Words of Investing Wisdom from Warren Buffett

[Dennis Ng]

If you want to learn from Warren Buffett, learn directly from him, read what he writes, (annual letters to shareholders), instead of books written by other people who proclaim they can teach you how to invest like Warren Buffett.

Here's the link to what Warren Buffett wrote: http://www.berkshirehathaway.com/letters/letters.html

In my opinion, nobody can invest like Warren Buffett except Warren Buffett himself, many try to emulate him but failed. I don't learn from people who didn't prove to me they got Rich through what they Teach you. I don't want to learn from people who get Rich teaching. You get the difference?

I share some of the investment concepts used by Warren Buffett in my seminar but my seminar is NOT called teach you invest like Warren Buffett. And to make things clear, I only started sharing in year 2009 what I know after I reached millionaire status applying what I learned from multi-millionaire sifus. I started teaching becos I reached the point I could NOT stand some of these seminars out there which teaches very little but charge alot.

I don't really agree with Warren Buffett on certain things eg. he said that share price is NOT important to him. On this point, I tend to agree with George Soros that price movement can make a big difference becos of "reflexivity". I also don't agree with Warren Buffett when he said:"if you're not prepared to hold a stock for 10 years, do NOT bother even owning it for 10 minutes." Over the years, now I practise Market Cycle Investing, so I buy/sell stocks 1 to 4 years' time to capture gains from each Market Cycle, not hold for 10 years.

The world is changing too fast that any company that is strong today might not be strong 10 years down the road, very, very few stocks qualify to be held for 10 years. One example, Yahoo was a star a few years ago, now it is in its pits and up for sale at a fraction of its market value at its peak.

I'm not saying that Warren Buffett is wrong or I'm right, but I practise Independent Thinking and NO longer blindly follow anyone's advice, even if he is Warren Buffett or George Soros. Warren Buffett bought and sold Petro China in a few short years, so I watch what people do rather than what they say. Action speaks louder than words.

Another real life example: George Soros in Sep 2010 (when price was US$1,200 per oz) said that Gold price was bubblish yet he was actually buying Gold as prices moved up even higher from Jan 2011 to Sep 2011...

here's the interview given by George Soros
http://www.youtube.com/watch?v=tMaxn9s583k

Cheers!

Dennis Ng

35 Years of Buffett's Greatest Investing Wisdom

By Matt Koppenheffer | More Articles
March 1, 2012

Last weekend, Berkshire Hathaway (NYSE: BRK-A ) (NYSE: BRK-B ) released Warren Buffett's annual letter to the company's shareholders. As always, Buffett delivered with a combination of ever-quotable folksy wisdom and an easy-to-digest view of the year that Berkshire Hathaway had.

The ritual of the annual letter is far from new. In fact, this most recent letter was the 35th edition that Berkshire has posted online for investors to peruse. Most of those letters' contents are dated in terms of when Buffett put pen to paper, but to show just how enduring his wisdom is, I thought I'd take a look back at some of Buffett's best quips over the past three-and-a-half decades.

1977: "Most companies define 'record' earnings as a new high in earnings per share. Since businesses customarily add from year to year to their equity base, we find nothing particularly noteworthy in a management performance combining, say, a 10% increase in equity capital and a 5% increase in earnings per share. After all, even a totally dormant savings account will produce steadily rising interest earnings each year because of compounding. ... we believe a more appropriate measure of managerial economic performance to be return on equity capital."

1978: "We make no attempt to predict how security markets will behave; successfully forecasting short term stock price movements is something we think neither we nor anyone else can do."

1979: "Both our operating and investment experience cause us to conclude that "turnarounds" seldom turn, and that the same energies and talent are much better employed in a good business purchased at a fair price than in a poor business purchased at a bargain price."

1980: "[O]nly gains in purchasing power represent real earnings on investment. If you (a) forgo ten hamburgers to purchase an investment; (b) receive dividends which, after tax, buy two hamburgers; and (c) receive, upon sale of your holdings, after-tax proceeds that will buy eight hamburgers, then (d) you have had no real income from your investment, no matter how much it appreciated in dollars."

1981: "While market values track business values quite well over long periods, in any given year the relationship can gyrate capriciously."

1982: "The market, like the Lord, helps those who help themselves. But, unlike the Lord, the market does not forgive those who know not what they do. For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments."

1983: "We will be candid in our reporting to you, emphasizing the pluses and minuses important in appraising business value. Our guideline is to tell you the business facts that we would want to know if our positions were reversed. ... We also believe candor benefits us as managers: the CEO who misleads others in public may eventually mislead himself in private."

