Investing Lessons From the Stock Market Guru Warren Buffet

If you are new to stock market then you definitely need to know about Warren Buffett. He is the best known stock market guru and his theory of the long term buy and hold has been legendary and well known. Well now no longer is he the guru of stock market but also owns and manages several companies within his portfolio via his holding company called Berkshire Hathaway.


The person Warren Buffet lives in a town called Omaha and has been investing now for over 40 years now. When he began the Berkshire Hathway firm in 1965 and if you invested $10,000 in it would have grown to 30 million dollars in year 2005. He has shown the world that it is possible to achieve sustained compound annual returns on the investment year over years. Of course based on the returns he has given his investing style has become very famous.


His investing style comes from the Benjamin Graham school of investing which says is all about value investing. Value investing means that you as an investor pick stock whose stock price does not adequately reflect the intrinsic worth of the stock. Coming to intrinsic value there is no formula defined to get to know the intrinsic worth. What that means is that you almost try to beat other investors in looking out for a value investing stock. As soon you get there, a few hundreds will also swarm in and the price will go up and that price will be true reflection of the intrinsic worth.


Since you have already honed in the stock you will gain the most from the upside. Now that is the short term outlook you have. Warren Buffet looks it like a long term strategy and he holds onto the stock that he bought when they were undervalued and he seeks to maintain that long term hold and he has since proved that holding long term without worrying about the stock market is your best bet. He had once said and I quote “In the short term the market is a popularity contest; in the long term it is a weighing machine”.


Well Warren buffet works on the value investing principle but definitely has devised his own way of working with that principle. For example he asks the question whether management is candid with shareholders. That criterion is one of the few tenets that he uses to analyze the companies. He himself has a letter to shareholders which is legendary and every year people wait to see get hold of the newsletter so that they get pieces of wisdom from this person.


So go ahead and read all about Warren Buffet apply your own intelligence to it and you will surely make money in the stock markets.

The author provides tips and advice on stock market for beginners and helps them learn the stock market for beginners lessons.

The Buffettology Workbook: Value Investing The Warren Buffett Way

  • ISBN13: 9780684871714
  • Condition: NEW
  • Notes: Brand New from Publisher. No Remainder Mark.

Product Description
Timeless Investing Strategies for Any Economy
For five decades, Warren Buffett has been making himself one of the wealthiest men in the world, amassing more than 30 billion dollars by investing in the stock market. Remarkably, he did it by spurning popular Wall Street trends, adhering instead to his own unique discipline, one the world has come to know as Buffettology. In The Buffettology Workbook, internationally acclaimed writer and lecturer Mary Buff… More >>

The Buffettology Workbook: Value Investing The Warren Buffett Way

Applied Value Investing: The Practical Application of Benjamin Graham and Warren Buffett’s Valuation Principles to Acquisitions, Catastrophe Pricing and Business Execution

  • ISBN13: 9780071628181
  • Condition: NEW
  • Notes: Brand New from Publisher. No Remainder Mark.

Product Description
Since Benjamin Graham fathered value investing in the 1930s, the method of analysis has spawned a large number of highly successful investors, such as Graham’s own former student and employee, Warren Buffett, who is regarded as one of the most successful investors of modern times. Over the years, numerous books have been published on Benjamin Graham’s approach. Most of these books present different interpretations of value inves… More >>

Applied Value Investing: The Practical Application of Benjamin Graham and Warren Buffett’s Valuation Principles to Acquisitions, Catastrophe Pricing and Business Execution

Essential Real Estate Investing Business Plan That Would Make Warren Buffet Drool ? Part 3

The 4th Element – Marketing Plan

The last thing a successful investor like Warren Buffett would do is to invest into businesses that always guessed at their future profitability and had a loose, unfounded marketing plan for generating prospects, and unproven ways for converting those prospects into customers.

As a real estate investor, your business needs to decide on the type of marketing that will powerfully increase your visibility, draw in motivated sellers and investor buyers like a ten ton magnet on steroids, and follow proven processes for converting those leads into deals, and those deals into profits for you. Are you using proven online websites? Proven sales scripts and automatic response programs? Do you have a compelling value proposition? Who is your ideal target client profile? How are you positioning your business to disrupt your competition and dominate?

For Buffett, he only buys into businesses he can understand and evaluate accurately. With your real estate investing business plan here, you need to make sure it’s doing the same thing.

The 5th Element – Your “Product”

One of the things that Warren Buffet said, that any entrepreneur investing in real estate should remember is: “We are willing to hold a stock indefinitely so long as we expect the business to increase in intrinsic value at a satisfactory rate . . . we do not sell our holdings just because they have appreciated or because we have held them for a long time.”

