Learn from Warren Buffett

Warren Buffett recommend investors to read Security Analysis by his professors Benjamin Graham and David Dodd.

To know very much about your investment so that you are able to figure out its intrinsic value, you must know:
- how the company makes money
- the durability of its earnings
- what its weaknesses are
- opportunities for future growth
- the strength of its competitors
- the honesty and competence of its management

Only sell your investment when you find a more attractive investment.

Risk comes from not knowing what you are doing. If you know what you own, you will be fine. Never buy what you don't know. The dumbest reason in the world to buy a stock is because it is going up. Investment must be rational. If you don't understand it, don't do it.

Value investing is buying a business for less than you think it is worth.

Potentially superior investments can be found by looking for companies that are buying back their stock.

Take one industry at a time and develop some expertise in a half a dozen companies in that industry. Put yourself in the frame of mind that you just inherited the company and it was the only asset your family was ever going to own. What will you do with it? What will you be thinking about? What will you be worried about? Who are your competitors? Who are your customers? Go out and talk to them. Find out the strengths and weaknesses of this particular company versus the other ones in the same industry. If you have done this, you may understand the business better than the management.

To value a company properly, the only way to do that is to focus on what you know about them and own them.

Investing is like reporting. Imagine you have been assigned an in-depth article about that company you intend to invest. Ask a lot of questions and dig up a lot of facts. Be curious about the company you intend to own.

Warren Buffett look for business with high profit margins (e.g.32%), little debt, and outstanding returns on equity. Also good management and have expansion plans.




Warren Buffett recommends the practice of observing and writing down those characteristics and traits that you admire, and as long as you start soon enough, all of them can be part of your makeup and mind-set. Similarly, if you make a list of habits you admire, you too can have those same habits.