Warren Buffett

Thursday, 5th May 2016

2016 Annual Berkshire Hathaway Shareholder’s Meeting

Written by George Traganidas Topics: Presentations, Stock Investing, Wealth Building

Berkshire Hathaway meeting

Berkshire Hathaway held its 51st shareholder’s meeting in Omaha on Saturday 30th of April. This was the first year that the meeting was also broadcast live through Live Feed Video and it will be available for 30 days after the meeting. This caused a drop in the number of people who attended the meeting this year in Omaha, because they could watch the event from home.

Here follow my notes from the meeting. The notes will not cover all the topics and they are my attempt to summarise their most important points.[…]

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Friday, 29th May 2015

What makes Berkshire Hathaway special?

Written by George Traganidas Topics: Stock Investing

Charlie Munger

This years shareholder’s letter included for the first time a piece that was written by Berkshire Hathaway’s vice-chairman Charlie Munger. In his letter Charlie, reversed engineered the culture of Berkshire; how it operates and how it is run. He explains that all this was not based on any grand design or blueprint that Warren devised 50 years ago, but something that grew organically. Here is what Charlie has to say:

The management system and policies of Berkshire under Buffett (herein together called “the Berkshire system”) were fixed early and are described below:

(1) Berkshire would be a diffuse conglomerate, averse only to activities about which it could not make useful predictions.[…]

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Tuesday, 26th May 2015

Investment advice from Warren Buffett

Written by George Traganidas Topics: Personal Finance, Stock Investing, Wealth Building

Warren Buffett

A lot of people are still wondering where they should invest their money. Should they buy some stocks or are they too risky and they should invest in bonds instead. In his speeches and writings Warren Buffett has always said that a diversified portfolio of American businesses will provide the best long term results as long as the investor buys and holds wonderful businesses for the long term. His approach is simple so anyone can follow it and it delivers results with minimum supervision over the investments and minimum loss of sleep. He has followed his own advice and over 50 years it has helped him to build Berkshire Hathaway into a successful holding company. He is a man who follows his own advice. […]

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Tuesday, 5th May 2015

2015 Annual Berkshire Hathaway Shareholder’s Meeting

Written by George Traganidas Topics: Presentations, Stock Investing, Wealth Building

Berkshire Hathaway meeting

This time every year thousands of people from all over the world are gathering in Omaha to hear the words of Warren Buffett and his partner Charlie Munger. This year the crowd was about 44,000 people and they were not disappointed. The meeting started at 8:30 with the annual movie and at about 9:00, Warren and Charlie started the Q&A session. They answered question for about six hours on every topics. As always no questions were off limit.

Here follow my notes from the meeting. The notes will not cover all the topics and they are my attempt to summarise their most important points. […]

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Sunday, 3rd May 2015

Who will succeed Warren Buffett?

Written by George Traganidas Topics: Stock Investing

Warren Buffett

This is the question that many shareholders are asking every year. Berkshire Hathaway has grown from a small textile company to the 4th largest US company under the leadership of Warren Buffett and his partner Charlie Munger. Now, a lot of people fear that when the two great leaders are not running the company any more, this great story will come to end, because in many people’s eyes Berkshire Hathaway is Warren Buffett. This is a valid concern. Or is it not?

As Charlie once said, when asked about the future of Berkshire, “If your main concern in life is who will succeed Warren then you have any easy life”. […]

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Sunday, 18th May 2014

2014 Berkshire Hathaway Annual Shareholder meeting notes and more

Written by George Traganidas Topics: Presentations, Stock Investing, Wealth Building

Berkshire Hathaway meeting

On Saturday 3rd of May I joined almost 38,000 other “students” to attend the master class for investors that is the Berkshire Hathaway annual meeting. People started queuing at 2:30 am on Saturday in order to get a front seat to listen to Warren Buffett and his partner Charlie Munger. A student was paid $100 to start queuing at 3:00 am for a shareholder who arrived at 7:00 am to take his place in the line. As per usual, Warren Buffett and his long time business partner Charlie Munger sat on stage in Omaha, Nebraska, for over five hours answering questions from reporters, financial analysts, and Berkshire shareholders. Many shareholders had travelled great distances to be part of the weekend.[…]