With television programs such as House Flipping so popular, many real estate investing entrepreneurs imagine that the real estate game is all about flipping properties very quickly.

That’s not always true.

In many instances, successful investors have created enormous fortunes by real estate investing over the long term. That is, some of the biggest success stories have bought commercial real estate, marketed it better to increase the vacancy rates, and are generating a large, steady income while building their net worth.

For you, this where you need to clearly outline the types of “product” you’ll be investing in, the length of time involved for each type of real estate, and the proposed exit strategies along each step of the way, with a focus for long-term wealth creation.

The 6th Element – Your Power Team

This is defined by the outsourced members in the real estate investing field who will be the “enablers” for you to start, run, and scale your investment business. People like Realtors, Mortgage Brokers, Real Estate Attorneys, etc go here. Be specific as to why you have chosen these individuals in terms of what value they bring to the table, and how they propose to deliver this value to your business. Always have references (at least two) for each member of your power team

The 7th (Final) Element – Resources & Financial Targets

Now we’re well beyond your Power Team in terms of additional hard and soft resources you’ll require. For example, do you have an investment advisor or real estate mentor to guide you through the growth of your business? Do you need websites and marketing systems to promote your business?

How much money do you expect to generate in the next three months? What do you need to generate a 6 figure bank account and 7 figure real estate gains within 7 months? This final section of your real estate investing business plan shows your existing resource constraints, and profit targets – both short and long term – and how you arrived at these conclusions.

Brad Wozny is a real estate investing expert. Let Brad show you how to connect with eager real etsate investor buyers & sellers of investment properties. Access private money & creative lending resources. Read more about Brad on his Real Estate Blog and claim your FREE Strategic Real Estate Investment Manifesto.

Buffett?s Value Investing Style

Warren Buffett is the world famous stock market guru. Recently, he bought stakes of General Electric Co (GE) and Goldman Sachs Group. General Electric Co (GE) is a technology and services giant company which is listed in Dow Jones board; whereas, Goldman Sachs Group (GS) is a financial heavyweight company, which is listed in New York Security Exchange (NYSE). Through his famous investment company; Bershire Hathaway, Buffett invested US$8bil in these two companies. His action startled many people in stock market. When everybody was taking their money out from the Wall Street, he invested such a huge amount of money. There is no surprise actually because he at one time said that the best time to enter the market was when everybody was not interested in stocks. He also stated that it was difficult to buy a popular stocks and made profit from it. Besides, he also said that when everybody was in fear was the best time to enter the market but not when everybody was greedy. According to financial specialists, Buffett investment is a long term investment.

Currently, stock prices are considered as irrational due to the heavy sell down. So, now it is the best time to invest. When investing in a company, we should invest to the company management and market strategy. In this type of investment, good stocks should be held as long as possible by the investors.

When investing in stock market, Warren Buffett is very careful. He sets very strict requirements to select stocks. So, stocks that fulfill his requirements are seldom being found. Earnings versus growth, high return on equity, minimal debts, strength of management and simple business model are five main criteria, which are used by Buffett to select stocks to invest. He usually concentrates in a few solid stocks, which able to give high return of investment. These few stocks usually are in the industries that he understands the most. He is also very careful to the local bourse, which is an emerging market that could be very volatile. Besides, he is also watchful to the market sentiment, which could be easily affected by many other external factors.

Good stocks are worth to hold for as long as possible. This is because good stocks such as blue chip stocks are able to ride through bad times and recover over time. Buffett is the most successful and trusted investors. His investments in GE and Goldman Sachs will restore the confidence of some of the investor on the Wall Street. When Buffett invests in stocks, underlying fundamentals of a company are the must will be investigated by him rather than market sentiment. Because of his astute investment skill, he is dubbed as “The Oracle of Omaha”. Intrinsic value of a business is always will be determined by him and he is willing to pay a good price for it as long as the business has the intrinsic value. Buffett is very prudent and holds a principle that if he can not understand the operation of the business; he will not invest in it. That’s why, he escaped the dotcom market crash. He will check the fundamentals of the companies that he intends to invest by analyzing the companies’ annual reports. This is his simple investment principle.

He is the chairman of Berkshire Hathaway and this company’s stock is the most expensive on Wall Street. In a letter last year to his shareholders, he stated that Bershire was looking to invest to the companies, which had competitive advantage in a stable industry for long-term prospects. His philosophy is that the stock price will increase as long as the business does well. Investment in PetroChina, which is an oil and gas firm in China, was one of his most successful investments. He bought the stake for this company for an initial sum of US$500 mil and then sold it for US$3.5 bil. Investments in companies such as Coca-Cola, American Express and Gillette are also among his successful investments.

