The World's Most Successful Investor

"Price is what you pay. Value is what you get." ~ Warren Buffet

Warren Buffett is the world's most successful investor and a self-made billionaire. He is consistently ranked among the world's Top 3 wealthiest people. Buffett generated an average annual return of about 31%.

Warren Buffett's Key To Investing

Warren Buffett was once asked what is the most important thing he looks for when evaluating a company to invest in.

Without hesitation, he replied, → "sustainable competitive advantage" ... More

The Power of Focus

Warren Buffett says his companies ability to generate large profits is the result of being able to focus on → what is important, and not paying attention to things that would distract the company.

Buffett's Teachings on Investment

Warren Buffett is the world's most successful investor. "Buffett's teachings on investment sound deceptively simple. But there is no deception. They truly are simple. Do not allow investment advisers to persuade you that investment is a complex matter needing great expertise. Instead, learn how to assess the fundamental and financial values of a business yourself, and invest according to your convictions."  >>>

Ignoring Conventional Investment Guidelines

Warren Buffett believes that the conventional approach to investment makes it difficult to beat the market and easy to do worse. If you wish to invest well you must be prepared to go against the prevailing wisdom and ignore conventional investment guidelines. You can increase your chances of finding winning stocks by adhering to Buffett's contrarian principles.

Using the Probability Theory

Buffett is a master at the art of fast decision making and arbitrage. The probability theory is essential to Buffett's theory of investment: "Take the probability of loss times the amount of possible loss from the probability of gain times the amount of possible gain. That it what we're trying to do. It's imperfect, but that's what it is all about."

Buffett uses essentially the same approach to investment strategy and arbitrage. In both cases "he buys into situations where the probability is that shares are undervalued and that this undervaluation will be corrected. The difference is time-scale; the arbitrage position will be closed out as soon as possible, while the investment will be kept "indefinitely so long as we expect the business to increase in intrinsic value as a satisfactory rate." That answers the question about how long Buffett believes a share should be held: possibly forever."²

Relying On Gut Instinct

Bill Gates, Founder of Microsoft Corporation and a Berkshire director, praises Buffett's hard-to-imitate management style. "It's baffling to think who else could do it," he says.

Warren Buffet spends most of his day alone in an office with no computer. His desk isn't littered with stock research. "I don't use analysts or fortune tellers, " Buffett says. "If I had to pick one, I don't know which it would be." He deliberately keeps the outside world at bay, believing it is the best way for him to remain "rational" as an investor. If he is interested in investing in a company, he studies the financials himself. "All I have to do is think and not be → influenced by others," he says. Warren Buffett "spends the better part of most workdays thinking and reading. He fields a handful of phone calls, and on most days, he confers with the chiefs of of a few Berkshire subsidiaries. He seldom holds meetings."¹

Making Fast Decisions  >>>

Warren Buffett "makes swift investment decisions, steers clear of meetings and advisers, eschews set procedures and doesn't require frequent reports from managers. Occasionally he picks up the phone, calls his broker and trades $100 million or more of stock."¹

When Buffett is buying stock, he pays little attention to some factors that shape other investors' decisions, such as economic climate. He doesn't wait to see what government is doing to make a trade. Buffet also can move more quickly than his competitors. He has no investment committee, and that allows him to make immediate decisions...  >>>  Case in Point

Hands-Off Management

Buffett believes that managers of the companies he is investing in ought to be left to run their businesses without interference from him and without having to hew any to any unifying corporate strategies or goals. "We delegate to the point of abdication," Buffett says in Berkshire's Owner's Manual.

Despite its investment size, Berkshire Hathways has a tiny staff. It's headquarters is staffed by just 17 employees. The company has no public-relations, human-relations, investor-relations, legal departments, or investment committee. It holds no quarterly earning calls for investors and analysts, has no asset allocation guidelines, and gives no guidance on future earnings. Warren Buffet tells the chiefs of his business units not to produce any special reports for him.

On occasion, when severe → problems arise, Buffett abandons his hands-off management approach however.