Warren Buffet: the world’s greatest investor
The world’s greatest moneymaker is seemingly going through the current financial crisis without any problems.
Warren “Oracle of Omaha” Buffet is 79 this year and worth about USD40 billion.
Be greedy when others are fearful and fearful when others are greedy.
He has always enjoyed himself in a falling market, which, as he sees it, provides him with the best opportunities.
Since 1965, his company, Berkshire Hathaway’s value has achieved a mind-boggling 20.3% average annual growth – 336,000% over the years – 84 times that of the standard US index fund, the S&P 500.
He ignores short-term share price movements, either up or down.
He has never started a business, nor invented anything, nor came up with a way of making businesses more profitable.
Still lives in his kampung, more than a thousand miles from Wall Street.
Still works from the 14th floor of a boring looking office building he has rented for almost 50 years.
He has never had a computer, calculator or even a stock ticker in his office.
If a deal needs complicated calculations before you can decide if it is right, then it probably is not.
Always leave a margin of safety so that if things don’t work out as he’d hoped, you don’t lose money.
He has one personal assistant.
He hates meetings.
He hates busy schedules.
In other words, he’s rather laidback.
He drives himself from his house to the office, a few miles apart on the same road.
Most evenings he’ll eat a ham sandwich, then do several hours of online bridge under the name T-Bone.
When you call him up, he often picks up the phone himself, or call back immediately later.
Since the 1960s, he’s been buying companies rather than mere stocks. Wonder if he’s going to buy companies involved in Kettlebells anytime soon?
The difference between owning a business outright and owning shares in it is only one of degree.
Buy shares for the long-term and, as a shareholder, think like you’re buying a part of a business.
You should think like an owner.
Invest in profitable businesses with good prospects rather than looking for undervalued shares.
Focusing on share prices makes you a mere speculator, whereas a real investor looks to the asset itself to produce the return. Like someone buying a farm: do not worry about its price but rather its productivity.
Think long term, rather than the figures for the next quarter.
Treat the business like it’s the only business your family owns. You can’t sell it. You’re going to own it for a hundred years.
Looks on his shareholders as partners who buy into his company to be part of a business and something they expect to die with.
If you take the couple of centuries we’ve had, the 19th and the 20th, we’ve had about 15 bad years in both centuries, and we’ll have fifteen bad years in centuries to come. Capitalism overshoots, and market people do get irrationally exuberant sometimes, but that’s the nature of it. You want a dynamic system, and you want a market system that’s free to make mistakes to some degree.
Source
The BBC, 25th oct 2009