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Wednesday, 12th March 2014

Lessons from Warren Buffet’s 2014 letter to shareholders

Written by George Traganidas Topics: Property Investing, Stock Investing, Wealth Building

Warren Buffett

On Saturday 1st of March, Warren Buffet released his 2013 annual letter to shareholders of Berkshire Hathaway. As always his letter is a great read, because it does not only tell you about his company but also gives general advice on investments and finance. He has been helping people for years to better understand the investment process and what they should look for and what to avoid. His insights on how to value companies are priceless. In addition, he sometimes gives general finance advice to help people who are not investment professionals themselves and they just want to look after their wealth and grow it.[…]

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Saturday, 23rd March 2013

How to value a business

Written by George Traganidas Topics: Stock Investing, Wealth Building

There seems to be a lot of confusion and discussion on how to value a business and determine what is a fair price to pay. If you are wondering whether to buy a share or the whole business you must be able to answer a simple question. How much is the value of the business and is the current price fair? After all a stock is part ownership of a business.

So let’s start from the beginning. Valuing a business is an eight step process and it takes time and effort.[…]

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Saturday, 12th May 2012

Berkshire Hathaway shareholders meeting 2012

Written by George Traganidas Topics: Seminars, Stock Investing, Wealth Building

Warren Buffet

Last weekend I went to Omaha for the annual Shareholders meeting of Berkshire Hathaway. It was an opportunity to see and hear Warren Buffet and Charlie Munger speak live and answer questions for more than 5 hours. It is a great experience and really well worth it.

On Friday evening, there were welcome drinks with food and a live band at Borsheims. It attracted a big crowd and it was a great place to socialise and meet fellow shareholders. Some of them have been going to the annual meeting for 30 years, but there were also a few that this was the first meeting that they attended.[…]

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Friday, 10th February 2012

Why stocks beat gold and bonds

Written by George Traganidas Topics: Articles, Stock Investing, Wealth Building

Fortune
By WARREN E. BUFFETT
Published: February 9, 2012

Investing is often described as the process of laying out money now in the expectation of receiving more money in the future. At Berkshire Hathaway (BRKA) we take a more demanding approach, defining investing as the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power — after taxes have been paid on nominal gains — in the future. More succinctly, investing is forgoing consumption now in order to have the ability to consume more at a later date.

From our definition there flows an important corollary: The riskiness of an investment is not measured by beta (a Wall Street term encompassing volatility and often used in measuring risk) but rather by the probability — the reasoned probability — of that investment causing its owner a loss of purchasing power over his contemplated holding period. Assets can fluctuate greatly in price and not be risky as long as they are reasonably certain to deliver increased purchasing power over their holding period. And as we will see, a nonfluctuating asset can be laden with risk.[…]

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Tuesday, 9th November 2010

Warren Buffett’s Business Evaluation Filters

Written by George Traganidas Topics: Stock Investing, Wealth Building

At a press conference in 2001, when Warren Buffett was asked how he evaluated new business ideas, he said he used 4 criteria as filters.

  • Can I understand it (Is it predictable. Do I have a reasonable probability of being able to assess where the business will be in 10 years)?[…]

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Monday, 24th May 2010

Quotes Warren Buffett

Written by George Traganidas Topics: Quotes

Warren Buffett

A public-opinion poll is no substitute for thought.
— Warren Buffett

Beware of geeks bearing formulas.
— Warren Buffett

Chains of habit are too light to be felt until they are too heavy to be broken.
— Warren Buffett

Derivatives are financial weapons of mass destruction.
— Warren Buffett

I always knew I was going to be rich. I don’t think I ever doubted it for a minute.
— Warren Buffett

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Tuesday, 6th April 2010

Learn from Warren Buffett’s personal portfolio

Written by George Traganidas Topics: Articles, Stock Investing

I read an article the other day by Robert Miles on the website of Morningstar that talked about the personal portfolio of Warren Buffett. That is the stocks that Warren has in his name and not under Berkshire Hathaway. I include here the major points from this article:

Buffett’s private portfolio represents less than five percent of his net worth, but that five percent is substantial by anyone’s measure–with a recent value of $1.8 billion. Certainly worth paying attention to.

