WARREN BUFFETT

Just spice up your sunday afternoon with this few paragraphsn from this book am reading now.

Warren Buffett never invests in businesses he cannot understand or that are outside his “circle of competence”. All investors can, overtime obtain and intensify their “circle of competence” in an industry where they are professionally involved or in some sector of business they enjoy researching. One does not have to be correct very many times in a lifetime as Warren states that twelve investment decisions in his forty year career have made all the difference.

Risk can be reduced greatly by concentrating on only a few holdings if it forces investors to be more careful and thorough in their research. Normally more than 75% of Berkshire’s common stock holdings are represented by only five different securities. One of the principles demonstrated clearly several times in this book is to buy great businesses when they are having a temporary problem or when the stock market declines and creates bargain prices for outstanding franchises.

Stop predicting the direction of the stock market, the economy, interest rates, or elections, and stop wasting time or money on individuals that do this for a living. Study the facts and financial conditions, value the company’s future outlook, and purchase when everything is in your favor. Many people invest in a way similar to playing poker all night without ever looking at their cards.

THE WARREN BUFFETT WAY. By ROBERT G. HAGSTROM.