Everything Warren Buffett

US News and World report has a great section on Warren Buffett and his investing style. I'm going to highlight a few of their pieces and add my comments to them.

In How to Make Money The Buffett Way they ask:

What if the bottom was falling out of the stock market, and your portfolio had plunged by 10 percent in a week?

Buffett's answer:

d) Study and reconfirm your assessment of the company, then smile and buy more?

If you answered "d," you may have a future at Berkshire Hathaway, the financial juggernaut whose 76-year-old chief executive and godhead, Warren Buffett, is searching for a successor. That's because, in addition to the requisite financial smarts, you'll need the sort of temperament to do what the "Oracle of Omaha" has long done best: take advantage of the market's temporary insanity to stock up on sure things at bargain prices.

Ha! Warren and I are on the same page when it comes to this tip. ;-)

They also list the six keys to investing Buffett style including:

• Make money by not losing money.
• Don't get fooled by earnings.
• Look into the future.
• Stick with companies with wide "moats."
• When you bet, bet big.
• Don't be afraid to wait.

This is basic investing 101, really. These tips are simple to understand, but hard to implement. That's what makes Buffett so good in my opinion -- he knows these rules and consistently follows them no matter what others think, what the market is doing, etc. To me, it's his implementation that's a big part of his success.

Then again, he's brilliant too. In Built to Make Billions? they wonder if Buffett's brain is simply wired in the right way:

To be sure, Buffett possesses one of the keenest intellects in business, with a knack for crunching numbers in his head. "His neurons are really good at thinking in a purely abstract, rational way," says law professor Lawrence Cunningham, author of How to Think Like Benjamin Graham and Invest Like Warren Buffett. "It's a way of thinking in terms of calculations, of instantly recognizing if a company generates profits at a given cost over time. It's something businessmen learn to do before making a capital allocation. But for him, it's an innate apparatus."

No fair, no fair!!!! (as my 9-year-old would say.) ;-)

And if you doubt he's both brilliant and a great implementer, check out how $1,000 invested with him in 1956 would be worth almost $28 million today.

Not bad at all!

Comments

[KCLau]

I wonder if he still avoids all the high tech company which is doing very well nowadays like Google?

[Joe Fier]

That man is truly a genius. He is definitely one to ward away from the crowd and set his own standards. While the world is flipping out in the stock market as a scare news report comes out from a large company, Buffett holds his ground. Doing that research and believing what you invest in is certainly the name of the game!

[Dr. Artfredo C. Abella Ph.D]

I agree with the "Oracle of Omaha" that in times of bear markets it is time to buy - this is simply right since the opportunities are better to purchase at this period, the par value is much, much lower in the markets. However, a caution must be made on this aspect, see to it that during the bear markets buy stocks from stable companies to ensure that the money you are investing will be secured. The thumbs rule in the stock market is always buy during the bear markets and not during the bull periods. Buy by the volumes during the bear market and buy limited quality stocks during the bull period is the soundest advice we can chart in the stock markets. The most that we can really opt in the stock markets is to procure by diversification, this is so because the more companies that you partly own the greater will be your possibilities of getting more cash and stock dividends not to mention the stock options to buy at IPO. The literal observance on tracking which companies share their spoils to their part owners is also one the best secrets in the stock markets. By analyzing which companies, stable at that provides frequent stock and cash dividends would ensure growth in the investment schemes. On the overall, the greater and holistic view in investing the stock markets is simply because you are then buying the ownership of companies instead of buying their products. This is the greater benefits that a part owner must feel - you are now sharing a piece of the whole pie which represents the ownership of it. Just think if you are a part owner of Exxon, doesn't that feel elated and empowering you financially besides that will also boost your money morale because you are now one of the owners of Exxon, a powerful oil companies in the U.S. The greater strategy that we can employ in the stock market is to invest money and time, I mean a decade or two will be the basic. Over the long run coupled with the spirit of goodwill and patent, the attainment of affluence would be knocking right at your doorstep. Warren Buffet, the richest man in the world would tell you to invest your money in stocks using the pragmatic approach is worthwhile emulating.