This also answers the question often asked, “How does Warren Buffett live on a salary of $100,000 per year, with one of the lowest CEO compensation packages among the Fortune 500 companies?”[…]

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Thursday, 25th February 2010

Mr. Buffett on the Stock Market

Written by George Traganidas Topics: Articles, Stock Investing

Fortune
By Warren Buffett
November 22, 1999

The most celebrated of investors says stocks can’t possibly meet the public’s expectations. As for the Internet? He notes how few people got rich from two other transforming industries, auto and aviation.

Warren Buffett, chairman of Berkshire Hathaway, almost never talks publicly about the general level of stock prices–neither in his famed annual report nor at Berkshire’s thronged annual meetings nor in the rare speeches he gives. But in the past few months, on four occasions, Buffett did step up to that subject, laying out his opinions, in ways both analytical and creative, about the long-term future for stocks. FORTUNE’s Carol Loomis heard the last of those talks, given in September to a group of Buffett’s friends (of whom she is one), and also watched a videotape of the first speech, given in July at Allen & Co.’s Sun Valley, Idaho, bash for business leaders. From those extemporaneous talks (the first made with the Dow Jones industrial average at 11,194), Loomis distilled the following account of what Buffett said. Buffett reviewed it and weighed in with some clarifications.[…]

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Thursday, 25th February 2010

Who Really Cooks the Books?

Written by George Traganidas Topics: Articles, Stock Investing

The New York Times
By Warren E. Buffett
Published: July 24, 2002

OMAHA— There is a crisis of confidence today about corporate earnings reports and the credibility of chief executives. And it’s justified.

For many years, I’ve had little confidence in the earnings numbers reported by most corporations. I’m not talking about Enron and WorldCom — examples of outright crookedness. Rather, I am referring to the legal, but improper, accounting methods used by chief executives to inflate reported earnings.

The most flagrant deceptions have occurred in stock-option accounting and in assumptions about pension-fund returns. The aggregate misrepresentation in these two areas dwarfs the lies of Enron and WorldCom.[…]

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Thursday, 25th February 2010

Fuzzy Math And Stock Options

Written by George Traganidas Topics: Articles, Stock Investing

The Washington Post
By Warren Buffett
Tuesday, July 6, 2004

Until now the record for mathematical lunacy by a legislative body has been held by the Indiana House of Representatives, which in 1897 decreed by a vote of 67 to 0 that pi — the ratio of the circumference of a circle to its diameter — would no longer be 3.14159 but instead be 3.2. Indiana schoolchildren momentarily rejoiced over this simplification of their lives. But the Indiana Senate, composed of cooler heads, referred the bill to the Committee for Temperance, and it eventually died.

What brings this episode to mind is that the U.S. House of Representatives is about to consider a bill that, if passed, could cause the mathematical lunacy record to move east from Indiana. First, the bill decrees that a coveted form of corporate pay — stock options — be counted as an expense when these go to the chief executive and the other four highest-paid officers in a company, but be disregarded as an expense when they are issued to other employees in the company. Second, the bill says that when a company is calculating the expense of the options issued to the mighty five, it shall assume that stock prices never fluctuate.[…]

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Thursday, 25th February 2010

10 Ways To Get Rich

Written by George Traganidas Topics: Articles, Habits, Personal Finance, Stock Investing

Parade
By Warren Buffett
published: 09/07/2008

With an estimated fortune of $62 billion, Warren Buffett is the richest man in the entire world. In 1962, when he began buying stock in Berkshire Hathaway, a share cost $7.50. Today, Buffett, 78, is Berkshire’s chairman and CEO, and one share of the company’s class A stock is worth close to $119,000. He credits his astonishing success to several key strategies, which he has shared with writer Alice Schroeder. She spent hundreds of hours interviewing the Sage of Omaha for the new authorized biography The Snowball. Here are some of Buffett’s money-making secrets—and how they could work for you.

