The Warren Buffett Way: Investment Strategies of the World’s Greatest Investor

The Warren Buffett Way: Investment Strategies of the World’s Greatest Investor

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“Simply the most important new stock book of the 1990s, to date. Buy it and read it.” -Kenneth L. Fisher Forbes

The runaway bestseller-updated with new material included for the first time!

“The Warren Buffett Way outlines his career and presents examples of how his investment techniques and methods evolved and the important individuals in that process. It also details the key investment decisions that produced his unmatched record of performance.” -from the Foreword by Peter S. Lynch Bestselling author, One Up on Wall Street and Beating the Street

“. . . an extraordinarily useful account of the methods of an investor held by many to be the world’s greatest.” -The Wall Street Journal


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Warren Buffet’s $5 Billion Investment

Just last night I attended a financial seminar. I knew it was going to be interesting. My first clue was the location. The seminar was hosted in a tiny restaurant in a strip mall. A bagel shop to be precise. So much for the glamour of “Wall Street.” The food was decent and the presenter was entertaining. The topic wandered a bit bouncing from the market, to insurance, to REITs. The general question being answered was what to do now with your money. What really caught my attention however was a comment from the presenter. It wasn’t anything big or earth shattering. But he said it several times. I couldn’t get it out of my head.

The comment? “Warren Buffett just bought $ 5 Billion Dollars worth of Goldman Sachs today!” Maybe it was the way he emphasized the words $ 5 Billion Dollars. Maybe it was the excitement in his voice – like he had just discovered a gold mine. Maybe it was the fact he said it twice and his co-presenters said it several times as well. Or, maybe it was the Wall Street Journal running a front page story about that very topic. Whatever it was, the statement really bugged me. Look, I’m just like everyone else. Seeing a really smart investor step up and put money on the table makes you take notice. Seeing an investing giant like Warren Buffett do it is even more influential. I started thinking about Buffett. You know, more than 10 years ago he wouldn’t comment on his investments. He had a joke that he’d tell you but then he’d have to kill you. Now he’s interviewing with Wall Street Journal reporters and calling into CNBC live.

I looked closely at this investment and it’s a no brainer. As a matter of fact, I’d put my own money into Goldman on the same terms. Does anyone happen to know the home phone number of Lloyd Blankfein the CEO of Goldman Sachs (GS)? If you do, please let him know I’m interested in investing on the same terms. Seriously. Why’s this investment a no brainer? The structure of the deal is exciting. It’s an instant win for Buffett. It’s the closest thing you can get to a guarantee in the markets. Buffett invests $ 5 billion dollars. Now that’s no small sum. I certainly don’t have that much money. But he’s investing in a way you and I never could. First he’s not buying stock on the open market. That $ 5 billion isn’t going to flow onto Wall Street. Nope. He’s buying the stock right from the company. That $ 5 billion is going right into the Goldman Sachs bank account. Second the security he’s buying is different. He’s not buying common stock like you or I would. He gets a special class of stock. A “Perpetual Preferred.” What’s that mean?

Two things. First his perpetual preferred gives him seniority over the common stock if, and it’s a big “if”, Goldman gets into trouble. Second it pays him a dividend perpetually – or forever. And that dividend gets paid to him before anything goes to the shareholders – that’s why they call it preferred. The dividend’s no small number either. He’s getting 10% on his money. Keep in mind, the common stock’s getting only a little more than 1% on their dividend. Warren can hold this investment forever . . . but if Goldman wants to buy it back. Well, they have to pay him a 10% premium. Sounds pretty good doesn’t it. But wait. There’s more!

That’s right the sweetheart deal for Buffett isn’t over yet. Warren also gets warrants on Goldman’s stock. Warrants are simply contracts giving the owner (Buffett) the right to buy more common stock at a fixed price for a certain amount of time. It’s like a call option but typically longer term. So Buffett gets warrants to buy another $ 5 billion worth of Goldman at $ 115 a share anytime in the next 5 years. Sounds like a good deal to me considering the stock price was much higher when the deal was being struck. Now before you dismiss this warrant, let me tell you something. This is probably the most valuable part of the entire deal. Keep in mind that today the stock’s over $ 136 a share and his profits will be huge. How big?

We’ll let’s see here. $ 5 billion invested at $ 115 a share gives Warren 43,478,260 shares. And $ 136 less $ 115 gives a profit of $ 21 per share. So $ 21 times 43.4 million shares (and change) means a profit of more than $ 913 million. A profit of $ 913 million on a $ 5 billion investment is 18.2%. That’s an annual return of over 900%. Not bad for a week’s worth of work. I think when all is said and done, Warren will make much, much more on his investment. How? He’ll wait till the stock rebounds to its 52-week high (of over $ 250 a share). I’ll let you figure how much he makes then.

Brian Mikes is the editor of the Dynamic Wealth Report, a free investment newsletter that offers investment ideas and news you can’t get from the mainstream investment press. Brian and his team bring decades of Wall Street and Silicon Valley experience to help you discover profitable trading ideas you can use today.