1984: "[M]ajor repurchases at prices well below per-share intrinsic business value immediately increase, in a highly significant way, that value. ... Corporate acquisition programs almost never do as well and, in a discouragingly large number of cases, fail to get anything close to $1 of value for each $1 expended."

1985: "[A] good managerial record ... is far more a function of what business boat you get into than it is of how effectively you row ... Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks."

1986: "We intend to continue our practice of working only with people whom we like and admire. ... On the other hand, working with people who cause your stomach to churn seems much like marrying for money -- probably a bad idea under any circumstances, but absolute madness if you are already rich."

1987: "The value of market esoterica to the consumer of investment advice is a different story. In my opinion, investment success will not be produced by arcane formulae, computer programs or signals flashed by the price behavior of stocks and markets. Rather an investor will succeed by coupling good business judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about the marketplace."

1988: "To evaluate arbitrage situations you must answer four questions: (1) How likely is it that the promised event will indeed occur? (2) How long will your money be tied up? (3) What chance is there that something still better will transpire -- a competing takeover bid, for example? and (4) What will happen if the event does not take place because of antitrust action, financing glitches, etc.?"

1989: "Because of the way the tax law works, the Rip Van Winkle style of investing that we favor -- if successful -- has an important mathematical edge over a more frenzied approach."

1990: "Because leverage of 20:1 magnifies the effects of managerial strengths and weaknesses, we have no interest in purchasing shares of a poorly managed bank at a 'cheap' price. Instead, our only interest is in buying into well-managed banks at fair prices." (He wrote this in reference to Berkshire's purchase of Wells Fargo (NYSE: WFC ) , a bank he continues to laud today).

1991: " An economic franchise arises from a product or service that: (1) is needed or desired; (2) is thought by its customers to have no close substitute and; (3) is not subject to price regulation."

1992: "[W]e think the very term 'value investing' is redundant. What is 'investing' if it is not the act of seeking value at least sufficient to justify the amount paid? Consciously paying more for a stock than its calculated value -- in the hope that it can soon be sold for a still-higher price -- should be labeled speculation (which is neither illegal, immoral nor -- in our view -- financially fattening)."

1993: "The worst of these [arguments for selling a stock] is perhaps, 'You can't go broke taking a profit.' Can you imagine a CEO using this line to urge his board to sell a star subsidiary?"

1994: "We will continue to ignore political and economic forecasts, which are an expensive distraction for many investors and businessmen. ... Indeed, we have usually made our best purchases when apprehensions about some macro event were at a peak. Fear is the foe of the faddist, but the friend of the fundamentalist."

1995: "Any company's level of profitability is determined by three items: (1) what its assets earn; (2) what its liabilities cost; and (3) its utilization of 'leverage' -- that is, the degree to which its assets are funded by liabilities rather than by equity."

1996: "In the end, however, no sensible observer -- not even these companies' most vigorous competitors, assuming they are assessing the matter honestly -- questions that [Coca-Cola (NYSE: KO ) ] and Gillette will dominate their fields worldwide for an investment lifetime." (A decade and a half later, and he's yet to be proven wrong, though Gillette is now dominating as a Procter & Gamble (NYSE: PG ) subsidiary, making Berkshire P&G's fourth-biggest shareholder and Coke's largest.)

1997: "Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices."

1998: "[W]e give each [of our company managers] a simple mission: Just run your business as if: 1) you own 100% of it; 2) it is the only asset in the world that you and your family have or will ever have; and 3) you can't sell or merge it for at least a century. As a corollary, we tell them they should not let any of their decisions be affected even slightly by accounting considerations. We want our managers to think about what counts, not how it will be counted."

1999: "Our lack of tech insights, we should add, does not distress us. After all, there are a great many business areas in which Charlie and I have no special capital-allocation expertise. For instance, we bring nothing to the table when it comes to evaluating patents, manufacturing processes or geological prospects. So we simply don't get into judgments in those fields."

2000: "But a pin lies in wait for every bubble. And when the two eventually meet, a new wave of investors learns some very old lessons: First, many in Wall Street -- a community in which quality control is not prized -- will sell investors anything they will buy. Second, speculation is most dangerous when it looks easiest."

2001: "Some people disagree with our focus on relative figures, arguing that 'you can't eat relative performance.' But if you expect as Charlie Munger, Berkshire's Vice Chairman, and I do -- that owning the S&P 500 will produce reasonably satisfactory results over time, it follows that, for long-term investors, gaining small advantages annually over that index must prove rewarding."

