Money Matters

The Essential Dos and Don'ts in Money Making : This blog strives to provide CRITICAL INSIGHTS and knowledge on wealth creation. Since no effort is free of mistakes, or,can be fool proof, the primary condition, always, is - that Reader must take total responsibility on himself for investments or other use he makes of info on this blog by making sure of the info from other sources too. The blog will remain receptive to any corrections, comments, suggestions etc from readers.

Friday, February 5, 2010

INVESTOR EDUCATION = INVESTMENT STRATEGIES OF WARREN BUFFET ( POST NO.4)

INVESTOR EDUCATION SERIES

WARREN BUFFET'S

INVESTMENT STRATEGIES

Let continue with my analysis of Warren Buffet's Investment strategies.

Be a great reader, a voracious reader, of all the authentic material available on the businesses and Industries you are investing in.
There are excellent business and financial newspapers, magazines and books for the purpose. The annual reports and quarterly results etc are a great source. Now, the Net also provides lot of material.Buffet also reads about the competitor firms. Then, he thinks and waits for an appropriate time to make his investment.
He also advises - select the material to read. You don't have infinite time to go on reading. He advises not to waste much time on reading market forecasts, formula based constructs and theories. Instead, find, real, solid material on the business progress. Dig deep into real, useful, understandable material.
To be a good long term investor, he advises us to avoid bad habits and cultivate good habits. Most of these good habits are covered in the blog posts so far. we need to make them our HABITS. So, is the case with the bad habits. We need to eschew them.
He says, avoid the Herd behaviour. Ignore daily stock tips of others. Forget about daily stock price movements. Avoid Industries you do not understand. Buy when other people are running away from Market. Remember Mr. Marker and margin of safety.
The costs associated with investment must be carefully considered always. You must assess your net return.
You must be on the look out for what types of mistakes others are committing and refrain from committing such mistakes yourself. You investment decisions must yield a net profit to you commensurate with your reasonable expectation.
Be a good and sound investor, not necessarily a brilliant one.Your investments must earn a decent profit and capital appreciation - but must not become losing ones.
Every one should preferably write down such investment related good habits, read them periodically and adhere to them - for success.

Good Luck to all the readers!

Other Articles in CUSTOMER EDUCATION SERIES can be read at the following URLs :

1. 1. MONEY FASCINATES:

http://wiseinvestmentideas.blogspot.com/2010/01/money-fascinates.html

2. MARKET INVESTMENT : ESSENTIAL RULES FOR SUCCESS:

http://wiseinvestmentideas.blogspot.com/2010/01/stock-market-investment-essentail-rules.html

3. SELECTING A GOOD SCRIP FOR INVESTMENT

http://wiseinvestmentideas.blogspot.com/2010/01/selecting-good-scrip-for-investment.html

4. INVESTMENT STRATEGIES OF WARREN BUFFET: (5 ARTICLES)

http://wiseinvestmentideas.blogspot.com/2010/02/investment-strategies-of-warren-buffet_05.html

http://wiseinvestmentideas.blogspot.com/2010/02/investment-strategies-of-warren-buffet_04.html

http://wiseinvestmentideas.blogspot.com/2010/02/investment-strategies-of-warren-buffer.html

http://wiseinvestmentideas.blogspot.com/2010/02/investment-strategies-of-warren-buffet.html

6. WORDS OF WISDOM FROM WARREN BUFFET:

http://wiseinvestmentideas.blogspot.com/2010/05/warren-buffet-wisest-stock-market-guru.html

7. DOLLAR (RUPEE) COST AVERAGING :

http://wiseinvestmentideas.blogspot.com/2010/05/win-with-dollar-rupee-cost-averaging.html

8. PRICE TO EARNINGS RATIO :

http://wiseinvestmentideas.blogspot.com/2010/05/price-earnings-ratio-investor-education.html

9. GROWTH STOCKS vs VALUE STOCKS :

http://wiseinvestmentideas.blogspot.com/2010/06/growth-stocks-value-stocks-two-great.html

