowledge and Confidence

Risk comes from not knowing what you areRisk comes from not knowing what you are

doingdoing


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Secret #7: Calculate how much moneySecret #7: Calculate how much money

you will make, not whether the stock isyou will make, not whether the stock is

underva

lued or ov

erva

lueda

ccording tounderva

lued or ov

erva

lueda

ccording tosome academic model.some academic model.

Think independently

Invest in high-return businesses that are run for

the shareholders

Pay only a reasonable price, even for anexcellent business

Invest for the long term

Do not diversify excessively


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Secret #8: Remove the weeds and waterSecret #8: Remove the weeds and water

the flowersthe flowers not the other wayaroundnot the other wayaround

Strategy 1: selling profitable stock and retainingStrategy 1: selling profitable stock and retaining

losing stock.losing stock.

Strategy 2: selling losing stock and retainingStrategy 2: selling losing stock and retainingprofitable stock.profitable stock.


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Secret #9: Become a conscious investorSecret #9: Become a conscious investor

Model Portfolio and Watch ListModel Portfolio and Watch List

Steps to be followedSteps to be followed

Selecting Great Companies in Minutes

Avoiding Wealth Destroying CompaniesBuy at Your Price


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CriticismCriticism

Berkshire net sinks; Buffett says economy in shamblesBerkshire net sinks; Buffett says economy in shambles

Quarterly net income for Omaha, NebraskaQuarterly net income for Omaha, Nebraska--basedbasedBerkshire sank 96 percent to $117 million, or $76 perBerkshire sank 96 percent to $117 million, or $76 per

Class A share, from $2.95 billion, or $1,904, a yearClass A share, from $2.95 billion, or $1,904, a yearearlier, based on company filings. Revenue fell 12earlier, based on company filings. Revenue fell 12percent to $24.59 billionpercent to $24.59 billion

Berkshire's net worth fell to $109.27 billion at year endBerkshire's net worth fell to $109.27 billion at year endfrom $120.16 billion at the end of September, andfrom $120.16 billion at the end of September, and

$120.73 billion at the end of 2007.$120.73 billion at the end of 2007.

Date: 28Date: 28--FebFeb--0909

Source: ReutersSource: Reuters


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ConclusionConclusion

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Warren Buffet's 9 investment principles