2002: "Many people argue that derivatives reduce systemic problems, in that participants who can't bear certain risks are able to transfer them to stronger hands. These people believe that derivatives act to stabilize the economy, facilitate trade, and eliminate bumps for individual participants. And, on a micro level, what they say is often true. ...

"Charlie and I believe, however, that the macro picture is dangerous and getting more so. Large amounts of risk, particularly credit risk, have become concentrated in the hands of relatively few derivatives dealers, who in addition trade extensively with one other. The troubles of one could quickly infect the others. On top of that, these dealers are owed huge amounts by non-dealer counterparties. Some of these counterparties, as I've mentioned, are linked in ways that could cause them to contemporaneously run into a problem because of a single event (such as the implosion of the telecom industry or the precipitous decline in the value of merchant power projects). Linkage, when it suddenly surfaces, can trigger serious systemic problems."

2003: "True independence -- meaning the willingness to challenge a forceful CEO when something is wrong or foolish -- is an enormously valuable trait in a director. It is also rare. The place to look for it is among high-grade people whose interests are in line with those of rank-and-file shareholders -- and are in line in a very big way."

2004: "Over the 35 years [ending in 2004], American business has delivered terrific results. It should therefore have been easy for investors to earn juicy returns... Instead many investors have had experiences ranging from mediocre to disastrous.

"There have been three primary causes: first, high costs, usually because investors traded excessively or spent far too much on investment management; second, portfolio decisions based on tips and fads rather than on thoughtful, quantified evaluation of businesses; and third, a start-and-stop approach to the market marked by untimely entries (after an advance has been long under way) and exits (after periods of stagnation or decline). Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful."

2005: "[For CEOs] huge severance payments, lavish perks and outsized payments for ho-hum performance often occur because comp committees have become slaves to comparative data. The drill is simple: Three or so directors -- not chosen by chance -- are bombarded for a few hours before a board meeting with pay statistics that perpetually ratchet upwards. Additionally, the committee is told about new perks that other managers are receiving. In this manner, outlandish "goodies" are showered upon CEOs simply because of a corporate version of the argument we all used when children: 'But, Mom, all the other kids have one.' "

2006: "Corporate bigwigs often complain about government spending, criticizing bureaucrats who they say spend taxpayers' money differently from how they would if it were their own. But sometimes the financial behavior of executives will also vary based on whose wallet is getting depleted. Here's an illustrative tale from my days at Salomon. In the 1980s the company had a barber, Jimmy by name, who came in weekly to give free haircuts to the top brass. A manicurist was also on tap. Then, because of a cost-cutting drive, patrons were told to pay their own way. One top executive (not the CEO) who had previously visited Jimmy weekly went immediately to a once-every-three-weeks schedule."

2007: "A truly great business must have an enduring 'moat' that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business 'castle' that is earning high returns. Therefore a formidable barrier such as a company's being the lowcost producer (GEICO, [Costco]) or possessing a powerful worldwide brand (Coca-Cola, Gillette, [American Express]) is essential for sustained success."

2008: (Recall that the financial crisis was raging) "Amid this bad news, however, never forget that our country has faced far worse travails in the past. In the 20th Century alone, we dealt with two great wars (one of which we initially appeared to be losing); a dozen or so panics and recessions; virulent inflation that led to a 21 1⁄2% prime rate in 1980; and the Great Depression of the 1930s, when unemployment ranged between 15% and 25% for many years. America has had no shortage of challenges.

"Without fail, however, we've overcome them. In the face of those obstacles -- and many others -- the real standard of living for Americans improved nearly seven-fold during the 1900s, while the Dow Jones Industrials rose from 66 to 11,497."

2009: "We've put a lot of money to work during the chaos of the last two years. It's been an ideal period for investors: A climate of fear is their best friend. Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance. In the end, what counts in investing is what you pay for a business -- through the purchase of a small piece of it in the stock market -- and what that business earns in the succeeding decade or two."

2010: "Money will always flow toward opportunity, and there is an abundance of that in America. Commentators today often talk of 'great uncertainty.' But think back, for example, to December 6, 1941, October 18, 1987 and September 10, 2001. No matter how serene today may be, tomorrow is always uncertain."

2011: "The logic is simple: If you are going to be a net buyer of stocks in the future, either directly with your own money or indirectly (through your ownership of a company that is repurchasing shares), you are hurt when stocks rise. You benefit when stocks swoon. Emotions, however, too often complicate the matter: Most people, including those who will be net buyers in the future, take comfort in seeing stock prices advance."

