Warren Buffett Knows the Language of Investing
Just a short video on how you can write your own application in order to find good value stocks using Warren Buffett’s Value Formula. Reduces the manual labor and actually applies the formula for you by parsing online stock data and returning useful results for you to analyze later on.
Video Rating: 5 / 5
The Secret Millionare’s Club – Pam interviews legendary investor, Warren Buffett about the new investor education cartoon for children, The Secret Millionaire’s Club, produced by DIC Entertainment. Mr. Buffett shares his time-proven investing strategies about what really works. The Scam Alert focuses on a man who was impersonating a mortgage loan broker. Read New York State Attorney General, Andrew M. Cuomo’s consumer tips on advanced fee loan sharks. Before you invest, check out the opportunity with your State Securities Regulator
Yes, Rich People know this secret and use this idea. Yes, it is very easy for them to do this. Yes, it is actually very easy for you to do this too.
In Fact, You Are Already Using This Powerful Tool and Don’t Even Know It! Find out exactly what this tool is that you are ALREADY USING without realizing it, so that you can use it with conscious awareness and DRAMATICALLY INCREASE YOUR INCOME, especially in this troubled economy!
What Is This Amazing Tool Which You Are Already Using? The answer is LEVERAGE
Barack Obama runs the whole country of United States. He can do that only because there are several million government employees doing little parts of his grand plan.
Warren Buffett can invest in great businesses because he has dozens of analysts constantly studying key financial indicators for a selected number of target public companies.
But, What Can I Do? I’m Just A Little Guy?
I can hear your comment now: “I’m just a little guy. I don’t have staff. I don’t have a team of analysts. I don’t employ millions of government employees. How does this article apply to me?!”
I am so glad you asked that question. Because …
Leverage not only Applies to You, You are Already Doing It! Every time a mother orders in dinner, she is leveraging the staff and products of a local pizza joint and the driver and car of the delivery service. That’s leverage. She did not have to make the meal herself to have a meal for her family.
Every time a couple with kids enjoys an evening out, they are leveraging the babysitting skills of a neighbour or family member. The couple does not have to simultaneously be out on a date and also at home parenting their children. They do not have to be at home to parent their children.
Every time a businessman hops into a taxi, he is leveraging the driving skills of a cabbie. The businessman does not have to simultaneously be thinking of his business deal and also driving the car.
How You Use Leverage To Make Money
Here is the key to the entire article …
1.Think of your job or business and the tasks you do in your workday life. Now, think of ways that others support you. What you notice will expand. If you want people to support you more, you simply first need to at least notice that they exist and are helping you. So, first notice many ways that others are helping you.
2.Think of tasks you do that you are not particularly good at. Imagine creative ways that those tasks might be able to be done by others (yes, even if you are an employee!!). Incorporate as much leverage as possible in your workday life.
3.Implement just one leverage. Get just one help in just one tasks from just one person. Start with one. Measure your success. Celebrate your success.
4.Then, find just one more way. That’s what I do. That’s what every successful person does. Now, you are doing it too!
Now It’s Your Turn
I have a double homework assignment for you. But, only if you wish to do it. There will be HUGE benefits to you if you choose to do it. Here goes …
HOMEWORK ASSIGNMENT #1: Record 5 ways that you enjoy leverage in your life.
HOMEWORK ASSIGNMENT #2: Think of a sweet way to acknowledge those people who are supporting you with their leverage. Why? You may wonder why you should thank those people if you are paying them already. Isn’t payment enough appreciation? I say NO. Payment is the mildest and most basic way to appreciate someone for helping you. But a smile, a card, a tip, a note, a flower, etc. (be creative and it does not need to cost much or even anything!). Record the ways to appreciate these wonderful people who are helping you.
I look forward to your comments. I look forward to your realizing all the wonderful ways that others are supporting you. Hey, that shirt you are wearing. Ever think of that shirt? You leveraged a seamstress, some machine workers, dye manufacturers, design geniuses, transportation companies, a retail store and all its staff and probably also a credit card company. Phew. And, you think you do everything on your own!!
Raymond Aaron,New York Times Top Ten Bestselling Author, “Double Your Income Doing What You Love”
Claim your Gifts From Raymond at http://www.GiftFromRaymond.com “to double your income”. It’s free.
