Warren Buffett's Investment Wisdom

This assignment delves into the investment strategies of renowned investor Warren Buffett. It analyzes his key principles, including focusing on value over price, investing in established businesses, and utilizing low-cost index funds. The text highlights Buffett's emphasis on long-term growth and patience in the stock market, urging investors to avoid chasing short-term gains and instead seek sustainable returns.

INTERESTING FACTS
ABOUT WARREN BUFFET
AND DISCUSSION ON
SUCCESSFUL INVESTMENT

Table of Contents
INTRODUCTION 3
WARREN BUFFET-SOME INTERESTING FACTS………………………………………………………………….3
KEY POINTS RELATED TO SUCCESSFUL INVESTMENT 5
CONCLUSION……………………………………………………………………………………………………………………………………..6
REFERENCES………………………………………………………………………………………………………………………………………7
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INTRODUCTION
WARREN BUFFAY-SOME INTERESTING FACTS
Warren Buffett, one of the most dominant investor around the globe was born on 30th August,
1930. At present he is working as the CEO of Berkshire Hathaway and is commonly referred
as the “Oracle of Omaha”. He is solely responsible for the overall growth of the company and
for it to become one of the biggest conglomerates internationally with over 60 companies
together with Duracell, Dairy Queen and Geico. Globally, he is the second wealthiest with
the net worth of around $76.9 billion. At the early age of 11, he started trading in share
market and was an official taxpayer by the age of 13 proving his passion for tax
effectiveness. By the time he turned 16, he made huge revenue which is around $53,000 in
current dollars (Elkins, 2015). During his teenage days, he made more money than his teachers
and seniors by doing few businesses such as paper delivery, selling stamps and old golf balls
etc. Considering his huge success, no one can ever imagine that he was refused admission at
the Harvard University and chose Columbia University where his icons Benjamin Graham
and David Dodd were teaching. Since he was not Jewish, Benjamin Graham refused to
employ him for a particular post. But he was persistent. Being reluctant at public speaking, he
took a Dale Carnegie course on the same of around $100 at the age of 21.
One more interesting fact about Warren Buffett is that despite of being a billionaire, he has
been residing in the same house in Omaha since 1958 which he initially bought for around
$31,500. In this era of advanced technology, he still makes use of Nokia flip phone instead
of smart phone and doesn’t makes use of computers and internet which is clear from the fact
that he has mailed only once in his entire life which was sent to Jeff Raikes of Microsoft and
ended up in controversy(Kirkham, 2014). He spends around 12 hours in a week to play
bridge. He is an avid reader and spends most of his time reading. He follows unhealthy
lifestyle in terms of eating and drinking coke. With a 9.3% share, his company is the biggest
shareholder in Coca Cola (Leadem, 2016). Inspite of the fact that he had always been
victorious, his net worth was $3.8 billion more on his 60th birthday which shows that around
94% of his capital was gained much later in his life. The GDP of Uruguay is projected to be
lower than his net value. Not only is he recognized as a successful investor but is also
considered as a generous donor. He created The Giving Pledge in the year 2010 together with
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Bill and Melinda Gates to request richest group globally to donate greater part of their assets
for good and social cause. In the year 2016, he promised to contribute 85% of its company’s
shares steadily to charitable organizations. Because of his generosity, he has been recognized
with the “Presidential Medal of Freedom” which is the biggest national award. He also has
contributed huge amount to The Apple Campus.
Buffett has always been exceptional in his performance. He stands at number one and has the
biggest record in thrashing the market amongst all the top investors (Holodny, 2014).
Berkshire Hathaway is the biggest investor with 24% shares in The Washington Post (WPO)
as Buffett has always been connected with the company from his high school days (Reed,
2011). In relation to shares and stock market, Buffett has always followed a straightforward
and uncomplicated approach. Instead of possessing numerous of diverse securities, his
company comprises of shares from around 30 companies inclusive of American Express,
Johnson & Johnson, Kraft, Wells Fargo, Procter & Gamble, Coca Cola, Wal-Mart and
ConocoPhillips. With his philosophy of relating success with love rather than money, it
makes him more appealing and renowned worldwide and is so popular that people pay in
millions just to have food with him. The investing magnate splurges economically although
he receives around $100,000 from his company yearly. Being guided by his own certain
principles which he uses in investment, he has given some really interesting and motivational
quotes related to the same. One such quote is: “Accounting is the language of business,
and you have to learn it like a language… To be successful at business, you have to
understand the underlying financial values of the business.”
KEY POINTS RELATED TO SUCCESSFUL INVESTMENT
Warren Buffet gives exceptional advice on successful investment. First and the most
important advice given by him is that if one cannot perceive a particular business, no
investments should be made in that business. An individual working in an organization will
have more knowledge about its business and related companies in that area. However, the
investment market is huge with diverse companies and it is very difficult to know and predict
each and every company’s future prospects in shares. According to him, it is not possible to
have a view for the whole market. Thus, even if one is investing in such field, it should be