Voila!
And there you have it, 35 years of Buffett's wisdom. If you haven't quite had your fill of Buffett and want to hear about the industry that he -- and some other savvy investors -- have been diving into, you can grab a free copy of The Motley Fool's special report "The Stocks Only the Smartest Investors Are Buying."

[Dennis Ng]

BUFFETT RULES

The $62+ Billionaire WARREN BUFFETT focused on the business of making money. He is the CEO of Berkshire Hathaway who is dubbed the "Oracle of Omaha" The richest man in the world is argruably one of the most successful investors of all time and has proven you can make money quite easily, simply by following the right philosophies.

We use his most famous quotes to inspire our Cambodia Capital business of making money as follows:

- The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.
- The first rule is not to lose. The second rule is not to forget the first rule.
- The investor of today does not profit from yesterday's growth.
- The only time to buy these is on a day with no "y" in it.
- The smarter the journalists are, the better off society is. For to a degree, people read the press to inform themselves and the better the teacher, the better the student body.
- There seems to be some perverse human characteristic that likes to make easy things difficult.
- Time is the friend of the wonderful company, the enemy of the mediocre.
- Value is what you get.

- We believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic.'
- We enjoy the process far more than the proceeds.
- We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
- When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
- Why not invest your assets in the companies you really like? As Mae West said, "Too much of a good thing can be wonderful".
- Wide diversification is only required when investors do not understand what they are doing.
- You do things when the opportunities come along. I've had periods in my life when I've had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing.
- You only have to do a very few things right in your life so long as you don't do too many things wrong.
- Your premium brand had better be delivering something special, or it's not going to get the business.

- I get to do what I like to do every single day of the year. I get to do it with people I like, and I don't have to associate with anybody who causes my stomach to churn. I tap dance to work, and when I get there I think I'm supposed to lie on my back and paint the ceiling. It's tremendous fun.
- Ships will sail around the world but the Flat Earth Society will flourish.
- I am out of step with present conditions. When the game is no longer played your way, it is only human to say the new approach is all wrong, bound to lead to trouble, and so on. On one point, however, I am clear. I will not abandon a previous approach whose logic I understand ( although I find it difficult to apply ) even though it may mean foregoing large, and apparently easy, profits to embrace an approach which I don't fully understand, have not practiced successfully, and which possibly could lead to substantial permanent loss of capital.

- The speed at which a business success is recognized, furthermore, is not that important as long as the company's intrinsic value is increasing at a satisfactory rate. In fact, delayed recognition can be an advantage: It may give us the chance to buy more of a good thing at a bargain price.
- Managers thinking about accounting issues should never forget one of Abraham Lincoln's favorite riddles: `How many legs does a dog have if you call his tail a leg?' The answer: `Four, because calling a tail a leg does not make it a leg'.
- Working with people who cause your stomach to churn seems much like marrying for money - probably a bad idea under any circumstances, but absolute madness if you are already rich.


- If past history was all there was to the game, the richest people would be librarians.
- In the business world, the rearview mirror is always clearer than the windshield.
- It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.
- It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction.
- It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
- Let blockheads read what blockheads wrote.
- Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.

- Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.
- Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years.
- Only when the tide goes out do you discover who's been swimming naked.
- Our favorite holding period is forever.
- Price is what you pay. Value is what you get.
- If a business does well, the stock eventually follows
- I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.

- I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
- I buy expensive suits. They just look cheap on me.
- I am quite serious when I say that I do not believe there are, on the whole earth besides, so many intensified bores as in these United States. No man can form an adequate idea of the real meaning of the word, without coming here.
- I always knew I was going to be rich. I don't think I ever doubted it for a minute.
- Chains of habit are too light to be felt until they are too heavy to be broken.
- A public-opinion poll is no substitute for thought.

- Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.
- Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
- Risk is a part of God's game, alike for men and nations.
- Risk comes from not knowing what you're doing.

THE MASTER INVESTORS, WARREN BUFFETT - A LIFE OF AN ORDINARY BILLIONAIRE:

