Timeless investment advice from Warren Buffet

Tue, Feb 22, 2011

Financial Advice, Investment

Warren Buffett is a billionaire investor, a businessperson and one of the humanity’s greatest philanthropists. He is also the second or third richest man in the world and a guru to millions of investors of all flavours.

His philosophy of value investing has been shown conclusively to work in all types of markets and financial environments, and has never gone out of style. Following his simple strategies, he has built the holding company Berkshire Hathaway to an investment vehicle with a market value of $196 billion. As the largest shareholder and CEO, his net worth is about $52 billion. Warren Buffett made his reputation as the “world’s greatest investor” by taking the long view, buying quality stocks with good earnings power and staying with them through both bull and bear markets. Here’s his simple investment advice:

  • Is the company in an industry with good economics, rather than in an industry that competes on price.
  • Does the company have a consumer monopoly or brand name that commands loyalty?
  • Can any other company with an abundance of resources compete successfully with it?
  • Are the earnings on an upward trend with good and consistent margins?
  • Is the debt-to-equity ratio low or is the earnings-to-debt ratio high? This means that the company can repay its debt even in years when earnings are lower than average.
  • Does the company have a high and consistent return on invested capital?
  • Does the company retain earnings for growth?
  • Does the company reinvest earnings in good business opportunities? Does management have a good track record of profiting from these investments?
  • Is the company free to adjust prices for inflation?
  • He also asks at what price is the business a bargain. The answer is when it provides a higher rate of compounded return relative to other available investment opportunities.

What do you think of Warren’s advice? Can you see how you can use it in your own investments? Let us know below.

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7 Responses to “Timeless investment advice from Warren Buffet”

  1. Carlos Lopez Says:

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  2. Mahendra Jain Says:

    Dear Sir, I need the financial help will you be in position to do help me.

    Reply

  3. Philip Malmstedt Says:

    Mr. Warren Beffett,

    I need your help to understand how successful I grow more cash. I am the deaf person, 45 years old, the homeowner, the father of two. I do not know how to grow investment. I need to get your advice I can learn more how to make more money. I prefer the basic step by step you give me more. I do not like the tight budget I made so far. I want to profit more money in my pockets. I want to invest money for my children to get education in the college when the children will graduate in the future. I’d be happy to hear from you soon.

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  4. Melissa Says:

    Dear Mr. Buffet,

    I am in my first year at Fontys Eindhoven, attending an International Business and Management course. One of the classes that I am struggling with at this moment involves basic finance and accounting. If there is any possiblity that you could help me out, that would be very much appriciated.

    Kind Regards,

    Melissa Olson

    Reply

  5. Arnaldo Loureiro Says:

    Dear Mr. Buffet,

    I would like to no if you can help me to start my own buisness.
    I have not the equity needed for the start.
    I have projects for green energy in Europe.
    The buisness is very good and guaranteed with public contract.
    If you can help me to start one of it i would be very mouch pleased with tour atention.

    Best Regards
    A. Loureiro

    Reply

  6. Arnaldo Loureiro Says:

    Dear Mr. Buffet,

    I would like to no if you can help me to start my own buisness.
    I have not the equity needed for the start.
    I have projects for green energy in Europe.
    The buisness is very good and guaranteed with public contract.
    If you can help me to start one of it i would be very mouch pleased with your atention.

    Best Regards
    A. Loureiro

    Reply

  7. omar bakr Says:

    i think network marketing industry is the best invesment you made . it’s time for BoooMing

    Reply

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