Can You Invest Like Warren Buffett
If you want to look at an extremely successful stock picks strategy, you would be remiss to overlook the Warren Buffett strategy. The philosophy he uses is known as value investment and this comes from the school of Benjamin Graham. When he invested in Berkshire Hathaway in 1965 it cost him $10,000. This investment is worth $30 million today. Had he invested this money in the S & P 500, it would be worth the considerable sum of $500,000, however half a million is nothing compared to thirty million!
The legend that is Warren Buffett has grown to such a degree as to almost appear mythical. His philosophy of value investing has him pursuing bargains, much like a bargain hunter might and this is how he makes his millions. He sees value in certain stocks which other people can't. The products he purchases are under-valued, so they don't attract other investors.
Securities with low intrinsic worth are grist for his mill. He identifies these and predicts their worth by analyzing the company's fundamentals. The majority of buyers are unable to predict this and Warren Buffett seems to know that the market will eventually favor his investments.
He is not concerned with facts such as supply and demand. This is normally what controls markets, but Warren Buffett is not looking for short term gains, he is looking for long term, return on investment. The quote that best describes the way he thinks is: "In the short term the market is a popularity contest; in the long term it is a weighing machine".
He looks at stocks in terms of the company's overall potential to make money. Because he seeks long term investment value, capital gain is of no consequence, and this is what makes value investing so different to other methods of investing.
There are a number of questions he asks himself when evaluating the relationship between the price and the level of excellence of a stock. These include but are not limited to the return on equity in terms of performance, whether the business avoids excess debt, if the profit margins are high and are they increasing, how long it has been a public company and whether the company relies on a commodity for its products. - 23210
The legend that is Warren Buffett has grown to such a degree as to almost appear mythical. His philosophy of value investing has him pursuing bargains, much like a bargain hunter might and this is how he makes his millions. He sees value in certain stocks which other people can't. The products he purchases are under-valued, so they don't attract other investors.
Securities with low intrinsic worth are grist for his mill. He identifies these and predicts their worth by analyzing the company's fundamentals. The majority of buyers are unable to predict this and Warren Buffett seems to know that the market will eventually favor his investments.
He is not concerned with facts such as supply and demand. This is normally what controls markets, but Warren Buffett is not looking for short term gains, he is looking for long term, return on investment. The quote that best describes the way he thinks is: "In the short term the market is a popularity contest; in the long term it is a weighing machine".
He looks at stocks in terms of the company's overall potential to make money. Because he seeks long term investment value, capital gain is of no consequence, and this is what makes value investing so different to other methods of investing.
There are a number of questions he asks himself when evaluating the relationship between the price and the level of excellence of a stock. These include but are not limited to the return on equity in terms of performance, whether the business avoids excess debt, if the profit margins are high and are they increasing, how long it has been a public company and whether the company relies on a commodity for its products. - 23210
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posted by X - Men @ 4:44 AM
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