- BORN 1930, OMAHA, NEBRASKA: Started managing funds in 1956 with the formation of the Buffett Partnership (dissolved in 1969). Now chairman and major owner, Berkshire Hathaway, Inc.
- $1000 invested with Buffett in 1956 would now be worth $31,289,750. Annual compound rate of return is 24.7% ($1000 invested in the S&P index in 1956 would now be worth $80,387.) Number of losing years: 1 (2001) - compared to 13 down years for the S&P 500 since 1956.
1943: Aged 13, Buffett files his first tax return. Working as a paperboy, he deducts his bicycle and watch as a works expense
1945: Aged 15, he and his friend buy a second-hand pinball machine for $25, which they place in a barbershop. In the next three months, they buy three more
1950: Aged 20 and a graduate, he applies for admission to the Harvard Business School but is turned down. Inspired by his mentors, two famous securities analysts Benjamin Graham and David Dodd, he enrolls at Columbia Business School instead
1951: aged 21, he buys a gas station, works as a stockbroker and takes a Dale Carnegie public speaking course. Then he teaches a night class to people twice his age at the University of Nebraska on the subject of investment principles
1954: Aged 24, and after marrying, he begins work with Benjamin Graham, earning $12,000 a year. Graham teaches him that good stocks should provide a wide margin for safety, calculating using the difference between their prices and intrinsic value. Basically, stock has to be worth more than its price.
1956: Aged 26, Buffett's personal savings now sit at more than $140,00. He starts Buffett Partnerships Ltd., an investment partnership
1957: Aged 27, he purchases a five-bedroom stucco house in Omaha for $31,000, in which he still lives. He also starts several other partnerships. He asks one of his partners, a doctor, if he knows ten other doctors who would be willing to invest $10,000 each in his partnership. Eventually, eleven doctors invest
1962: Aged 32, he becomes a millionaire. His partnerships have in excess of $7million, of which more than $1million belongs to Buffett. He merges the partnerships and then finds a textiles manufacturing firm called Berkshire Hathaway. He begins purchasing shares at $7.60 each
1965: Aged 35, he keeps buying Berkshire shares for $14.86 each while the company has working capital (current assets minus current liabilities) of $19 per share, excluding the value of fixed assets (factory and equipment), he takes control of Berkshire
1966: Aged 36, he closed his partnerships to further partner
1967: Berkshire pays out its first and only dividend of 10 cents
1969: After a bumper year, he liquidates the partnership, transfers assets to his partners and pay out shares
1973: Aged 43, he begins to buy stock in the Washington Post Company
1979: Aged 49, he begins to buy stock on ABC, at $290 per share. His net worth reaches $140million
1988: Aged 58, he begins buying stock in Coca-Cola. He eventually buys 7 percent of the company for $1.02billion. It becomes one of Berkshire's most lucrative investments, and one which it still holds
2008: Aged 77, he passes friend Bill Gates to become the richest man in the world, worth $62billion according to FORBES
2010: Current day -

A DAY WITH WARREN BUFFETT:

- Buffett has always been frugal with money, and only pays a small wage. In 2008, it was still only $100,000, despite the fact that he is worth $US62Billion.
- Most nights Buffett eats hamburger or pork chops for dinner
- He lives in the same house he bought for $31,000 in 1958, which is now worth $700,000
- He does not carry a mobile phone, does not have a computer in his office and drives his own car, a Cadillac
- Every year he auctions himself off to charity, with the winner receiving a lunch and free advice (although they're not allowed to ask what he's investing in). In 2008, a Chinese businessman, Zhao Danyang, paid more than $2million for the right to dine with Buffett. The venue? A steakhouse in New York

[Dennis Ng]

Even Warren Buffett's Berkshire Hathaway can make investment mistakes...but overall, he is making money...so remember No. 1 Rule is NOT to lose money (on an overall Portfolio basis).

Cheers!

Dennis Ng

Berkshire Buys GM Before Plunge as Backups Pick Stocks
By Noah Buhayar - Jul 6, 2012 12:00 PM GMT+0800

Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) acquired its largest stake in General Motors Co. (GM) before the automaker slumped 16 percent, as the billionaire chairman hands more responsibility to deputy stock pickers.

Berkshire accumulated about 8.47 million shares of GM through Feb. 3 at an average price of $24.35, according to National Association of Insurance Commissioners data compiled by Bloomberg. The automaker closed at $20.54 yesterday in New York. Omaha, Nebraska-based Berkshire’s full stake was reported in a separate regulatory filing in May that didn’t disclose the purchase price or date.
Enlarge image Berkshire Buys GM Before Plunge as Backups Pick Stocks

Buffett, the world’s third-richest person, built a reputation for investing in stocks below intrinsic values and riding out market swings until prices rose. That strategy has helped Berkshire amass the largest holdings in companies including Coca-Cola Co. and American Express Co.

“It’s probably an advantage of Berkshire’s model that they don’t have to” focus on short-term results, Meyer Shields, an analyst at Stifel Nicolaus & Co., said in a phone interview. “The long-term track record of equities is pretty solid. So if you get yourself in that position, where you can endure a lot more fluctuation than almost any other investment company, then you should be able to benefit.”

