Warren Buffet's- Golden Rules

CONITNUED FROM YESTARDAY......

SUCCESSFUL INVESTORS

To be successful, investors needed to do just a few
things well. One was investing only in companies that were within their
circle of competence.

GOOD ECONOMIST

“to be a good investor,one also needs to be a good economist.”

MEASURING STICK

“In Williams theory we have to decide what Should be the discount rate? Accoring to William his readers could determine for themselves what would be appropriate. But Buffett’s measuring stick is very straightforward: He uses either the interest rate for long term (meaning ten-year) U.S. bonds, or when interest rates are very low he uses the average cumulative rate of return of the overall stock market.”

TO BE CONTINUED TOMORROW.......

“ENJOY TODAY ,WAIT FOR BEAUTIFUL TOMORROW ”
what are weakness and strength you find while reading this article/section ?
please give your comment below (in comment label) as how can this article/section be improved further ? it will GIVE THE OPPORTUNITY TO MEMBERS OF “ jab we met CA “ BLOG TO IMPROVE THEMSELVES. WAITING FOR YOUR REPLY....

SATBIR SINGH
PRESIDENT
JAB WE MET CA
REDEFINING PROFESSIONALISM......
“LEADERS ARE READERS, READERS ARE THE LEADERS”

warren buffet-Golden Rules

CONITNUED FROM YESTARDAY......

BASIC IDEAS
The basic ideas of investing are to look at stocks as businesses,
use market f luctuations to your advantage, and seek a margin
of safety. That’s what Ben Graham taught us. A hundred years
from now they will still be the cornerstones of investing.4
WARREN BUFFETT, 1994

GRAHAM’S APPROACHES
Graham’s approaches—buying a stock for less than twothirds
of net asset value and buying stocks with low P/E multiples—had
a common characteristic. The stocks that Graham selected based on
The basic ideas of investing are to look at stocks as businesses,
use market f luctuations to your advantage, and seek a margin
of safety. That’s what Ben Graham taught us. A hundred years
from now they will still be the cornerstones of investing.4
WARREN BUFFETT, 1994

PEOPLE COULD MAKE SUPERIOR PROFITS
Fisher came to believe that people could make superior profits by
(1) investing in companies with above-average potential and
(2) aligning themselves with the most capable management. these methods were deeply out of favor with the market.

GROWTH
companies with above-average potential have ability to grow
sales over the years at rates greater than the industry average. That
growth, in turn, usually was a combination of two factors: a significant
commitment to research and development, and an effective sales organization.

CONSISTENT PROFITS

“All the sales growth in the world won’t produce the right type of investment vehicle if, over the years, profits do not grow correspondingly,” .Accordingly,
Fisher examined a company’s profit margins, its dedication to maintaining
and improving those margins and, finally, its cost analysis and
accounting controls.”

TO BE CONTINUED TOMORROW.......

“ENJOY TODAY ,WAIT FOR BEAUTIFUL TOMORROW ”
what are weakness and strength you find while reading this article/section ?
please give your comment below (in comment label) as how can this article/section be improved further ? it will GIVE THE OPPORTUNITY TO MEMBERS OF “ jab we met CA “ BLOG TO IMPROVE THEMSELVES. WAITING FOR YOUR REPLY....

SATBIR SINGH
PRESIDENT
JAB WE MET CA
REDEFINING PROFESSIONALISM......
“LEADERS ARE READERS, READERS ARE THE LEADERS”

Warren Buffet -Golden Tips

CONITNUED FROM YESTARDAY......

TWO QUALITIES OF INVESTMENT

1) some degree of safety of principal
2) and a satisfactory rate of return INCLUDING price appreciation

BUY CERTANTIES

“Buffett’s preference to “buy certainties at a discount.”
“Certainties” are defined by the predictability of a company’s
economics. The more predicable a company’s economics, the more certainty
we might have about its valuation”

INVESTMENT V/S SPECULATION

“An investment operation is one which, upon thorough
analysis, promises safety of principal and a satisfactory return. Operations
not meeting these requirements are speculative.