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from abcnews: Under a cloak of secrecy, some of the world’s wealthiest people gathered in an unprecedented meeting early this month in New York City “to see how they can join together to do more,” according to one attendee. Invited by the world’s two richest men Bill Gates and Warren Buffett, along with David Rockefeller, a Who’s Who of American wealth and influence gathered around a long table in a window-lined private room overlooking the East River on May 5. “The overwhelming reason for the meeting was need — that was the issue that galvanized everyone to participate,” Patricia Stonesifer, senior advisor to the Gates foundation’s trustees, Bill and Melinda Gates and Warren Buffett, told ABCNews.com. “This was a group very committed to philanthropy coming together to see how they can join together to do more.” media monarchy dot com
Warren Buffett Secret Millionaires Club web series review by Rich Mbariket. More web series reviews at: www.webseriesnetwork.com
Albert Einstein – yes, he of “e equals mc squared”, said that compound interest was the greatest mathematical discovery of all time, and this brief summary might just convince you how right he was.
When one first examines a potential investment, it is natural to look at the headline expected rate of return, but it is the compounding of the interest (or profits) on that principal which creates the biggest returns over time.
The compounding of profits, or dividends, or interest applies in all financial markets, so if you are a short term stockmarket trader, property investor or other short or long asset holder, you may find the magic of compounding interest very interesting. We will see here though how using CFDs and compound interest can provide potentially astonishing returns.
The rule of 72 and long term returns
You might not have learnt this at school, but Einstein’s rule of 72 is one of most magical and simple formulas around. What this says is that to work out how long it takes to double the value of an investment, you simple divide the return into 72.
So, if we say that the stockmarket has returned around 11% on average over the last one hundred years or so, (and property is not far behind for that matter), then to work out on average how long it would take an investment in the market to have doubled, the calculation is 72 divided by 11, which equals about six and a half years.
A few quick points need to be made clear here. First, this rounded figure assumes all dividends are reinvested, and there are no charges for investment, which clearly is not realistic for most investors. It does not include taxes of any sort, which again would have to be factored into potential returns.
Doubling and doubling again
Once we have the time it takes to double your money, this is where the magic of compounding comes in, because it becomes possible then to extrapolate some very tasty figures over the longer term.
If we return to long term equity investment, and say that the real return on shares (that is adjusted for inflation and charges) is say 5%, then you could work out how much would you need to invest and how long to give you a future investment value of say £1m in today’s money.
A simple spreadsheet model can do this, but let’s say you began with £10000 and each year your investment appreciates by 5% in real terms. To double the initial figure would take (72 divided 5 approximately) just over fourteen years. Another fourteen years is what it takes to double again, and after 42 years of working life, your £10000 becomes £77615 in real terms. Now this doesn’t sound much, but of course this does not include any further contributions you make through your working life.
But going back to nominal returns, the story is dramatically different. Assuming a round 10% per annum returns after costs, it takes just over seven years to double your money. After 42 years, your £10000 is now worth £547637 – a quite amazing figure. Now you can see the linkage with the trend of property prices based on these long term returns from the past, but as mentioned before the figures for total return on the stockmarket (not just how much the indices have gone up) is even higher.
Just to show how this sort of compounding works in the real world, Warren Buffett began with $105,000 fifty six years ago – it was a lot of money admittedly then. His fund’s compound returns have been around 25% per annum, and his fortune is currently over £50bn, making him the second richest man on earth.
Monthly returns and hitting the magic million
How then does all this relate to the short term and in particular to CFD trading? The first thing we have to presume is that a good trading methodology is crucial to all traders, whether it is in equities, indices, forex or commodities. It is then possible to leverage short term investments for spectacular gains within just a few years.
Let’s return to our fictional £10,000 starting investment, but this time we’ll measure performance in months, not years. A very good trading system might return 1.5% per month after costs, which compounds to 19.6% per annum. This is not far off the sort of figure that only the best hedge funds aim to match or beat over the long term.
Without leverage, the £10,000 becomes £24432 over five years, which is a pretty good return on its own.
Using just three times leverage however the return jumps to an astonishing £140274 over just five years.