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How To Invest: Simple Strategies To Grow Your Stocks, ETF’s, and Futures (How To Invest, Stocks, Binary Options, Investing, Investment Books, Day Trading, ETF’s, Futures Book 1)

How To Invest: Simple Strategies To Grow Your Stocks, ETF’s, and Futures (How To Invest, Stocks, Binary Options, Investing, Investment Books, Day Trading, ETF’s, Futures Book 1)

Day Trading or Investing has become one of the fastest and most lucrative ways to make money. It has changed thousands of people’s lives similar to the way the lottery can change your life – however, it is far less risky if you understand how to invest. In this book, I will walk you through the strategies that I have implemented since I began trading in 2006. We will cover several types of investments including: Forex, Commodities, Indices, Stocks, Binary Options, ETFs, Futures, and How to use trading signals so that you can be highly successful and understand how do you trade.

One of the things I enjoy about investing is that I only have to put in a few hours a day, and my work is done so that allows me to spend more time with


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Warren Buffett – Speculation Vs Investment

For the latest Warren Buffett, go to – Warren Buffett and Bill Gates often play bridge together. They both eat junk food and have simple tastes. Buffett really is different. The guys on Wall Street like quick profits, but Buffett takes the long view. With an investment attitude, you look at the asset to generate the returns for you. If you buy a stock hoping that the price goes up, that is pure speculation. You have to deal with things you are capable of understanding. Then it needs to have a durable competitive advantage with talented management. You finally need a price that makes sense. With this checklist, you can find some good investment opportunities. Coca-cola (KO) ticked many of Buffett’s boxes in the 80s by a comfortable margin. Buffett bought a billion dollars worth of shares. They were very aggressive in buying KO. They also invested in American Express and Disney (DIS). They put a third of their assets into KO. You don’t need to diversify. Stick with what you know. Your 50th stock idea won’t be as good as your first. If you bet on someone early like Buffett, it can really pay off well. Buffett has spent 80 years working up a file of everything he knows about business, and he worked at it all the time. Buffett started with a pinball machine business and a used golf ball business. He also had adolescent troubles, especially when he moved to Washington DC.

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Warren Buffet’s Investment Ethics

When investors think of the person and success they would most like to emulate, Warren Buffet’s name is top on the list. He is seen an extremely successful and moral investor that has made his money through dedication and diligence.

Buffet’s entire life is a testimonial to the American dream and what can be achieved through smart investing. Warren Buffett holds position two, as the second most affluent man in the United States. He is unique to that list because he has made the majority of his wealth investing in other companies.

Warren Buffett presently presides as the CEO of his investment company, Berkshire Hathaway. He acquired this company in the late 1960s, nurturing and molding it into the highest priced and most fruitful listing on the New York Stock exchange.

Warren offers an unusual duality for a business man. He is often described (even by himself) as an introvert with simple tastes and a disheveled appearance. Pair this shy, “grandpa-like” exterior with a commanding aptitude for power investing and judiciously seeking out corporate talent and management – the combination is unstoppable.

Warren Buffett’s methodology and life philosophy is diligently studied, he is worshipped, respected, and recognized as the world’s most successful investor of the 20th century. Conservative in business and appearance he is a liberal at heart, which contrasts him sharply with his peers. He has set the standard for and broken the stereotype that a successful business man cannot flourish financially and maintain a solid set of ethical ideals.

Warren Buffett is a “reluctant” philanthropist. Giving away money is just like loosing money, and Buffett does not like either. It was, his wife and later his traveling companion, Susan, that inspired, and encouraged Warren to give money to number of local charities. These nonprofit organization were located in regions suffering from poverty, that she found herself dedicated too.

Even though he believed that these organizations would misuse the funds and his money would be wasted, he donated freely. He supported his wife’s ideals and became an active participant in her causes which centered around abortion, birth control, and homeless youths. Together, the pair created a foundation called Glide.

This organization was a joint venture used to direct monetary contributions to those particular causes. In 2000 it was rumored that Buffett, upon his passing, intended to make the Buffett Foundation his sole beneficiary. Warren Buffet love baseball and can often be overheard and quoted using baseball metaphors in his lectures, books, and interviews.

This love of baseball prompted his over 1 million dollar contribution to Omaha’s Minor League Baseball Commission to ensure baseball stays in Nebraska. Warren also aided Grinnell College in acquiring a radio station that was public, for 13 million dollars. Grinnell, two years later, sold the station for 35 million dollar profit.

Buffet was temporarily apprehensive over the sale, but the returned revenue spoke for itself. He has also indulged his liberal side by investing in a libertarian magazine start-up in Washington DC, which eventually failed.

