Recently I listened to this very interesting MBA-Talk with Warren Buffett (there are 10 parts):
- Warren only invests in stuff that he understands
- He doesn’t trade, he invests!
- His main decision making source are Annual Reports
- He only buys at a “good price”
- He only buys things with the intention to hold them forever (no rule without exeption)
- He holds 8% of Coca-Cola and is absolutely certain that the value of Coca-Cola will increase substantially over the next 20 years, i.e. there is no reason to sell
- He only invests in simple business models (beverages, sweets, chewing gums, insurances). If he doesn’t understand the industry, he doesn’t invest. E.g. he doesn’t invest into technology/internet companies.
- He can make a purchase decision in 5-10 minutes. He doesn’t overanalyize companies. He doesn’t negotiate very much. When the price that is offered to him is okay, he buys immediately. When he offers a price, it’s often non-negotiable and he expects very fast decisions.
- He recommends not to listen to stock recommendations. If you do that, you’re playing, and not investing.
- He still lives in the same house he bought as a 25 year old (see also his bio)
Conclusion:
I will definitely read and listen to more stuff of and about Warren! There are some very important lessons to learn!
PS: The article What Warren thinks… is also quite interesting! (via Morten)
Love this Video too…Also to mention that he, besides of his wealth, still lives in a $50’000 house that he bought 50 years ago…
assume he sticks pretty much to those wideley published principles; yet with exceptions, as noted in the newest issue of the bloomberg mag – e.g., he apparently invested in some pretty complex structured finance stuff
Tom, there is certainly no rule without exception. I’m sure even good old Warren is trading/speculating/gaming some time. But as investing and speculating are two complete different things I’m sure he gambles only with a very limited amount of money and just for fun ;-).