1. Reinvest your profits
When you first make money, you may be tempted to spend it. Don’t. Instead, reinvest the profits. Buffett learned this early on. In high school, he and a pal bought a pinball machine to put in a barbershop. With the money they earned, they bought more machines until they had eight in different shops. When the friends sold the venture, Buffett used the proceeds to buy stocks and to start another small business. By age 26, he’d amassed $174,000—or $1.4 million in today’s money. Even a small sum can turn into great wealth.[…]

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Thursday, 25th February 2010

Buy American. I Am.

Written by George Traganidas Topics: Articles, Stock Investing

New York Times
By WARREN E. BUFFETT
Published: October 16, 2008

The financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So … I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.[…]

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Wednesday, 24th February 2010

The Greenback Effect

Written by George Traganidas Topics: Articles, Stock Investing

New York Times
By WARREN E. BUFFETT
Published: August 18, 2009

In nature, every action has consequences, a phenomenon called the butterfly effect. These consequences, moreover, are not necessarily proportional. For example, doubling the carbon dioxide we belch into the atmosphere may far more than double the subsequent problems for society. Realizing this, the world properly worries about greenhouse emissions.

The butterfly effect reaches into the financial world as well. Here, the United States is spewing a potentially damaging substance into our economy — greenback emissions.[…]

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Wednesday, 24th February 2010

Top tips for business success

Written by George Traganidas Topics: Habits

If you are looking to start your own business you might want to consider the sound advice of famous business people. These people have already trodden the path to business success and you can take advantage of their wisdom. The following list is a collection of business tips and general words of wisdom:

1. All successful people have a vision. They have the ability the “see” clearly what they want before it exists. – Bill Gates[…]

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Tuesday, 8th December 2009

Warren Buffett Investment Lessons, part 7

Written by George Traganidas Topics: Stock Investing

How he runs Berkshire Hathaway

In 1992, Warren Buffett say that Berkshire’s after-tax overhead costs are under of 1% of reported operating earnings and less than 1/2 of 1% of look-through earnings. In 1996, the after-tax headquarters expense amounts to less than two basis points (1/50th of 1%) measured against net worth.

Warren Buffett does not believe in flexible operating budgets, as in “Non-direct expenses can be X if revenues are Y, but must be reduced if revenues are Y – 5%”. In addition, it makes no sense to add unneeded people or activities because profits are booming, or cutting essential people or activities because profitability is shrinking.[…]

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Tuesday, 8th December 2009

Warren Buffett Investment Lessons, part 6

Written by George Traganidas Topics: Stock Investing

Debt and Leverage

Warren Buffett prefers to get finance (debt) in anticipation of need rather than in reaction to it. Warren Buffet has an aversion to debt, particularly the short-term kind. He is willing to incur modest amounts of debt when it is both properly structured and of significant benefit to shareholders.

Warren Buffett does not like leverage. Even if the odds of disaster are 99:1, he does not like them. A small chance of distress or disgrace cannot, in our view, be offset by a large chance of extra returns. If your actions are sensible, you are certain to get good results.[…]

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Tuesday, 8th December 2009

Warren Buffett Investment Lessons, part 5

Written by George Traganidas Topics: Stock Investing

Economic franchises

An economic franchise is a product or service that:

  • Is needed or desired
  • Is thought by its customers to have no close substitute
  • Is not subject to price regulation

The company can regularly price its product or service aggressively and earn high rates of return on capital. Franchises can tolerate mis-management, because the managers might diminish the franchise’s profitability but they cannot inflict mortal damage.

