Thursday, February 4, 2010

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!


Other Articles in CUSTOMER EDUCATION SERIES  can be read at the following URLs :
1.    1. MONEY FASCINATES:


2.  MARKET INVESTMENT : ESSENTIAL RULES FOR SUCCESS:


3. SELECTING A GOOD SCRIP FOR INVESTMENT


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


6. WORDS OF WISDOM FROM WARREN BUFFET:


7. DOLLAR (RUPEE) COST AVERAGING :


8. PRICE TO EARNINGS RATIO :


9. GROWTH STOCKS vs VALUE STOCKS :


10. CANSLIM TECHNIQUE :


11. PRICE TO BOOK VALUE RATIO



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1 comment:

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