Warren Buffet – A real stock investing guru
Warren Buffet is one of the few who can be described as the father of stock investing. The term stock investing is generally aimed at buying and holding a stock for a longer term. This is exactly what Warren Buffet has specialized in. The question is if he made any profits by doing it. Maybe this information would be enough: He is the second-richest man in the world (ranked by Forbes).
What is his stock investing secret?
Warren concentrates only on companies whose business model he understands. That is one of his main principles. That’s why he kept his hands off internet or biotech stocks even then when these stocks were extremely en vogue in 1998 and 1999. This strict adherence spared him the notorious burst of the internet bubble in 2000.
And this leads to another stock investing principle applied by Mr. Buffet. Whenever he has found a stock (or company) to buy he tries to wait for an adequate time to enter. And this is generally when stocks go down. He knows why this happens. Not because stocks have become worse than a few days ago. It’s because fear rules those times. But when the market fears Warren stays calm and goes “shopping”. He discovers great bargains and cannot resist not buying these undervalued stocks.
What we have learned from him is this: He never looks to the chart pattern of a stock, he puts great emphasize on the intrinsic value of the stock or company. The intrinsic value describes what a company’s real value is or in other words what somebody would pay for a company if it wouldn’t be listed on the stock market.
Other things Warren Buffet used for his stock investing:
- detailed due diligence of every stock you want to invest in because the investor should always treat stocks as a part of a company (and that’s what it is), thus, who wants to buy a junky company?
- Debt level should be low or better not existent at all
- Return on Equity (ROE)should not diverge, be above the industry average and over 12%
- Unimitable competency over competition (brand name, technology, pioneer)
- Using earnings for further growth
- Rising earnings with over the average margins
So what are the stocks Buffet bought and never sold? Everyone knows them. Stocks like Coca Cola, Gillette or General Electric.
Buffet even has his own stock or company, it’s Berkshire Hathaway. But its more a Holding, where he holds the stocks of great value. With this stock he gave ordinary people the opportunity to make a fortune from scratch.
Stock Investing
What is his stock investing secret?
Warren concentrates only on companies whose business model he understands. That is one of his main principles. That’s why he kept his hands off internet or biotech stocks even then when these stocks were extremely en vogue in 1998 and 1999. This strict adherence spared him the notorious burst of the internet bubble in 2000.
And this leads to another stock investing principle applied by Mr. Buffet. Whenever he has found a stock (or company) to buy he tries to wait for an adequate time to enter. And this is generally when stocks go down. He knows why this happens. Not because stocks have become worse than a few days ago. It’s because fear rules those times. But when the market fears Warren stays calm and goes “shopping”. He discovers great bargains and cannot resist not buying these undervalued stocks.
What we have learned from him is this: He never looks to the chart pattern of a stock, he puts great emphasize on the intrinsic value of the stock or company. The intrinsic value describes what a company’s real value is or in other words what somebody would pay for a company if it wouldn’t be listed on the stock market.
Other things Warren Buffet used for his stock investing:
- detailed due diligence of every stock you want to invest in because the investor should always treat stocks as a part of a company (and that’s what it is), thus, who wants to buy a junky company?
- Debt level should be low or better not existent at all
- Return on Equity (ROE)should not diverge, be above the industry average and over 12%
- Unimitable competency over competition (brand name, technology, pioneer)
- Using earnings for further growth
- Rising earnings with over the average margins
So what are the stocks Buffet bought and never sold? Everyone knows them. Stocks like Coca Cola, Gillette or General Electric.
Buffet even has his own stock or company, it’s Berkshire Hathaway. But its more a Holding, where he holds the stocks of great value. With this stock he gave ordinary people the opportunity to make a fortune from scratch.
Stock Investing
posted by jophan at
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