Warren Buffet Investing Strategy
In the month of November, I had read a chinese book. This is my first time of reading chinese book since I started my reading habit, one book per month. The reason I choose chinese book is it is cheaper than English book. Made in China always cheaper right. Now, I just spend half of my budget on books.
????????? or I just translate it to English, Warren Buffett Investing Strategy. This is my second book on Warren Buffett after Interpretation of Financial Statement. Warren Buffett Investing Strategy is a summary of Warren Buffett life of investing and his strategy.
How Warren Buffett become rich : Warren Buffett start investing in stock when he was 11. When he grow up, he learn investing from Benjamin Graham in Columbia University. He adopt value investing learned from Benjamin. Berkshire Hathaway an investing company owned by Warren Buffett stock price had rise from $6 in 1962 to $100 000 in 2007. He emphasis of company return of equity (ROE). He retain the profit of company and reinvest it until his stock price achieve hundred thousand level.
Warren Buffett investing strategy : 1. Warren Buffett buy stock just as he buy the company or buy the business. He plan to own the stock for long term. 2. When market is up, he don’t buy; when market is down, he buy. This is because percentage of return much depends on your buying price. 3. Warren loves to buy undervalue company as this will increase his percentage of return. 4. Focus on a few stock instead of diversify.
How Warren Buffett pick stocks : Warren Buffett buy stock that he knows only. He don’t buy any technology related stock as he know nothing regarding it. Besides easy and simple company, he looks for competitive advantage company. Competitive advantage means having better operation or higher quality than its competitor. Warren Buffett pay attention to the company management. He looking for honest, logical and independent thinking management team.
Numbers that Warren Buffett look for : Warren Buffett look for figure such as ROE, EPS, PER and cash flow from company’s financial statement. He know the company condition from the financial statement. The numbers tell him all about the company.
Warren Buffett portfolio : Warren Buffett put all eggs in one basket and look after it carefully. He learn the focus investing from Philip A.Fisher.
Warren Buffett Investing Strategy is a summary of Warren Buffett life of investing. The author pen it in simple and understanding form. Another thing to mention is the book never lack of picture that simplified further. However, if you which to study more on Warren Buffett, such as calculating the numbers that Warren look for, you will need to find another book.
Warren Buffet is focusing on good quality companies that are seriously undervalued. He emphasizes on margin of safety. I tried his method but very hard to look for these companies in local.
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Mrcoolku Reply:
December 9th, 2009 at 7:29 pm
There are quite some undervalue companies in local but I am not sure about their quality from management aspect. He only buy when market is down or company was affected by certain unfavored issues. This is his strategy of margin of safety.
Of course not easy to find good company, else all become millionaire already. However, with the hard work, I believe we can find it.
That’s just my 2cent only. I am still new to stock investing.
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Lai Seng Choy Reply:
December 10th, 2009 at 4:54 pm
I used to try Warren Buffet way to identify those undervalued companies locally. Actually, be frank, almost 99.9% within my list are failed.
FYI, some big blue chips were also in my list as well. Most of them are failed in earning growth and “poor” cashflow from operation. In other words, they were all “over-valued”. However, their prices were still “up-up-and-away” then.
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Mrcoolku Reply:
December 10th, 2009 at 9:37 pm
That means you have 0.1% or 1 stock which is good. Warren Buffett adopt focus investing. Then put all in ba.
Ya, many goreng stocks in Bursa. I tend to find low profile stocks to hold and wait.
If really want to make fast money then play US stocks.
I read before somewhere that Warren Buffet says that to be an investor we don’t have to have high IQ! Patience and some common sense will do.. ^^ Isn’t that simple? haha
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Mrcoolku Reply:
December 15th, 2009 at 10:02 pm
Say is easy, Execute it is hard. Buy low sell high? All people can say it but few people can do it.
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