Monday, November 06, 2006

Warren Buffets Philosophy of investing

Warren Buffett  - the greatest investor of this generation. What makes him click

from his famous speech in 1984 Columbia Business School

1)) Value investing

 2) Look for the value of the company as a whole.

Buffett gave the example of the Washington Post Company, which, in 1973, was selling for $80 million in the stock market. At the same point of time, the assets of the company were worth not less than $400 million. So the price of the business was much less than its value. And that made it a good buy.

  3) Look for the total worth of business

  4) Psychology of investors.
           The higher stock prices go, the more they appeal to investors, a psychology that often proves detrimental to the interests of both investors as well as the market.

As Buffett pointed out in the speech, "He's not looking at quarterly earnings projections, he's not looking at next year's earnings, he's not thinking about what day of the week it is, he doesn't care what investment research from any place says, he's not interested in price momentum, volume or anything… He's simply asking: What is the business worth?"

Thanks DNAIndia for amazing article.