Warren Buffett’s Investment Style

Investing, Warren Buffett style, is frequently attempted, but rarely executed to perfections.

First, a disclosure.  I have held stock in Warren Buffett’s Berkshire Hathaway (stock symbol BRKA) company for years.  One of the few smart financial moves I ever made.  You can find a pdf file of many years of his annual company reports here. They are always interesting reads.

Annual Meeting by Ethan Bloch

An article in MSM Money, recently dissected out statements in Mr Buffetts recent annual report. He publishes the annual report this time of year, to go over last year’s company results.

The article linked above, emphasizes  statements in the annual report, that will be particularly helpful to new investors in the stock market.

Buffetts Investment Rules

I will list them here with commentary for my readers…..

• Stay liquid-this means make sure you have cash available.  You need the safety, security, and flexibility available when you have cash in the bank-will discuss the flexibility in the next comment.
• Buy when everyone else is selling-this is why you stay flexible with cash on hand-you want to take advantage of stock prices dropping when the heard is in panic mode-think March of last year!
• The same corollary holds true for the opposite-don’t buy when everyone else is buying (think tech stock bubble and housing bubble!!!!!).
• Value stocks over growth stocks-I have discussed the difference in other posts.  The hard part here is picking a stock that is undervalued, and not just cheap cause its a crappy stock!
• Understand what you own.  That is what we are here for.  In the information age, one,the idea that you would buy a stock without understanding why you should own it.-two, how much you should buy -and three, when you should sell it is crazy!
• Defense beats offense-Your want your companies to drop less than the market when things are tough.  That is another reason to buy value companies.

Buffett Out of Style?

Now some argue that Buffett is aging, and investing in his company would be a mistake.  Well my feeling is, the Buffett -Way will continue for sometime, even if he is no longer leading.  He is smart and humble enough to have a line of succession in place if he were to be unable to continue.  So you couldn’t go wrong, with investing in his company.

Provided you are out of debt, have an emergency fund in place and are ready to begin building wealth.

Questions: Any questions here?