Who is Warren Buffett?
Warren Buffett is an investor, a business magnate, and a philanthropist. Buffett was born in Omaha, Nebraska, U.S on August 30, 1930. He started developing his interest in investment from a very young age. He currently serves as the Chairman and CEO of the Berkshire Hathaway, An American multinational company.
Warren Buffet described his investment style as an inspiration of Benjamin Graham. He said ‘I’m 85% Benjamin Graham’. Graham is known as the father of investing and business style. He also introduced Intrinsic Value.
Buffett’s Investment Style
If we breakdown Warren Buffett’s Investment style, he uses 12 investment key considerations or tenets. These tenets or considerations might seem easy to understand but are very difficult to execute. Buffett’s considerations are categorized under areas like financial measure, business, value, and management.
The Buffett’s ‘way’ of investment is the traditional style of investing which is open to adoption. Unlike many investors, Buffett does not have any concerns with the supply and demand intricacies. This logic can be extracted from his famous line “Market is a popularity contest, it is a weighing machine”.
— Warren Buffett (@WarrenBuffett) March 5, 2015
Warren Buffett’s methodology includes asking himself some questions. Then based on those questions, he evaluates the relationship between price and the stock’s level of excellence. Some of these questions are:
Is company’s reliance on Commodity?
The company is public from how long?
Do the company’s profit margins increase or are they high?
Does the company avoid excessive debt?
How consistent is that company in terms of performance?
Buffett’s investing style can be compared to someone who loves shopping but with a bargaining nature, or a bargain hunter.
Warren Buffett’s Strategic Advice
Warren Buffett says that a good investment strategy is to find a good business first. This business must be understood properly. Understanding a business does not mean to get only the know-how of its functions but to also understand its competitive advantage, whether it is run by an honest and able person. Most of all, whether it is available at a price that seems suitable and making sense or not.
According to Buffett, getting involved in an investment in the practice. Never take big risks by investing in businesses that you don’t understand. Warren Buffet says that he only chooses a handful of 100 companies out of 10,000+ public businesses. He says that he does not compromise on the quality of business. He says straightforward ‘no’ to complex businesses.
Top 5 investments in terms of total return and time of investment done by Warren Buffett are:
Total Return: 720%
Years Held: 5
Total Return: 671%
Years Held: 6
Total Return: 1,525%
Years Held: 13
Total Return: 1,745,300%
Years Held: 49
Total Return: 9,417%
Years Held: 24
Warren Buffett is a great philanthropist too. He has pledged to give almost 99% of his fortune to such causes. He founded the Giving Pledge with Bill Gates and Mark Zuckerberg where most of the billionaires pledge to give away their fortunes.