Jun 18, 2015 01:24 PM
2213 Views
One of the best book to read on simple principals in life and investment style of the greatest and richest investor of the world Warren Edward Buffett, born August 30, 1930 in Omaha, Nebraska, . Mr.Buffett is an amazing man.
His life style is simple, not like a typical billionaire .The company he directs, Berkshire Hathaway, is head-quartered in Omaha Nebraska. Buffett still lives in same old house in Omaha, he drives his own old car and does his own taxes.He is honest, kind and gracious .He is very intelligent, quick and intuitive with great warmth and genuine charm.
His personal net worth above$70 billion, still his philosophy of life is to live a simple life, buy only things which you need not what you want, other wise one day you have to sell what you need. Robert G.Hagstrom other books are Warren Buffett Portfolio: Mastering the power of focus investment strategy.and The Nascar way: the business that drives the sport.
Warren Buffett never invests in business that he can not understand or that are outside his circle of competence, like commodity business like Airlines, Textiles, Technology, All transports like automobiles, all metals like steel, copper Minerals like coal, gold, etc .
The problem with commodity business are they can not be differentiated from one other, are competitive and have to reduce prices consistently.You can not differentiate from which brand of cloth you are wearing, than business like textile or airlines, need lot of capital to maintain them, like new planes or textile machines than many workers and airline staff, and during a recession their demand is reduced as you will not buy a new car when money is less liquid.
Warren only buy business with consumer-monopoly, a brand name, a franchies business which people need for daily use and can not live with out them, like food, shaving blades like Gillette, newspaper like Washington post, media, fast food , beverages like coca-cola, credit cards like American express, banks like Well fargo, Insurance companies like Geico Pharma like Merck. Warren is influenced by the father of value investing Benjamin Graham and his book The intelligent investor which he read when he was 11 years old .
He buys stocks of business that he understand, have a good brand name and managed by honest managers and are under his Circle of competence, and are available at very low price below their intrinsic value, to give you a Margin of safety . A no nothing small investor according to Warren Buffett will do better by investing in low cost index funds for the long term, buying when markets are on sale 50%down, due to panic selling and holding forever.