IDENTIFY MARGIN OF SAFETY

“Margin of Safety exists when securities are selling—for
whatever reason—at less than their real value”. If, for example, an analyst reviewed the operating history of a company and discovered that, on average, for the past five years the company was able to earn annually five times its fixed charges, then that
company’s bonds possessed a margin of safety. If the spread between the price of a stock and the intrinsic value of a company was large enough, the margin-of-safety
concept could be used to select stocks. Definition of intrinsic value is “that value which is determined by the facts.” These facts included a company’s assets, its earnings and dividends, and any future definite prospects.

MOST IMPORTANT FACTOR

“Single most important factor in determining a company’s value was its future earnings power, a calculation that is bound to be imprecise. Simply stated, a company’s intrinsic value could be found by estimating the earnings of the company and multiplying
the earnings by an appropriate capitalization factor. The company’s stability of earnings, assets, dividend policy, and financial health influenced this capitalization factor, or multiplier.Intrinsic value is distinct from the market’s quotation price. Originally, intrinsic
value was thought to be the same as a company’s book value, or the sum
of its real assets minus obligations. It is not essential to determine a company’s exact intrinsic value; instead, investors should accept an approximate measure or range of value. Even an approximate value, compared against the selling price, would be sufficient to gauge margin of safety.”

TWO RULES OF INVESTMENT,

“ Two rules of investing, said by Graham are
1) The first rule is don’t lose.
2) The second rule is don’t forget rule number one.
This “don’t lose” philosophy steered Graham toward two approaches for selecting common stocks that, when applied, adhered to the margin of safety. The first approach
was buying a company for less than two-thirds of its net asset value, and the second was focusing on stocks with low price-to-earnings (P/E) ratios.”

TO BE CONTINUED TOMORROW.......

“ENJOY TODAY ,WAIT FOR BEAUTIFUL TOMORROW ”
what are weakness and strength you find while reading this article/section ?
please give your comment below (in comment label) as how can this article/section be improved further ? it will GIVE THE OPPORTUNITY TO MEMBERS OF “ jab we met CA “ BLOG TO IMPROVE THEMSELVES. WAITING FOR YOUR REPLY....

SATBIR SINGH
PRESIDENT
JAB WE MET CA
REDEFINING PROFESSIONALISM......
“LEADERS ARE READERS, READERS ARE THE LEADERS”

Warren Buffet 's Golden Rule of Invetment

CONITNUED FROM YESTARDAY......

Right Decision at the right time:-
“Buffett’s reputation grew, more people asked him to manage
their money. For the partnership, Buffett bought controlling interests
in several public and private companies, and in 1962 he began buying
shares in an ailing textile company called Berkshire Hathaway.

Tainted by a scandal involving one of its clients, American Express
saw its shares drop from $65 to $35 almost overnight. Buffett had
learned Ben Graham’s lesson well: When stocks of a strong company are
selling below their intrinsic value, act decisively. Buffett made the bold
decision to put 40 percent of the partnership’s total assets, $13 million,
into American Express stock. Over the next two years, the shares tripled
in price, and the partners netted a cool $20 million in profit.”
Embraces the simple and avoids the complications:-.
Warren Buffett is not easy to describe. Physically, he is unremarkable,
with looks often described as grandfatherly. Intellectually, he is considered
a genius; yet his down-to-earth relationship with people is
truly uncomplicated. He is simple, straightforward, forthright, and
honest. He displays an engaging combination of sophisticated dry wit
and cornball humor.
Avoid Risk of Being Wrong
“No matter how careful you are, the one risk no investor can ever
eliminate is the risk of being wrong. Only by insisting on what
Graham called the “margin of safety”—never overpaying, no matter
how exciting an investment seems to be—can you minimize
your odds of error.”
Develop Discipline And Courage
“how your investments behave is much less important than how
you behave.The secret to your financial success is inside yourself. If you
become a critical thinker who takes no stock market “fact” on faith,
and you invest with patient confidence, you can take steady
advantage of even the worst bear markets. By developing your
discipline and courage, you can refuse to let other people’s mood
swings govern your financial destiny.”
Learn From Past
“Those who do not remember the past are condemned to repeat it.”