You would theoretically hit a million in less than nine years, and that’s just from £10,000!
A word on risk/reward
All the above simulations (with the exception of Warren Buffett) are based on average long term returns and take no account of short term movements. CFD traders should of course be aware that by increasing your leverage, the risk of major falls in equity increases accordingly.
It is paramount that all traders have applicable money management systems and stop losses in place to protect against potential pitfalls when trading, but by using CFDs with a profitable trading system and leverage, the sky really is the limit.
Mike Estrey is the Head of Research for Blue Index, the Day Trading specialists in Contracts for Difference. Foreign Exchange Trading also forms part of their extensive services.
Did you ever sit there and just wonder how did the richest people in the world get so rich?
We have Bill Gates (Microsoft) with $50 billion, Warren Buffett (Berkshire Hathaway) with $40 billion, Lawrence Ellison (Oracle) with $27 billion, the Walton family with $21.5 billion and not to mention the mighty Mr. Moneybags (that would be me) whose net worth is so large that any calculator in the world would simply explode just by trying to fit all those numbers onto one screen.
Let me tell you a little secret: Bill Gates didn’t make that $50 billion from selling bits of string (or computer software for that matter) nor did the Walton family make all their cash from selling mountains of discounted Tupperware (or whatever it is that Wal-Mart sells). I can also guarantee you that there weren’t any (or at least, not that many) shady business deals going on in dark allies next to any dumpsters. All these people made their massive riches through the little gift from the deepest, darkest depths of Rich Man’s Heaven known as compound interest.
What is compound interest you ask? Well, Albert Einstein describes compound interest as the most powerful force in the universe.
Yes, you read that correctly. Not radioactive congenial congruently concentrated vernacular waves, not subatomic dilating hydrogen splitting atomic protons and not even the deadly hydro-synthesizing corrugating sub-congenial metamorphosing radian. He said compound interest.
So, how could the man that was fundamental to the development of the second deadliest weapon (after my fists) the world has ever seen (a.k.a. the atomic bomb) call something that can never harm a fly be the most powerful force in the universe?
You’re going to have to understand what compound interest is in the first place.
Compound interest is making profits on top of profits on top of other profits and so on. As simply as it can be described, it is generating earnings from previous earnings. Before your head explodes, let me formulate it into something a little more tangible:
The story of compound interest
Let’s say your dear old Uncle Bert takes one too many trips to his local buffet and his intestines implode rendering him six feet under a short while after. In a weird twist of fate/luck/insurance fraud you find yourself inheriting a million bucks. You have the following options:
a) Buy a (large) house
b) Buy twenty Corvettes
c) Buy four million sticks of gum
d) Do something useful
Let’s assume you chose option “d”, do something useful – you start your own business. You take the money and you build a stable and start breeding Equestrian racing horses (don’t ask me why, you’re the one that decided to do this, not me). At the end of the year you find that you have made a tidy $300,000 net profit (a 30% rate of return). Instead of spending the proceeds on hookers and booze you decide to reinvest the money back into your business like a good entrepreneur – so now you have $1,300,000 invested in your business.
A year later you find that your rate of return is 30% again –only this time you make $390,000, not $300,000. You made $300,000 from the $1,000,000 and another $90,000 from the $300,000. Let’s say you decide to reinvest these new proceeds back into the business like last year – now you have $1,690,000 invested in the business.
Next year you make another 30% off of your investment – an extra $507,000. You reinvest it and your business is now worth $2,197,000.
I can go on, but I think (or at least, hope) you get the point. This is what it means to make profits off of your profits.
Oh, and how much do you think that initial investment of $1 million will be worth ten years later growing at the constant rate of 30% a year? $10.6 million. In 27 years it will be just under $1 billion dollars.
And that, my friends is how the richest people in the world got so rich.
By the way, investing in the stock market works the exact same way – that’s how my uncle’s mother’s cousin’s grandfather’s niece’s husband’s nephew, Warren Buffett got so rich (currently the second richest person in the world) and is the predominant source of my income (investing and compound interest, not Warren Buffett).
As I mentioned earlier, the beauty of investing is that your rate of return doesn’t depend on your business skills, but instead on others’ business skills.
