Warren Buffett is known today as the world’s most significant investor. If you had put one thousand dollars in his investing company. when he first initiated it, it would be worth over 17 million dollars today. Now how did warren Buffett’s achieve such a high return? It all came through intelligent investing and sticking to some fundamental investing principles of Warren Buffett.
Managers must have integrity and talent
when we hire people, we look for intelligence, we look for initiative or energy, and we look for integrity, and if they don’t have the latter, the first two will kill you because, if you’re going to get somebody without integrity, you want them lazy and dumb it mean yeah you don’t want to intelligent and energetic
Invest By fact
- The answer is that investors behave in very human ways, which is they get very excited during bull markets, and they look in the rearview mirror. People say I made money last year. I’m going to make more money this year, so this time, I’ll borrow, you know, or the neighbor says, you know I wasn’t in last year when that neighbor was dumber than.
- They see a lot of money having been made in the last few years they plow in, hey push and push and push on prices and when they look in the rearview mirror. They see no money having been made, say this is a horrible place to be, so they don’t care what’s going on in the underlying business, and it’s astounding, but that’s that makes for a huge opportunity, just a huge opportunity
Buy Wonderful Business
Warren Buffet Says in Speech :-
I’ve been taught by ben graham to buy things on a quantitative basis, look around for cheap items, and that I was taught that we’d say in 1949 or they made a big impression on me, so I went around looking for what I call use cigar butts of stocks and the cigar butt approach to buying stocks is that you walk down the street. You’re looking around for cigarette butts, and you find this terrible-looking soggy ugly looking cigar one puff left in it, but you pick it up, and you get your one breath disgusting you throw it away. Still, it’s free. I mean, it’s cheap.
Then you look around for another soggy, you know, one puff cigarette well, that’s what I did for years it’s a mistake uh. However, you make money doing it, and you can’t make it with big money. It’s so much easier to buy beautiful businesses, so now I would instead buy an excellent company at a fair price than an OK business at a fantastic price.
Only Buy Stock that you understand
- I have an old-fashioned belief that I should only hope to make money and things.
- What is economics business is likely to look like ten years from now or 20 years from now I know in general what economics will say chewing gum will look like ten years from now the internet is not going to change the way people chew gum Is. It’s not going to change how they chew gum.
- You know, if your mass chewing gum is available on the market and you find double mint and mint and juicy fruit flavor in it, those brands will be ten years from now, so I can’t pinpoint exactly what the numbers are Wrigley. Still, if I try to look ahead at something like this, I’m not going to evaluate a company for what I call their circle of competence; I understand what they do. Know the economics of this I know the competition Basic aspects of business
When you see a great opportunity, Take It.
The biggest mistakes we’ve made by far I’ve made, not we’ve made biggest mistakes I’ve driven by far are mistakes of omission and not commission. I mean, it’s the things I knew enough to do. They were within my circle of competence, and I was sucking my thumb, and that is those are the ones that hurt they don’t show up anyplace I probably cost Berkshire at least five billion dollars.
For example :-
by sucking my thumb 20 years ago or close to it when Fannie Mae was having some troubles, and we have to buy the whole company for practically nothing and don’t worry about that if it’s microsoft because i don’t know it because microsoft isn’t in my circle of competence and so i don’t have any reason to think i’m entitle to make money out of microsoft or out of cocoa beans or whatever but i did know enough to understand fannie mae and i blew it and that never shows up under conventional accounting.
but i see the cost of it i know you passed it up and those are the big big mistakes and uh i’ve had plenty of them at uh and unless i tell you about them in the annual report and i resist the temptation sometimes uh unless i tell you about them in the annual report you’re not going to know it because it doesn’t show up under conventional accounting
but is way more significant than commission there’s ample opportunities in life have to be seize. we don’t do very many things but when we get the chance to do something that’s right and big we’ve got to do it and even to do it in a small scale is just as big a mistake almost is not doing it at all i mean you’ve really gotta you gotta grab them when they come because they you’re not gonna get 500 great opportunities
Don’t sell unless the business fundamentally changes.
In terms of our wholly-owned businesses, we’re not going to sell no matter how much anybody offers this, for if somebody offers us three times what something is worth that sees candy, the buffalo news, whatever it may be, we’re not going to sell it I may be wrong in having that approach I know I’m not wrong if I owned 100 of Berkshire.
That’s how I want to live my life. I’ve got all the money I could need. It just amounts to which a change in the newspaper story on my obituary and the amount of money the foundation has and the break-off relationships with people I like and people that have joined me because they think it’s a permanent home to do that simply because somebody waves a big check at me it would be like selling one of my children because I’m going to wait for a big statement so.
I want to tell my partners I won’t do it so that they’re not disappoint me more and more with specific stocks. We’ve got that approach now if we were chronically short of funds and all kinds of opportunities coming, we might have a somewhat different direction, but our inclination is not to sell things unless we get discourage perhaps with the management, or we think the economic characteristics of the business change in a big way I mean and that happens so, but we’re not going to sell because it looks too high in all likelihood I suggest that you can’t make that 100.