10. CANSLIM TECHNIQUE :

http://wiseinvestmentideas.blogspot.com/2010/06/investor-education-canslim-technique.html

11. PRICE TO BOOK VALUE RATIO

http://wiseinvestmentideas.blogspot.com/2010/11/investor-education-series-price-to-book.html

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Thursday, February 4, 2010

INVESTOR EDUCATION = INVESTMENT STRATEGIES OF WARREN BUFFET ( POST NO.3)

INVESTOR EDUCATION SERIES

WARREN BUFFET'S

INVESTMENT STRATEGIES

Following are a few more ideas of Warren Buffet on Investment Strategies :

Think independently. Warren Buffet lays great stress on INDEPENDENT THINKING, ANALYSIS AND DECISION. Our decisions must not be based on what others think.
His mentor Ben Graham, whom he adores, says, " you are neither right nor wrong because people agree with you.You're right because your facts and your REASONING are right."
Warren Buffet, is almost allergic to following the crowd. But, at the same time, he does not go mindlessly against the CROWD BEHAVIOUR. There is never ever popular wisdom in stock market. it is always INDEPENDENT WISDOM.
Get your facts, analyze and act. This is the Simple Investment strategy to follow.
Develop a level of competence in certain Industries and stay within your CIRCLE OF COMPETENCE. Do not stray away, outside the circle of your competence. But, by all means, study the industries and businesses within your circle of competence thoroughly.
You may be ruling out 90 percent of businesses in the process. But, you will be making excellent investments in the businesses in the circle of your competence.
Ignore stock MARKET FORECASTS - especially of the short term variety. Instead, concentrate on analyzing the businesses you are in, or want to be in. Most forecasts show a lot of data seemingly supporting them.But, most of them are unaware of the forces acting beyond that data.
Develop an investment strategy that does not depend on the overall movement of the market.
There can be no precision forecasts in a volatile market. Be skeptical about all such forecasts.
Ben Graham taught warren 3 concepts which he follows well. (i) Mr.Market (ii) Margin of Safety, and (iii) stock is a part ownership of a business.
Mr.Market is almost manic-depressive always. He feels euphoric on one day when the prices have risen. He feels depressed on the day when prices have fallen. He comes up with stock quotes every day and with its associated mood. Read the mood of the Mr.Market by all means.Act in ways that take into account this mood. But,do not get swept away in the mood yourself. Never fall under the influence of Mr. Market. Exploit Mr. Market, but do not get into his moods.
Margin of Safety implies - that your stock BUYs are at a price substantially lower than the value of the Business. Warren Buffet talks of buying a Dollar Bill at 40 cents in the stock market. In ensuring this margin of safety, Mr.Market must be your servant rather than your guide.
Margin of safety depends on Intrinsic value, which again depends on factors like variability of interest rates etc and is a subjective estimate to some extent.
Wait for Mr. Market to get depressed sufficiently, so that your Margin of safety arrives. Then, seize your BUYING OPPORTUNITY.
Be fearful when others are greedy and Greedy when others are fearful, says Warren Buffet. People do become greedy, fearful or foolish - and are unpredictable. Do not make investments when stock prices are rising irrationally. The irrational mood swings affect market professionals as much as it affects other investors.
Buy when people are selling - at lowering prices. SELL when people are buying - at rising prices. This is your opportunity.

Good Luck, Readers!

Other Articles in CUSTOMER EDUCATION SERIES can be read at the following URLs :

1. 1. MONEY FASCINATES:

http://wiseinvestmentideas.blogspot.com/2010/01/money-fascinates.html

2. MARKET INVESTMENT : ESSENTIAL RULES FOR SUCCESS:

http://wiseinvestmentideas.blogspot.com/2010/01/stock-market-investment-essentail-rules.html

3. SELECTING A GOOD SCRIP FOR INVESTMENT

http://wiseinvestmentideas.blogspot.com/2010/01/selecting-good-scrip-for-investment.html