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Tuesday, 8th December 2009

Three suggestions of investors

Written by George Traganidas Topics: Stock Investing

After many years of investing, Warren Buffett has some suggestions for investors.


First, beware of companies displaying weak accounting. If a company still does not expense options, or if its pension assumptions are fanciful, watch out. When managements take the low road in aspects that are visible, it is likely they are following a similar path behind the scenes. There is seldom just one cockroach in the kitchen.[…]

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Tuesday, 8th December 2009

The formula for valuing assets

Written by George Traganidas Topics: Property Investing, Stock Investing

In one of his letters to the shareholders of Berkshire Hathaway, Warren Buffett told them what is the formula to value any assett.

The formula for valuing all assets that are purchased for financial gain has been unchanged since it was first laid out by a very smart man in about 600 B.C. (though he wasn’t smart enough to know it was 600 B.C.).

The oracle was Aesop and his enduring, though somewhat incomplete, investment insight was “a bird in the hand is worth two in the bush.” To flesh out this principle, you must answer only three questions. How certain are you that there are indeed birds in the bush? When will they emerge and how many will there be? What is the risk-free interest rate (which we consider to be the yield on long-term U.S. bonds)? If you can answer these three questions, you will know the maximum value of the bush ¾ and the maximum number of the birds you now possess that should be offered for it. And, of course, don’t literally think birds. Think dollars.[…]

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Tuesday, 8th December 2009

Warren Buffett Investment Lessons, part 4

Written by George Traganidas Topics: Stock Investing

Management

Making the most of an existing strong business franchise is what usually produces exceptional economics. Managers need to protect their franchise, control costs, search for new products and markets that build on their existing strengths and do not get diverted. They need to work exceptionally hard at the details of the business. He advocates leaving management alone to do their job.

When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

Only do business with people that you like, trust and admire.[…]

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Tuesday, 8th December 2009

Warren Buffett Investment Lessons, part 3

Written by George Traganidas Topics: Stock Investing

Be a successful investor

You do not have to make it back the way that you lost it.

I would rather be certain of a good result than hopeful of a great one.

To be successful, concentrate on identifying one foot hurdles that you could step over rather than acquire any ability to clear seven footers. An investor needs to do very few things right as long as he/she avoids big mistakes.

In each case you want to acquire, at a sensible price, a business with excellent economics and able and honest management. Thereafter, you need only to monitor whether these qualities are being preserved.

When carried out capably, an investment strategy of that type will often result in its practitioner owning a few securities that will come to represent a very large portion of his portfolio. This investor would get a similar result if he followed a policy of purchasing an interest in, say, 20% of the future earnings of a number of outstanding college basketball stars. A handful of these would go on to achieve NBA stardom, and the investor’s take from them would soon dominate his royalty stream. To suggest that this investor should sell off portions of his most successful investments simply because they have come to dominate his portfolio is akin to suggesting that the Bulls trade Michael Jordan because he has become so important to the team.[…]

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Tuesday, 8th December 2009

Warren Buffett Investment Lessons, part 2

Written by George Traganidas Topics: Stock Investing

Buying a business

Here are the thought of Warren Buffett on what to look for when you are considering buying a business. It must have a good management team, good future economics for the business and the price you pay must be right. The business itself should have the ability to increase prices easily (even when product demand is flat and capacity is not fully utilized) without fear of significant loss of either market share or unit volume. You should be able to accommodate large dollar volume increases in business with only minor addition of investment of capital. The best business to own is one that over an extended period can employee large amounts of incremental capital at very high rates of return.

The following are dismal economic characteristics that make for a poor long-term outlook for a business:[…]

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Thursday, 3rd December 2009

How to Minimize Investment Returns

Written by George Traganidas Topics: Stock Investing

In his Berkshire Hathaway annual report of 2006, Warren Buffet wrote an article that explained how investors were achieving lower returns by employing professional help. Below if the full test.


