Buffet’s mentors
Warren Buffett studied stock market analysis at Columbia University, in New York, under the wing of Benjamin Graham who was, until the arrival of Buffett, perhaps the greatest thinker on portfolio investment.
Graham was a classic value investor. In other words he was looking to buy companies whose net asset value per share was greater than the share price. Buffett inherited Graham’s fascination for technical analysis and aversion to paying over the odds for any stock.
The influence of Omaha, Nebraska
Buffett has spent virtually all his working life in Omaha, a mid-west town which is dedicated to economic activity with no distractions. This has given him a real ‘feel’ for business and how businesses work. He sees them as living organisms and thinks of a shareholding not as an abstract piece of paper but as a genuine stake in a business. He has been involved in the management of various companies for more than 40 years and in 1965 he took over Berkshire Hathaway, a textile manufacturer in Massachusetts, which he turned into his own investment company. Its performance has proved a moneyspinner for shareholders and turned Buffett into the world’s richest man. Back in 1965 Berkshire Hathaway’s share price stood at under $20. Today it stands at more than $115,000. Buffett's letters to Berkshire Hathaway shareholders have become collectors' pieces.
Understanding businesses
Buffett once famously said you should never invest in a business that you don’t understand. This stance meant that he didn’t invest in dot.com stocks and as a result his performance suffered at the height of the technology bubble. But Buffett had the last laugh when the tech bubble burst and his more sedate investments stood up a lot better in the market crash than the technology-rich portfolios of many of his competitors.
Read the full article
No comments:
Post a Comment