4. INVESTMENT STRATEGIES OF WARREN BUFFET: (5 ARTICLES)

http://wiseinvestmentideas.blogspot.com/2010/02/investment-strategies-of-warren-buffet_05.html

http://wiseinvestmentideas.blogspot.com/2010/02/investment-strategies-of-warren-buffet_04.html

http://wiseinvestmentideas.blogspot.com/2010/02/investment-strategies-of-warren-buffer.html

http://wiseinvestmentideas.blogspot.com/2010/02/investment-strategies-of-warren-buffet.html

6. WORDS OF WISDOM FROM WARREN BUFFET:

http://wiseinvestmentideas.blogspot.com/2010/05/warren-buffet-wisest-stock-market-guru.html

7. DOLLAR (RUPEE) COST AVERAGING :

http://wiseinvestmentideas.blogspot.com/2010/05/win-with-dollar-rupee-cost-averaging.html

8. PRICE TO EARNINGS RATIO :

http://wiseinvestmentideas.blogspot.com/2010/05/price-earnings-ratio-investor-education.html

9. GROWTH STOCKS vs VALUE STOCKS :

http://wiseinvestmentideas.blogspot.com/2010/06/growth-stocks-value-stocks-two-great.html

10. CANSLIM TECHNIQUE :

http://wiseinvestmentideas.blogspot.com/2010/06/investor-education-canslim-technique.html

11. PRICE TO BOOK VALUE RATIO

http://wiseinvestmentideas.blogspot.com/2010/11/investor-education-series-price-to-book.html

* * * E N D * * *

INVESTOR EDUCATION = INVESTMENT STRATEGIES OF WARREN BUFFET (POST.NO.2)

INVESTOR EDUCATION SERIES

WARREN BUFFET'S

INVESTMENT STRATEGIES

We will continue with the ideas of Warren Buffet on Investment strategies :

Some times, the market goes through huge downturns. Characteristically, the majority starts deserting even good stocks and these become available at low prices. What do you do? Warren says - market downturns are not body blows to you. They are BUYING OPPORTUNITIES.
When herd starts running away from good stocks, get ready to run towards them. Market gets into this sort of PANIC situations periodically. That is the time you profit from it. Learn to like a bear market. Search for value in it.Warren says - INVESTORS DON'T LOSE WHEN MARKETS FALL - ONLY "DISINVESTORS."
To be a successful investor, you don't have to make a large number of Investment Decisions. One good decision for one year is a high standard, feels Warren. This is enough to guarantee success. You don't have to predict every stock's future. But, what you predict, let it be thorough. Them you won't make risky investments. This itself guarantees success.
Warren frankly admits his omissions and commissions, from which he learns lessons very clearly. He says, BE DISCIPLINED to wait patiently for a good company, with a good business under a good management, which is selling at a discounted price. Go for it. It calls for patience. You only need a few good investments for great success.
Concentrate on the MICROs, the business specific matters that count. Do not worry too much about MACROs, unless they are usiness specific. Our economic indicators, deficits, monetary policies and so on - do not bother much about them. You must be a business analyst - not a great national analyst, not a great economist. But, such macro events do create opportunities for you. Look for those business opportunities.
Always go for GOOD MANAGEMENTS. Find, who is in charge. Do not go for untrustworthy managements. Do the managements really care for all shareholders? Are their annual reports transparent and frank? Study these aspects very carefully. You can't make a good deal with a bad person, though you can make a bad deal with a good person.
This means, avoid poor businesses, even those having great managements.There are, of course, no great businesses with bad managements.Avoid companies who are frequently committing malpractices.
Stock market, feels Warren Buffet, is the only place where people go to in Rolls Royces to get advice from people who take the subway. Too many ideas are always floating from so many experts,every day, minute by minute about buying opportunities and selling opportunities.If these are so wonderful opportunities, why are so few people profiting from them?
Instead of charts, technical analysis etc, Warren Buffet prefers to FOCUS ON THE VALUE of the business.All mutual funds say in small, fine print that our past performance is no guarantee of future success. If history revealed the path to riches, librarians would be rich.
Good Luck to all readers!