Over the century American businesses did extraordinarily well and investors rode the wave of their prosperity. Businesses continue to do well. But now shareholders, through a series of self-inflicted wounds, are in a major way cutting the returns they will realize from their investments.

The explanation of how this is happening begins with a fundamental truth: With unimportant exceptions, such as bankruptcies in which some of a company’s losses are borne by creditors, the most that owners in aggregate can earn between now and Judgment Day is what their businesses in aggregate earn. True, by buying and selling that is clever or lucky, investor A may take more than his share of the pie at the expense of investor B. And, yes, all investors feel richer when stocks soar. But an owner can exit only by having someone take his place. If one investor sells high, another must buy high. For owners as a whole, there is simply no magic – no shower of money from outer space – that will enable them to extract wealth from their companies beyond that created by the companies themselves.[…]

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Tuesday, 27th October 2009

Warren Buffett Investment Lessons, part 1

Written by George Traganidas Topics: Stock Investing

This is an edited version of a letter Warren Buffett sent some years ago to a man who had indicated that he might want to sell his family business.


Some Thoughts on Selling Your Business

Dear _____________:

Here are a few thoughts pursuant to our conversation of the other day.

Most business owners spend the better part of their lifetimes building their businesses. By experience built upon endless repetition, they sharpen their skills in merchandising, purchasing, personnel selection, etc. It’s a learning process, and mistakes made in one year often contribute to competence and success in succeeding years.

In contrast, owner-managers sell their business only once — frequently in an emotionally-charged atmosphere with a multitude of pressures coming from different directions. Often, much of the pressure comes from brokers whose compensation is contingent upon consummation of a sale, regardless of its consequences for both buyer and seller. The fact that the decision is so important, both financially and personally, to the owner can make the process more, rather than less, prone to error. And, mistakes made in the once-in-a-lifetime sale of a business are not reversible.[…]

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Wednesday, 22nd July 2009

“The Snowball: Warren Buffett and the Business of Life” by Alice Schroeder

Written by George Traganidas Topics: Books, Habits, Personal Finance, Stock Investing

Snowball, Warren Buffett

This is a great book for anyone who is interested to invest in the stock market and run a business. The book describes the life of Warren Buffett from the day he was born up to 2008. The lessons are drawn from both his personal and his professional life.

Warren got involved in a very young age in the process of making money and managing other people’s money. When he was a kid he took his sister’s money to invest in a stock. This stock went down and everyday his sister would ask him why the stock is down. Warren did not like that experience at all and from that day on he did not want to manage other’s people money unless he knew he could do a great job. This gave birth to his first rule of investment “Never lose the money.”

You can find a lot of details on his management style in the book and how he pushes his people to get the best out of them.[…]

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Tuesday, 24th February 2009

Invest like Warren Buffett

Written by George Traganidas Topics: Stock Investing

Warren Buffet has been characterised as the greatest investor of all times. He buys great companies in fair values and holds them forever. He is very successful and he has managed to become the wealthiest person on Earth.

There are many people who are wondering how he does this. They are trying to do the same thing as Warren and achieve similar results. One way that this can be done is by buying the same companies he buys at similar prices or better. This is not always easily done, because a lot of times he reveals his positions months after he has done the purchases.[…]

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Tuesday, 10th February 2009

Has Warren Buffett lost his touch?

Written by George Traganidas Topics: Articles, Personal Finance, Stock Investing

It is always useful to see both sides in an argument. This increases your understanding of the situation and hopefully will help you to make better decisions. I have been following Warren Buffett very closely in the last 3 years and I have been reading articles written about him and his investment and management style. Everyone is praising him for being a very good investor and being able to attract great companies.

There is one person though who is betting against him. Who tells that his time is over and he has lost his charm. This person is Doug Kass and the last few months he wrote articles on why Warren is wrong and why his style does not work any more. His articles and reasoning are very interesting. His main point is that his style is not applicable to this new age and following it will cause you to lose money.[…]

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