Does warren buffett even agree with mary buffett?
I started reading mary buffett’s book regarding warren buffett and his analysis of financial reports. I’ve only read the first 2 chapters, but they were quite surprising. She basically stated that Warren finds companies that have essentially brand name world renowned products IE coke, m&ms etc. etc. and buys that company as long as its stock is at a "reasonable" price. This was striking because to me it was contrary to grahams method. She then stated that he would simply keep those stocks forever regardless of value. This was even more shocking. Does warren buffett really disregard valuation just because a stock has a popular product? What if the p/e was 100 and p/b was 10 he would still keep it? So does warren buffett really think and invest the way mary is describing him? It was quite striking to read these things after reading the snowball and the intelligent investor.
Warren Buffett does not simply invest in big brands, he likes Coke, Gillette because of their market share and brand sure but he had also owned companies that no one has heard of like Petrol China.
As for valuation, he has always said he prefers a great company at a fair price over a fair company at a great price and once he buys a company he is absolutely in love with he does hold on to it for just about forever. This only applies to very few companies he owns though! Take Petrol China as an example, he bought into the company in 2004 I think and sold around 2008 for a profit of around 3.5billion dollars if I am not mistaken. He does not hold onto everything forever, but once he buys a company he is truly happy with like Geico or General Re he will hold on to it forever irrespective of P/E.
Buffett took Graham’s investing framework and then added his own business experiences to it, he doesn’t do exactly what Graham taught!
Does warren buffett even agree with mary buffett?
I started reading mary buffett’s book regarding warren buffett and his analysis of financial reports. I’ve only read the first 2 chapters, but they were quite surprising. She basically stated that Warren finds companies that have essentially brand name world renowned products IE coke, m&ms etc. etc. and buys that company as long as its stock is at a "reasonable" price. This was striking because to me it was contrary to grahams method. She then stated that he would simply keep those stocks forever regardless of value. This was even more shocking. Does warren buffett really disregard valuation just because a stock has a popular product? What if the p/e was 100 and p/b was 10 he would still keep it? So does warren buffett really think and invest the way mary is describing him? It was quite striking to read these things after reading the snowball and the intelligent investor.
Warren Buffett does not simply invest in big brands, he likes Coke, Gillette because of their market share and brand sure but he had also owned companies that no one has heard of like Petrol China.
As for valuation, he has always said he prefers a great company at a fair price over a fair company at a great price and once he buys a company he is absolutely in love with he does hold on to it for just about forever. This only applies to very few companies he owns though! Take Petrol China as an example, he bought into the company in 2004 I think and sold around 2008 for a profit of around 3.5billion dollars if I am not mistaken. He does not hold onto everything forever, but once he buys a company he is truly happy with like Geico or General Re he will hold on to it forever irrespective of P/E.
Buffett took Graham’s investing framework and then added his own business experiences to it, he doesn’t do exactly what Graham taught!
Which is better: Short-term Trading or Long-term Investing?
I have just started reading about investing a few days ago so I still have a long way to go. Currently, I’m reading Ben Graham’s "Intelligent Investor" and from what I’ve read so far, he’s adverse to speculative trading/day trading and he advocates long-term investing and looking at the value of a company rather than merely looking how its price fluctuates in the market. He cites many examples of speculative traders who incurred big losses in the long-run.
But then, I’ve been following this forum where a professional day trader talks about long-term investment being merely a propaganda. He is saying, to the best of my understanding, that we should take advantage of the volatility of the market and never ever buy-and-hold. And he seems to be very knowledgeable in this area and he’s making big profits out of it. I’ve also read a couple of articles saying that buy-and-hold is a myth and we should always do something about the market trends. But these are the very things that Graham warned the non-professional investor about.
Now, I don’t know what to believe. I don’t know if I will have the answers after finishing Graham’s book. :[
Why don’t you try doing both? Do stock trading, but if the trade turns to the red side, become investor until the trade ends on the green.
You can do either one but you have to find your investment style. Even stock trading depends a lot on short of mid term investment and requires fundamental analysis of a company before putting your money in. Right now the market is so low, that no matter which successful company you put your money in, you will make a profit. May be negative daily fluctuations might slow down your progress on daily trading, but if you stay firm on your goals and don’t let emotions take over your actions, you will succeed.
If you want to do stock trading, I recommend you do a lot of reading about investor styles. It’s easier to pick successful stocks by picking stocks that big investors use. You will also need to learn about doing technical analysis if you want to learn when to enter or exit the market. Consider buying a subscription for stock technical analysis. They usually give tips as well. Learn about support, resistance and risk on stocks. Big investors do thorough analysis of companies that any small investor will not be able to match. They have teams analyzing companies and investigating them. Interviewing with managers, before making a decision to invest money on those companies. Stocks are not lottery tickets, they are a part ownership of a company.
Even the majority of those big investors, do stock trading. They may not trade stocks daily, but they might do it monthly or quarterly. The only investor that buys and holds is Warren Buffett.
One more thing, never leave a trade on the negative. If you have done all your fundamental and technical analysis correctly… that is, you are investing on a company that is undervalued, you are buying near support, and still the stock falls, it means that an unusual thing is happening. The stock will rebound to its real value eventually… You have to learn to be patient and let the market discover the gem you have on your hands. Warren Buffett says, that if you can’t tolerate to see an investment drop 50% below its value, then you have no business on investing. So, those people advising to cut losses on investments are either gambling money or they just don’t know anything about investing.
Good Luck and try trading on your style, not Graham’s.