TO BE CONTINUED TOMORROW.......

“ENJOY TODAY ,WAIT FOR BEAUTIFUL TOMORROW ”
what are weakness and strength you find while reading this article/section ?
please give your comment below (in comment label) as how can this article/section be improved further ? it will GIVE THE OPPORTUNITY TO MEMBERS OF “ jab we met CA “ BLOG TO IMPROVE THEMSELVES. WAITING FOR YOUR REPLY....

SATBIR SINGH
PRESIDENT
JAB WE MET CA
REDEFINING PROFESSIONALISM......
“LEADERS ARE READERS, READERS ARE THE LEADERS”

GOLDEN RULES OF INVESTMENT

CONITNUED FROM YESTARDAY......

Greatest lesson to be learnt from Warren Buffet:-

The greatest lesson you can glean from Warren Buffett?
To learn from him without desiring to be like him.

It is important to use these articles to learn, but don’t use these articles to
be like Warren Buffett. You can’t be Warren Buffett and, if you try, you
will suffer. Use these articles to understand Buffett’s ideas and then take
those ideas and integrate them into your own approach to investing.

It is only from your own ideas that you create greatness.
The insights in this these articles are only useful when you ingest them into your own persona rather than trying to twist your persona to fit the insights.

The Warren Buffett Way describes what is, at its core, a simple approach.
There are no computer programs to learn, no two-inch-thick Investment manuals to decipher. Whether you are financially able to purchase 10 percent of a company or merely a hundred shares, this book can help you achieve profitable investment returns.

If you’re a young reader, the greatest investment lesson is to
find who you really are. If you’re an old reader, the greatest lesson is
that you really are much younger than you think you are and you
should act that way—a rare gift. Were that not possible, then Mr. Buffett
wouldn’t still be ably evolving at what for most people is postretirement
age. Think of Warren Buffett as a teacher, not a role model,
and think of these articles as the single best explanation of his teachings,
well stated and easily learned. You can learn an enormous amount from
these articles and that can be the foundation for developing your own successful
investment philosophy.

GOAL OF INVESTOR

“Your goal as an investor should be simply to purchase, at a rational
price, a part interest in an easily understood business whose earnings are
virtually certain to be materially higher, five, ten, and twenty years from
now. Over time, you will find only a few companies that meet those
standards—so when you see one that qualifies, you should buy a meaningful
amount of stock.”

Be small man with a big mind

Mr. Buffett evolved as investor without compromising any of his core principles.
Every decade, Mr. Buffett has done things no one would have predicted
from reading about his past, and done them well. Within professional investing,
most people learn in craft-like form some particular style of investing
and then never change. They buy low P/E stocks or leading tech
names or whatever. They build that craft and then never change, or
change only marginally. In contrast, Warren Buffett consistently took
new approaches, decade-after-decade—so that it was impossible to predict
what he might do next.

TO BE CONTINUED TOMORROW.......

“ENJOY TODAY ,WAIT FOR BEAUTIFUL TOMORROW ”

what are weakness and strength you find while reading this article/section ?
please give your comment below (in comment label) as how can this article/section be improved further ? it will GIVE THE OPPORTUNITY TO MEMBERS OF “ jab we met CA “ BLOG TO IMPROVE THEMSELVES. WAITING FOR YOUR REPLY....

SATBIR SINGH
PRESIDENT
JAB WE MET CA
REDEFINING PROFESSIONALISM......
“LEADERS ARE READERS, READERS ARE THE LEADERS”