Tag Archives: Tao of Warren Buffet

TAO OF WARREN BUFFET #5.

Every person should read this wisdom’s of Warren Buffet , It may be related to his business of buying & selling companies ,but the morals can be taken & used in our personal & professional life’s also, there are total 125 Wisdom’s ,I am writing 1 every other day.

Competitive-advantage
Competitive-advantage

The great personal fortunes in this country werent built on a portfolio of fifty companies.they were built by someone who identified one wonderful business.If you do a survey of the superrich families in America,you will find that almost without exception their fortunes were built on one exceptional business,The Hearst family made their money in Publishing,The Walton family in Retailing,the Wrigley family in chewing gum, The ,Mars family in Candy, The Gates family in Software’s,and The Coors and Butch family in Brewing. The list goes on and on,  and almost without exception,anytime they strayed from that wonderful business that made them so amazingly rich,they ended up being rich, they ended up losing money- as when CocaCola got into the movie business.

The key to Warren sucess is that he has been able to identify exactly what the economic characteristics of a wonderful business are- a business that has a durable competitive advantage that owns a piece of the customers mind.when you think of Gum you think of Wrigley,when think of a Discount Store you think of Walmart. And when you think of Cold beers you think of Coors or Budweiser.this elevated position creates their economic power.warren has learned that sometimes the shortsighted nature of the stock market grossly undervalues these wonderful business,and when it does he steps up to the plate and buys as many shares as he can.warrens company ,Berkshire Hathway,is a collection of some of the finest business in America,all of which are super profitable and were bought when wallstreet was ignoring them.

TAO OF WARREN BUFFET #3

Ask too much
Ask too much

Never be afraid to ask for too much when selling

or offer too little when buying.

Warren understands that people fear embarrassment if they ask too high a price when selling or offer too low a price when buying.No one wants to be seen as greedy or cheap.Simply stated,in the world of business,how much money you get from a sale or how much you have to pay when making a purchase determines whether you make or lose money and how rich you ultimately become.Once negotiations begin,you can come down in your selling price or up in your buying price.But its impossible to do the opposite.

Warren has walked from many a deal because it failed to meet his price criteria.Perhaps the most famous example was his Capital Cities purchase of ABC .Warren wanted a larger share of the company for his money than Capital Cities was willing to part with-so he walked from the deal.the next day Capital Cities caved in and gave him the deal he wanted.Ask and you might just receive,but if you don’t ask…..

TAO OF WARREN BUFFET #2

Patience
Patience

I made my first investement at the age of eleven,

I was wasting my life up until then.

It is good to find ones calling early in life,& in the field of investing it allows for unparalleled opportunities for the magic of compounding sums of money to work. The time to gamble is not when one is young ,when there is so much time ahead to profit from wise decisions.

The stock that warren bought when he was eleven was in an oil company called City Services .He bought three shares at 38$ ,only to watch  it to sink it to 27$. He sweated it out and ,after it recovered ,sold it at 40$ a share. Shortly thereafter ,it soared to 200$ a share he learned his first lesson in investment – Patience.

Good things do come to those who wait  – provided you pick the right stock.

TAO OF WARREN BUFFET.#1

Never_lose_money
Never_lose_money

Rule No 1 : Never lose money.

Rule No  2 : Never forget rule No 1 .

The great secret to getting rich is getting your money to compound for you ,and the larger sum you start with,all the better .As an example : $100,000 compounding at 15% for twenty years will grow to $1.636,653 in year twenty ,which gives you a profit of $1,536,653. But lets say you lost $90,000 of your initial capital before you even started and could only invest $10,000. Your investment would then grow to $163,665 in year twenty, for a profit of $153,665. This is a much smaller number.The larger the amount of money you lose,the greater the impact on your ability to earn money in the future. That is something that Warren has never forgotten. It is also the reason why he drove an old VW Beetle long after he was a multimillionaire.