Early retirement plan?
My wife and I contribute a good amount of money into our 401K’s and have increased as of March due to the stock market decline. We also have a good amount already in our nest egg and a good amount of equity in our home (about 70%). As the market has been on a decline, we have decided to start investing in stocks (for the long term; about 20 years) with our extra money. So, is this a good idea to build up extra income a ways off? I am trying to follow the Graham approach to investing-long term; value investing strategy. Is this a good methodology or is there something better?
You said " extra income a ways off"…but you didn’t mention a ROTH IRA….not only extra income, but TAX-FREE.
It would not be a bad idea to do your long-term stock investing IN a ROTH IRA. Pick your own stocks or go with a mix of mutual funds and stocks.
It’s called a " self- directed IRA" and all the companies have them… your portfolio and your buying or selling is all at your fingertips on- line. Check your status any time you’re at the computer.
Help me…I’m bored?
Here’s my life story. I’m a 33 year old former computer programmer. Through a combination of the boom years of the late nineties and value investing in the stock market, I’ve got enough money ($1.6 m) where I don’t feel like I ever have to work again. Three years ago my company laid me off. I decided to take some time off. I took a long trip around the world. I moved to the west coast and I’ve sort of become a slacker. For a while I really enjoyed the lack of responsibility.
Now, I’m starting to feel really bored and useless. I’d like to do something but I’m not sure what.
I’m well aware of my pros and cons
I feel like I’m really good at number crunching and capital allocations. I’ve been a very successful Graham-Dodd value investor.
I’m also very lazy and I haven’t had a serious responsibilty in years.
I feel like being a semi-silent partner in a small business would be a good project to segue out of retirement. I’m not really sure how to go about it.
Volunteer your time and skills to serve others who are not in as fortunate a position as yourself.
There are many nonprofits who serve their community, and you will feel good doing something to help others instead of yourself.
I am a planning to start investing and I know little about the subject?
a friend gave me 2 books by a guy named Benjamin Graham the intelligent investor/ security analysis he said I could a lot from these books. However they are very old are they still of value in the market place today? I don’t want to waste time reading stuff that will not help me now a days. I checked on line and I find mostly web sites trying to sell the books. I wanted financial savoy people
First, since you "know little about the subject", educate yourself about the stock market and trading.
There are many excellent websites you can use such as:
www.investors.com
www.investopedia.com
www.etfguide.com
www.mutualfundplanning.com
www.dripwizard.com
www.optiontradingpedia.com
www.daytrading.about.com
www.stockcharts.com/school
What is the best intrinsic value calculator?
1. Current Assets – Total Liabilities (A 15 year old’s no nonsense formula)
2. EPS X (8.5+2g) N
—————————-
Y
In this formula proposed by Benjamin Graham himself, EPS is for the past 12 months, 8.5 represents the proposed P/E Ratio of a no-growth company, g is the company’s estimated 5 year growth, N is the average yield of a high growth corporate bond, and Y is the current yield on AAA Corporate bonds. Is this formula outdated, as it was introduced in 1964. But Ben Graham and Warren Buffett both class value investing as timeless, so I’m not sure what to believe.
Remember I’m only fifteen, and this investing thing is new for me… Just guide me in the correct direction…
(1) is too simplistic because it does not factor in growth for starters.
(2) doesn’t make sense (unless I’m reading it wrong). In a high-interest environment, the stock and company is worth less (interest goes up, stock value should go down, except in the rare case when deflation is a big concern, such as now).
[edit] In terms stocks vs interest rate, think about how you would generally rate the following three investments:
1) AAA corporate bond paying 20%
2) Stock of a AAA-rated company
3) AAA corporate bond paying 2%
Did you study the stock market in school ?
Did it do you any good ?
Do you understand that value investing is how
the pros like Buffett get rich .
They do not even teach Buffett and Graham investing
except at Columbia U.
There are no courses in the Academic world as part of the school curriculum you have to educate yourself.
Although Buffett has been successful, but he started in an entirely different market, this is not to say you don’t buy value, but the buy and hold mentality is getting passe.
The markets are different now then they were, Buffutt never had to deal with hedge fund investors, a larger number of mutual funds or computerized trading.
Here are some books for you to read, yes one of them is a Buffett book but you shouldn’t got too hung up on him
The first book you should read is Rich Dad Poor Dad by Robert Kiyosaki
Then try some of these
What Works on Wall Street by James O’Shaunessey
Beating the Street by Peter Lynch
One Up on Wall Street by Peter Lynch
The Warren Buffett Way by Robert Hagstrom
Mastering the Trade” by John Caster
How to Make Money in Stocks” by William O’Neil
Here are some websites that will definitely help you and will give you a good education
http://moneycentral.msn.com/home.asp
http://finance.yahoo.com/
http://www.investors.com/?tn=top
http://investorshub.advfn.com/default.aspx
http://www.thestreet.com
http://www.brokerage101.com/
http://www.1source4stocks.com/
http://www.decisionpoint.com/TAcourse/TACourseMenu.html
http://stockcharts.com/
http://www.grahaminvestor.com/
http://www.thestreet.com/
http://www.morningstar.com/
http://www.dividenddetective.com/
How do you find information on companies for value investing?
i have been reding "the intelligent investor" by Ben graham. it tells you about comparing ratios but where do i find the statistics of public companies to chech the ratios etc?
try reuters. http://stocks.us.reuters.com/stocks/overview.asp?symbol=BUMI.JK
Change the BUMI.jk with yuor stock quote