Buffett, 81, has been preparing Berkshire for his eventual departure, in part by hiring former hedge-fund managers Ted Weschler and Todd Combs to help oversee a portion of the firm’s $89.1 billion stock portfolio. Buffett has said he makes Berkshire’s larger wagers, while the back-up stock pickers are responsible for smaller bets. Each oversees $2.75 billion, Buffett said May 5 at the company’s annual meeting.
One Quarter

“Combs, Weschler and Buffett are peas in a pod,” Jeff Matthews, a Berkshire shareholder and author of “Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett,” said in an e-mail. “I hardly think they worry about one quarter’s performance of one stock.”

Berkshire bought another 1.53 million GM shares through Feb. 14 for an average of $25.46 each, the insurance filings show. Taken together, the holdings had lost about $40 million in value through yesterday, assuming no shares were sold. Most of Berkshire’s stock portfolio is at insurance units that have their investments tracked by the NAIC. Buffett didn’t respond to a request for comment sent to an assistant.

GM’s shares fell 45 percent last year, even as the company regained the title of world’s largest automaker and earned a record annual profit of $9.19 billion. The U.S. government still owns a 32 percent stake in the Detroit-based firm after supporting its 2009 bankruptcy and restructuring.
European Crisis

Dan Akerson, GM’s chief executive officer, has said the shares have been pressured by troubles in Europe, which is struggling with a debt crisis. GM has lost $16.4 billion on the continent since 1999. A plan to break even last year was on track until November when the company pulled back its forecast as the European outlook worsened.

“For the whole sector, Europe is just going to keep weighing the stocks down at least for the rest of this year,” David Whiston, an equity analyst with Morningstar Inc. in Chicago, said in a phone interview.

GM’s slump may provide Berkshire with another opportunity to buy shares in a company that could benefit as U.S. consumers replace aging cars, said Tom Lewandowski, an analyst at Edward Jones & Co. GM sales climbed 16 percent in June, beating the average estimate of a 7.6 percent gain according to 11 analysts surveyed by Bloomberg. Shares surged 5.6 percent on July 3, when the data were released.
More Shares

“If anything, I would put money on them buying more of it if they have conviction in the investment,” Lewandowski, who advises clients to buy Berkshire stock, said in a phone interview. “It’s not going to be cause for concern.”

Berkshire also added to its holdings of DaVita Inc. (DVA) in the first quarter, buying 3.32 million shares at an average price of $84.04. The Denver-based provider of kidney dialysis care closed at $97.57 yesterday, delivering Buffett’s firm a $44.9 million paper profit if the shares are still held.

DaVita agreed on May 21 to acquire HealthCare Partners, which manages medical groups and physician networks under a system that rewards lowering costs. The acquisition will give DaVita an opportunity to profit from a growing part of the health-care market, Leerink Swann & Co. analysts led by Jason Gurda wrote in a June 8 note to clients.
HCP’s Model

“We like HCP’s model, which unlike many other companies in health care, doesn’t depend on using local market leverage to drive pricing higher,” they wrote.

Peter Grauer, chairman of Bloomberg LP, the parent company of Bloomberg News, has served on DaVita’s board of directors since 1994.

Berkshire’s bets on Wal-Mart Stores Inc., the world’s largest retailer, have also gained if they’re still intact. Buffett’s firm added 7.67 million shares in the first quarter. The largest portion was accumulated at an average price of $59.92 through March 29, according to NAIC data.

Wal-Mart, based in Bentonville, Arkansas, climbed to a record close of $71.08 yesterday after slumping earlier this year amid a bribery probe at the company’s Mexico operations. Buffett’s stake, including shares acquired previously, is valued at more than $3 billion.

“I don’t think the earning power of Wal-Mart five years from now will be materially affected by the outcome of this situation,” Buffett said at the meeting on May 5.

Other stock picks that increased from their purchase price include 1.3 million shares of Liberty Media Corp. (LMCA) and 2.65 million shares of DirecTV. (DTV) The Liberty Media shares were purchased at an average price of $83.03 and closed at $91.27 yesterday, while the DirecTV stake was accumulated at an average price of $44.48 and closed yesterday at $49.24.

The purchase dates and prices, detailed in NAIC statements, aren’t included in quarterly filings to the Securities and Exchange Commission. When stakes are built across multiple days, the NAIC allows companies to consolidate acquisitions under the date of the last purchase.

To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net.

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Warren Buffett is talking about an IPO of a company's stock or bonds through an investment bank.

He figures that the investment banker doing the selling has already FULLY PRICED the Issue. there is no chance that an investor is going to get a bargain price.