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In Search of Investment Wisdom – A Review of Berkshire Hathaway’s 1987 Annual Shareholder Letter

In Search of Investment Wisdom – A Review of Berkshire Hathaway’s 1987 Annual Shareholder Letter
By Bill Smith. This time we review Warren Buffett’s 1987 annual shareholder letter for his accumulated investing nuggets of wisdom. Although he’s never written a book, he pens these letters each year covering many subjects of interest to his shareholders, and uses them as a vehicle to discuss the subject of investing. Read more » »
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Best 10 tips for stock investment

1. A mind free shares: shares a lot of people handle every day, every day would like to share, do post every day, and I found that Buffett’s approach is completely different: do not look to see the company stock, do not want the price to value, not to make speculative investments . With many people’s eyes compared to only stock prices, Buffett did not stock, but as investment shares into business as a real investment: “You do not buy the stock, but the company.”Stock Market Today – Stock Quotes | Market Watch | Financial News

2. Safety First: Many people ask for money to life, in order to make money rather the huge investment, Buffett has stressed safety first, money second, losing money may be small, the possibility of large profits only when the shot. Buffett said: “The margin of safety is the cornerstone of investment success.” The margin of safety often appear in the stock market crash, good company when the stock price plunged. Most people like to chase sell, Warren Buffett on the contrary, abandoned as I get, people take me for.

3. Stock picking as election Wife: A lot of people picking is very frivolous, frequent conversion, Buffett irony for the stock market, “one-night stand”, he was selected stock picking as his wife: “We are looking for investment targets in the attitude and look for life partner exactly the same attitude. “I be summarized in three points: the attitude of caution and strict standards, very little amount.

4. To know ourselves: to know ourselves and be victorious. Warren Buffett minimal loss of stock selection, one important reason is that he only vote for those who own very familiar, very familiar, very sure of outstanding shares. He repeatedly stressed that the first principle of investment is the ability to circle principle: “capacity ring size is not important, the ability to know their boundaries is critical circle.” I’m picking it summed up three major precepts: can not choose, unfamiliar not vote, do not understand not vote.

5. First-class business: Buffett said: “We insist on looking for business-class company.” While ordinary investors to determine whether the business class is the simplest and most effective way to grasp the core of the key points: the brand. Best reflects the core business is first class brand, and first-class brand must have three elements: the famous, old, big.Stock Market Today – Stock Quotes | Market Watch | Financial News

6. Top management: Warren Buffett’s company to find not only a first-class business, but also have first-class management. He told us: “the acquisition of companies and buy shares, we want to buy the target company not only good business, but also have extraordinary outstanding, smart and capable, the subject of the beloved manager.” Buffett is often just like the company’s managers bought the company’s stock. I will be required for managers Buffett summed up as both ability and integrity, especially in demanding ethical, honest, sincere, loyal, in fact, is what we often say “Three Masters”: telling the truth, do practical things the old , so honest.

7. First-class performance: Warren Buffett said: “I just like those proved to have the continued profitability of the enterprise.” Promote long-term stock price continued to rise, and eventually only one force: profitable growth. I found that drive prices in the process of performance and the launch vehicle to promote the satellite into space, the process is very similar. As a listed company’s share price satellite launch vehicle to promote its profitability like, but also can be divided into three levels, first level is the gross profit, net profit of the second level is the third level is retained earnings. Buffett’s first-class performance required to meet three criteria: high-margin, high ROE, high retained earnings stock conversion.

8. Value Assessment: Warren Buffett has a famous saying: “You pay the price, but you get value.” Key to value investing is what you get is far greater than the value of the price you pay. The biggest difficulty is that value investing, the price is clear, but the value is very clear, only about the assessment themselves. The main valuation methods are generally based on three areas: asset value, profitability, cash flow. Buffett believes that free cash flow for valuation according to the most correct way.

9. Focus on investment: a very popular investment approach is to spread investments, do not put your eggs in one basket, but buy a lot of stocks, each stock to buy only a little, this seems more robust, making money is even greater. Buffett opposes diversification, advocates focus on investment: “Do not put all your eggs in one basket, this approach is wrong, the investment should be like Mark Twain suggested, put all your eggs in one basket years, and then watch that basket. “” Our investment concentrated in only a few outstanding companies who, we are focused investors. “I think it is similar to Buffett’s investment principles focus on the military principle of concentration of forces, popular that is to bet big to win big, but it requires three conditions: win big need great wisdom, great gambling need to Dayong, Dacheng need a big bear.

10. Long-term investment: Warren Buffett joked that his head with the butt earn money more than, in fact, better than anyone else because he could get is maintained: “My favorite time of holding a stock is: never . “long-held, easy to say, it is hard. Buffett was able to sum up my long-held stock is years or even decades is the secret of three heart: the determination not to sell dead; confidence, not to sell more profitable; perseverance, ups and downs do not sell. But need to note is that Buffett does not sell long-held and has been only a very small number of stocks, Buffett will also hold a lot of stock after a few years time to sell. – Stock Quotes | Market Watch | Financial News

Article from – Invest like this yourself by reading the book – http Warren Buffett and Charlie Munger are two of the greatest investors of all time. Thousands of people go to Omaha every year just to hear a few minutes of their investment advice. What is most interesting is that their advice typically goes against the “mainstream”. The mainstream would like you to think that successful investing is an extremely complicated matter that requires the understanding of complex mathematical formulas. However, this is NOT the way that Buffett made his billions.
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