A Few Numbers
Let’s have a look-see at what your initial investment of $10,000 can turn into after a few years growing at a rate of return of 30%:
Year 1: $10,000.00
Year 2: $13,000.00
Year 3: $16,900.00
Year 4: $21,970.00
Year 5: $28,561.00
Year 6: $37,129.30
Year 7: $48,268.09
Year 8: $62,748.52
Year 9: $81,573.07
Year 10: $106,044.99
Year 11: $137,858.49
Year 12: $179,216.04
Year 13: $232,980.85
Year 14: $302,875.11
Year 15: $393,737.64
Year 16: $511,858.93
Year 17: $665,416.61
Year 18: $865,041.59
Year 19: $1,124,554.07
Year 20: $1,461,920.29
Year 21: $1,900,496.38
Year 22: $2,470,645.29
Year 23: $3,211,838.88
I’d say that’s not bad – all done without leaving your chair! A lot of you will be somewhat awestruck as to how I can possibly suggest a 30% rate of return – but I assure you, making 30% returns is completely average. My stock portfolio is currently making a return of 144% – and if I can achieve returns like that then anyone can.
Also, just to see what’s out there, let’s see what your initial $10,000 investment could have grown into if it were sitting in a savings account at a bank (nowadays the interest rate you get is around 1% but let’s be generous and assume an interest rate of 3%):
Year 1: $10,000.00
Year 2: $10,300.00
Year 3: $10,609.00
Year 4: $10,927.27
Year 5: $11,255.09
Year 6: $11,592.74
Year 7: $11,940.52
Year 8: $12,298.74
Year 9: $12,667.70
Year 10: $13,047.73
Year 11: $13,439.16
Year 12: $13,842.34
Year 13: $14,257.61
Year 14: $14,685.34
Year 15: $15,125.90
Year 16: $15,579.67
Year 17: $16,047.06
Year 18: $16,528.48
Year 19: $17,024.33
Year 20: $17,535.06
Year 21: $18,061.11
Year 22: $18,602.95
Year 23: $19,161.04
Now do you see the value of investing in the stock market?
What if you don’t have a lot of money to invest?
If you don’t have millions of dollars to invest (or even a few thousand) all hope is not lost. Although it is true that it’s better to invest a large chunk of money at once (mainly due to commissions {more on that later} as well as due to market timing), investing small amounts of money periodically is better than nothing.
Here are some numbers that will help you sleep at night:
If you invest one dollar a day ($365 a year) starting today, growing at a rate of return of 30% a year, you end up with: a bit over $20,000 in ten years, a tad under $300,000 in twenty years and over $4 million in thirty years – or you can buy a chocolate bar a day for the next thirty years, be $11,000 poorer and be 730 pounds heavier.
If you invest $100 a month ($1200 a year) growing at 20% annually, you will have $37,850 in ten years, a bit under $270,000 in twenty years and just over $1.7 million in thirty years.
If you invest $300 a month ($3600 a year) growing at 25% annually, you will have $150,000 in ten years, a bit over $1.5 million in twenty years and $14.5 million in thirty years.
Of course, as I mentioned earlier, the rates of return mentioned above are averages and there will always be down years where you aren’t able to make nearly as high of a return – then again there will also be years you will make returns many times more than that.
Closing Thoughts
The most important thing to remember about the stock market is that the longer your money is invested, the more it grows thanks to compound interest. That’s why it’s so important to start investing your money as early as possible, especially when you see by how much your money grows in the later years.
It’s also important to remember, investing doesn’t have to be a full time job. You can still keep your lucrative job as a potato peeler and do what you love; your money will still be working for you. Of course, it takes some time to research the stocks you are going to buy and then a few hours out of your week to keep up with the latest news.
Then again, it’s better than mowing lawns or sweeping floors.
Mr. Moneybags is the richest being in the universe to ever have existed and ever to exist. He writes about building wealth in the stock market, business and personal finance on his blog and is determined to prove that the subject of money shouldn’t make you want to douse yourself in gasoline and run into a forest fire.
You can find more of his amazing articles on his blog at http://www.BigFatMoneybags.com
Infamous investor, Warren Buffett, thinks investing is so easy, even kids can do it. This video is a courtesy of PBS show Money Track. Check out their website at www.moneytrack.org.
