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Warren Buffett’s investment strategy

Warren Buffett has established himself as the best investor in history, repeatedly becoming the richest man in the world and building one of the largest companies in the face of Berkshire Hathaway from a failed textile company.

What specific investment strategy does Buffett use to create such success and wealth?

What specific investment strategy does Buffett use to create such success and wealth?

 Benjamin Graham was a direct mentor to Buffett through a class that he took at Columbia Business School, his books, and also as an employee of the Graham firm. Graham Buffett learned how to find value in equities by looking at the current price versus book value to create great risk / return ratios.

The basic principles of the Omaha Oracle Investment Strategy are:

1.When he invests, the timeline of the investment is forever. He only sells if the business of the company changes, if nothing changes he holds back the purchase.
2.He only invests in business models of which he understands. It sticks to products and services that it believes will have strong demand for decades to come. He remains within his competence and avoids new technologies.
3.He views the shares as a purchase of the entire company. Would you buy the company at its current market cap to gain full control over sales, products, brand, profits and cash flows?
4.Buffett would rather pay a fair price for a great company than a low price for a mediocre company. He wants to buy only the highest quality businesses, both in management and in products. Then he wants it at a good price. It chooses quality over value.
5.Part of his strategy is to keep cash money, so when the opportunity arises he is ready to play it. He will not buy if the shares are overvalued, but will wait for a much better price
6.He wants to buy a stock with a large safety margin or below the perceived intrinsic value or fair value for future cash flow. A good margin of safety reduces the risk of a fall and provides a buffer zone against unexpected problems.
7.Buffett wants to buy shares or entire businesses that have excellent management. He doesn’t want to tell people how to run their business, he wants to let them do what they’re good at.
8.He loves businesses that have created everlasting demand, such as razors, Coca Cola and consumer goods. This creates a very constant and familiar cash flow.
9.He likes to calculate the potential growth of the company based on current levels of expansion and potential value in the future if this pace is maintained.
10.Buffett knows very well the incredible power of capital appreciation over the long term as it grows exponentially. This is one of his biggest secrets for success in the industry, as capital rapidly increases year after year with steady profits.

Warren Buffett is a genius and business schools will study him for a decade for what he manages to do as an investor, principal and CEO. He is the model of success in capitalism.


 Trader Aleksandar Kumanov


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