The WB FAN CLUB
This is a dedication to the true living ledged for any investor — Warren Edward Buffet . He has been by far the single source of bacon of hope for investor . Like his guru Benjamin Graham he has been adhering to his theory of stock picking , investment style . The methods he has followed are simple , however it has withstood the test of time
Buffet has amassed an enormous fortune from astute investments managed through the holding company Berkshire Hathway , for which he is the largest shareholder and CEO. With an estimated current net worth of around US$52 billion, he was ranked by Forbes as the third-richest person in the world as of April 2007.
Did you know that a $10,000 investment in Berkshire Hathaway in 1965, the year Warren Buffett took control of it, would grow to be worth nearly $30 million by 2005? By comparison, $10,000 in the S&P 500 would have grown to only about $500,000. Whether you like him or not, Buffett’s investment strategy is arguably the most successful ever. With a sustained compound return this high for this long, it’s no wonder Buffett’s legend has swelled to mythical proportions. But how the heck did he do it? In this article, we’ll introduce you to some of the most important tenets of Buffett’s investment philosophy..
-Gopinath
In his latest edition of "The Warren Buffett Way" (2004), Robert Hagstrom illustrates the investment methods of the world’s most prominent value investor. If you want to emulate a classic value style, you already know that Warren Buffett is a great role model. Early in his career, Buffett said, “I’m 85% Benjamin Graham.” Graham is the godfather of value investing. He introduced the idea of intrinsic value – the underlying fair value of a stock based on its future earnings power.
There are a few things worth noting about Buffett’s interpretation of value investing. First, like so many successful formulas, it looks simple. But simple does not mean easy. Buffett utilizes about a dozen “investing tenets”, or key considerations. One of them asks if management is candid with shareholders. This is simple to ask and simple to understand, but it is not easy to answer.
What does he look for
Like any other fund manager he looks for key financial parameters viz ..Return on Equity over a longer term, Has the company avoided excess debt ,Are profit margins on the way up ? , Has the company been public long enough , is it widely held ? , Do companies product rely on a commodity ? Is the stock at a discount to the real value ? .
Apart from this he looks for qualitative aspects like Business , Management and Industry.
The man has continued to marvel both for his ability to generate returns and more so as a human being who is keen to not only make the wealth but distribute the same ..In June ’06 he made an announcement to donate over $ 30 billion of his wealth to the Bill Gates foundation His ability to donate billions for the benefit of humanity is by far a true reflection of his personality.
Truly this is one FAN CLUB which will have a world wide following
-K. Gopinath
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