done with alertness. This is proven in case of Warren Buffett as he has always been reluctant
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in investing in technology field with an exception of IBM (ValueWalk, 2017). Another
important advice that he gave was relating to the quality of business. There should not be any
negotiation in the quality of business. Having an experience of over 50 years, he believes that
high class companies give more development opportunity in future than the low class ones.
This he learnt by wrongly investing in low priced texting industry long time back. Hence,
investment should be made in high quality companies for long term and steady returns.
Return on invested capital is the best way to judge the company’s quality.
Moving further, Buffett always had a concerted group of shares. He gives valuable direction
to investors to keep on to their shares for the entire life. It is difficult to find a suitable good
quality business to invest and such business provides good prospects for future and increases
its worth with the course of time. Also, rudiments take time for the share prices to be
favourable. Further, continuous trading in securities may incur lower profits as major
earnings will be lost in duty and commission (Simply Safe Dividends, 2016). Thus,
investment is the game of persistence. Hence, one should plan to hang to their shares rather
than planning to invest for a specified period of time. Further, he guides that a person should
not possess more than 20 to 40 securities in diverse companies to have favourable returns.
Before investing one should take into contemplation constructive long-standing monetary
distinctiveness, fair and competent administration, striking purchasing control in opposition
to worth and knowledge about the company. Hence, it is better to be conservative and
investing in few companies rather than owning large number of stocks. As by investing in
diversity, one may loose on to profits by investing in few average industries.
The investing tycoon also enlightens investors with a significant opinion on monetary news
that impacts them. He guides that one should not pay much attention to the news as a person
invests in a particular company for a long period of time and it is bound to have some minor
and major fluctuations. However, one should clearly understand what impact fiscal news
have on them in long term as almost all news is clamour which is proven in his case as he did
not sell coke’s shares despite of the reports of company’s shares dropping by 4% due to
momentary causes. Further, as per him investment is not at all straightforward, but at the
same time it is not that complicated. It is not a simple game wherein a person always wins
with approving results. Also, one should not get tricked by people who pronounce to have
full knowledge about the stock market. Moving forward, he adds, an individual should have
the capability of differentiating amid price and value as price is what an investor is paying
and value is the return of the investment. Stock market is always fluctuating but it not
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necessarily has a long term effect. According to the billionaire, it is better to invest in
companies who are established than in stirring companies which are trying to establish
themselves. It will be more rewarding to gain profits with the course of time. Hence, it is
constructive to follow an uninteresting path with slow and steady growth. He also believes
that it is more advisable to invest more in low-cost index funds than in any government fund.
Lastly, he counsels to invest in truthful and experienced organization.
CONCLUSION
At the end, we conclude that Warren Buffett has given some useful and experienced insights
on investment. Every investor should follow them for positive returns. Undoubtedly, he is
one of the most popular and successful personalities around the world. Not only is he a
victorious investor, but also a great philanthropist. He is known worldwide for his charitable
work. As per him, one should not invest in a hurry, should always invest in high quality
business for lifetime, should invest in few known companies without paying much attention
to financial news, should be able to differentiate amid price and value, should not be attracted
by new and thrilling companies and should invest in low-index funds. By following his
guidance any investor can become successful.
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REFERENCES:
Kirkham, E. (2014). 21 Surprising Facts You Never Knew About Warren Buffett. Retrieved
from https://www.gobankingrates.com/net-worth/21-fun-never-knew-warren-buffett/
Elkins, K. (2015). 22 mind-blowing facts about Warren Buffett and his wealth. Retrieved
from http://www.businessinsider.in/22-mind-blowing-facts-about-Warren-Buffett-
and-his-wealth/articleshow/49082296.cms
Leadem, R. (2016). 24 Surprising Facts About Warren Buffett. Retrieved form
https://www.entrepreneur.com/article/290381
Holodny, E. (2014). 17 facts about Warren Buffett and his wealth that will blow your mind .
Retrieved form https://finance.yahoo.com/news/warren-buffett-facts-about-his-
wealth-193006548.html
Reed, B. (2011). 10 Warren Buffett Facts You Won’t Believe Are True. Retrieved from
http://www.nasdaq.com/article/10-warren-buffett-facts-you-wont-believe-are-true-
cm97581
ValueWalk. (2017).Top 10 Investment Tips from Warren Buffett- the Most Successful
Investor in the World. Retrieved from https://www.valuewalk.com/2017/03/top-10-
investment-tips-warren-buffett-successful-investor-world/
Simply Safe Dividends (2016). Warren Buffett’s Top 10 Pieces of Investment Advice.
Retrieved from https://www.simplysafedividends.com/warren-buffett-investment-advice/
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