Alexander Chong –

Author of “Workable Option Trading Strategies”.
http://www.makemoneystocks.com/

The Business of Value Investing: Six Essential Elements to Buying Companies Like Warren Buffett

  • ISBN13: 9780470444481
  • Condition: NEW
  • Notes: Brand New from Publisher. No Remainder Mark.

Product Description
A blueprint to successful value investing Successful value investors have an ingrained mental framework through which all investments decisions are made. This framework, which stems from the father of value investing, Benjamin Graham-who believed that investment is most intelligent when it is most businesslike-can put you in a better position to improve the overall performance of your portfolio. Written by Sham Gad-founder of the Gad Partners Funds, a value-… More >>

The Business of Value Investing: Six Essential Elements to Buying Companies Like Warren Buffett

The New Buffettology: The Proven Techniques for Investing Successfully in Changing Markets That Have Made Warren Buffett the World’s Most Famous Investor

  • ISBN13: 9780684871745
  • Condition: NEW
  • Notes: Brand New from Publisher. No Remainder Mark.

Product Description
If you read the original Buffettology, you know exactly half of what you need to know to effectively apply Warren Buffett’s investment strategies. Published in 1997, the bestselling Buffettology was written specifically for investors in the midst of a long bull market. Since then we’ve seen the internet bubble burst, the collapse of Enron, and investors scrambling to move their assets — what remains of them — back to the safety of traditional blue chip co… More >>

The New Buffettology: The Proven Techniques for Investing Successfully in Changing Markets That Have Made Warren Buffett the World’s Most Famous Investor

Buffett Beyond Value: Why Warren Buffett Looks to Growth and Management When Investing

  • ISBN13: 9780470467152
  • Condition: NEW
  • Notes: Brand New from Publisher. No Remainder Mark.

Product Description
A detailed look at how Warren Buffett really invests In this engaging new book, author Prem Jain extracts Warren Buffett’s wisdom from his writings, Berkshire Hathaway financial statements, and his letters to shareholders and partners in his partnership firms-thousands of pages written over the last fifty years. Jain uncovers the key elements of Buffett’s approach that every investor should be aware of. With Buffett Beyond Value, you’ll learn that, contrary… More >>

Buffett Beyond Value: Why Warren Buffett Looks to Growth and Management When Investing

Two Lessons On Investing Master Investor Warren Buffett Uses

Over the last 49 years, Warren Buffett managed to achieve a 24.7% annual compounding rate of return, which means he doubled his money every 2.9 years for half a century! He turned an initial investment of $100,000 into a staggering $42 billion. How was he able to consistently beat the market (only 10% of professional fund managers are able to beat the S&P 500 Index every year) and all the smartest money managers on Wall Street?


Here are two lessons an investor can learn from the master himself


Lesson One: Invest from a Business Perspective


Warren Buffett invests from a business perspective. Most people treat stocks like lottery tickets. Buying and selling based on predictions of whether the price will go up or down in the short term. Based on world events stock prices go up and down randomly and erratically, hence there is no way anyone can consistently beat the market by attempting to predict its movements. Many of these punters know every little about the business operations behind the stocks they own.


Warren Buffett knew that buying a stock meant becoming a part-owner of an ongoing business. The only way to consistently make money was to identify very good businesses run by a strong management team. Good businesses would over time generate higher and higher profits. Increasing profits will increase the value of a company and hence its share price. By honing his expertise in sniffing out companies that had the potential to generate huge amounts of earnings growth over time, he was confident that the stocks he held onto would increase significantly in price over time.


Lesson Two: The Market is Irrational, Take Advantage of It


While most financial experts teach that the market is rational and efficient (stock prices reflect the true value of a company), Buffett knew that stock market prices were determined by demand & supply, which in turn are irrationally driven by fear and greed. As a result, a stock’s price did not always reflect the true value of a company. In times of mass investor optimism & greed, buyers rush in and push a stock’s price way above its value. In times of fear and panic (i.e. news of a recession) investors sell their shares, causing a stock’s price to fall way below its value.


The Market tends to overvalue a company’s stock when there is good news and under-value a company’s stock when there is bad news.


Warren Buffett’s beliefs, philosophies and investing strategies are totally contrary to the average money manager or individual investor. Today, his company Berkshire Hathaway is the most expensive company in the world, with a share price of $100,000 per share.

Adam Khoo is an entrepreneur, best-selling author and a self-made millionaire by the age of 26. Discover his millionaire investing secrets and claim your FREE bonus chapter of his latest bestselling book ‘Secrets Of Millionaire Investors’ at Secrets Of Millionaire Investors.