For this reason, Warren has STAYED AWAY FROM IPOs since he began his investment career.

Warren likes to Wait until the securities have traded fro a while and the shortsightedness of the stock market has had a chance to MISPRICE the securities DOWNWARD.

The Rule is simple: Investment bankers will never serve you a bargain, But the Stock Market Will.


Source: The Tao of Warren Buffett by Mary Buffett & David Clark.

The $62+ Billionaire WARREN BUFFETT focused on the business of making money. He is the CEO of Berkshire Hathaway who is dubbed the "Oracle of Omaha" The richest man in the world is argruably one of the most successful investors of all time and has proven you can make money quite easily, simply by following the right philosophies.

his most famous quotes:

- The only time to buy these is on a day with no "y" in it.

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"People are Looking for a FORMULA," responded Warren Buffett to a question posted about one of the books written about him.

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They hope that by finding the RIGHT Formula, all they'll have to do is to Plug it in the Computer and Watch the Money Pour Out.

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Source: The Winning Investment Habits of Warren Buffett & George Soros

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Warren Buffett feels that the perfect amount to leave children is


"ENOUGH Money so that they would feel they could DO Anything,

Hard work.png

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but NOT SO Much that they could Do NOTHING."

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http://en.wikiquote.org/wiki/Warren_Buffett
http://www.treehugger.com/corporate-res ... -much.html

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Warren Buffett quote "It's only when the Tide Goes Out that you learn who's been Swimming Naked."

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When the stock market is SOARING, Everyone is in up to their chins-splashing around and having FUN.

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When it DROPS-as it Always does-you quickly see Who was PREPARED…and who is desperately running to deeper waters, hoping to COVER themselves.


http://www.fwallstreet.com/article/33-h ... ing-naked/

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Warren Buffett in annual report, 2011:

2 Categories of investment possibilities enjoy maximum popularity at peaks of fear:

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~~ Terror over Economic Collapse drives individuals to currency-based assets, most particularly U.S. Obligations, and

~~~~ fear of Currency collapse fosters movement to sterile assets such as gold.


We heard “cash is KING” in late 2008, just when cash should be deployed rather than held.
Similarly, we heard “cash is TRASH” in the early 1980s just when fixed-dollar investments were at their most attractive level in memory.

On these occasions, investors who required a supportive crowd paid dearly for that comfort.

(1) Investments that are denominated in a given currency include money-market funds, bonds, mortgages, bank deposits, and other instruments.

Most of these currency-based investments are thought of as ‘safe.”

In truth, they are among the MOST DANGEROUS of assets.

Their beta may be zero, but their Risk is huge.

Over the past century these instruments have destroyed the purchasing power of investors in many countries, even as the holders continued to receive timely payments of interest and principal. This ugly result, moreover, will forever recur. Governments determine the ultimate value of money, and systemic forces will sometimes cause them to gravitate to policies that produce inflation. From time to time such policies span out of control.

Even in the U.S., where the wish for a stable currency is strong, the dollar has fallen a staggering 86% in value since 1965, when I took over management of Berkshire. It takes no less than $7 today to buy what $1 I did at that time.

Under today’s conditions, therefore, I do not like currency-based investments. Even so, Berkshire holds significant amounts of them, primarily of the short-term variety.

We primarily hold U.S. Treasury bills, the only investment that can be counted on for liquidity under the most chaotic of economic conditions. Our working level for liquidity is $20 billion; $10 billion is our absolute minimum.


(2) Second major category of investments involves asset that will NEVER PRODUCE ANYTHING, but that are purchased in the buyer’s HOPE that Someone else - who also knows that the assets will be Forever Unproductive – will Pay More for them in the future.

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Tulips, of all things, briefly became a favorite of such buyers in the 17th century.

This type of investment requires an expanding pool of buyers, who in turn, are enticed because they believe the buying pool will expand still futher. Owners are NOT inspired by what the asset itself can produce – it will remain lifeless forever – but rather by the belief that others will desire it even more avidly in the future.

The major asset in this category is GOLD, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful).

Gold, however, has 2 Significant Shortcomings, neither of much use nor procreative

True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.

What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As “bandwagon” investors join any party, they create their own truth - for a while.

Over the past 15 years, both Internet stocks and houses have demonstrated the extraordinary excesses that can be created by combining an initially sensible thesis with well-publicized rising prices. In these bubbles, an army of originally skeptical investors succumbed to the “proof” delivered by the market, and the pool of buyers – for a time – expanded sufficiently to keep the bandwagon rolling.

But bubbles blown large enough INEVITABLY POP.

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And then the old proverb is confirmed once again: “WHAT THE WISE MAN does in the Beginning, the FOOL does in the END.”


http://www.berkshirehathaway.com/letters/2011ltr.pdf

The Dutch Tulip Mania (or “Tulipomania”)
http://www.masteryourfinance.com/forum/ ... nia#p24636

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Warren's preferred type of investment mentioned in the annual report 2011:

My own preference – and you knew this was coming – is our third category: investment in Productive assets, whether BUSINESSES, FARMS, OR REAL ESTATE.

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Ideally, these assets should have the ability in inflationary times to deliver output that will retain its purchasing-power value while requiring a minimum of new capital investment. Farms, real estate, and many businesses such as Coca-Cola, IBM and our own See’s Candy meet that double-barreled test. [/color][/b]Certain other companies – think of our regulated utilities, for example – fail it because inflation places heavy capital requirements on them. To earn more, their owners must invest more.

Even so, these investments will remain superior to nonproductive or currency-based assets.

Whether the currency a century from now is based on gold, seashells, shark teeth, or a piece of paper (as today), people will be willing to exchange a couple of minutes of their daily labor for a Coca-Cola or some See’s peanut brittle.

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In the future the U.S. population will move more goods, consume more food, and require more living space than it does now. People will forever exchange what they produce for what others produce.

Our country’s businesses will continue to efficiently deliver goods and services wanted by our citizens.Metaphorically, these commercial “cows” will live for centuries and give ever greater quantities of “milk” to boot. Their value will be determined not by the medium of exchange but rather by their capacity to deliver milk.

Proceeds from the sale of the milk will compound for the owners of the cows, just as they did during the 20th century when the Dow increased from 66 to 11,497 (and paid loads of dividends as well).

Berkshire’s goal will be to increase its ownership of first-class businesses. Our first choice will be to own them in their entirety – but we will also be owners by way of holding sizable amounts of marketable stocks.

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I believe that over any extended period of time this category of investing will prove to be the runaway winner among the three* we’ve examined. More important, it will be by far the safest.


* Two other categories of investments:
(1) Investments that are denominated in a given currency include money-market funds, bonds, mortgages, bank deposits, and other instruments.
(2) asset that will NEVER PRODUCE ANYTHING, but that are purchased in the buyer’s HOPE that Someone else - who also knows that the assets will be Forever Unproductive – will Pay More for them in the future, eg. Gold
http://www.berkshirehathaway.com/letters/2011ltr.pdf

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“I’d be a bum on the street with a tin cup if the markets were always efficient.”

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Alvin explained in his blog,

Warren Buffett said it in relation to the Efficient Market Hypothesis where it claims that the market is always efficient.

Warren Buffett’s method of investing is to buy companies of value, at a price that is less than what it is actually worth. Thus, if the market is efficient, the ‘actual’ or intrinsic price (as Benjamin Graham calls it) of each company will be reflected correctly in its stock price, and he would not be able exploit and profit from it.

However, we can look at the situation at another point of view. In the long run, we can say that Warren Buffett does hope that the market is efficient. This is because he hopes that eventually the stock price of the company that he buys at a bargain rises to its true value in the future.

So, maybe we can say that the market is relatively not as efficient in the near future but eventually in the long run.

http://www.bigfatpurse.com/2007/09/warr ... %E2%80%9D/

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Below is shared by Alvin in his blog:

One of the wise quotes from Buffett is,

“It’s far better to buy a Wonderful company at a FAIR PRICE than a fair company at a wonderful price.”

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Warren Buffett is one of the richest guys in the world. He only buys good businesses. He evaluates the ability of the companies to earn money and the durability of this profits in the future.

He does not just buy cheap stocks because cheap stocks can stay cheap forever, or even disappear in the long run.

He wants to Hold only the Best money-making stocks in the world.

http://www.bigfatpurse.com/2012/09/the- ... e-fittest/

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Even Warren Buffett advocated the virtue of saving,

"Do NOT save what is left after spending,

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but Spend what is left After SAVING."

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Warren Buffett says

It is better to be APPROXIMATELY Right

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than Precisely Wrong.

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True investing is the allocation of capital in investments that offers
~~ safety of Principle and
~~~ expects reasonable Rate of Return.

Too many people fell to the allure of High Returns over Short Period of Time and End Up With NOTHING.

moneythology.blogspot.sg/2011/11/better-to-be-approximately-right-than.html

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Warren Buffett doesn't talk much, but when he does, it's well worth listening to. His sense of Timing has been remarkable.


"When I got started,the BARGAINS were Flowing like the Johnstown Flood;

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by 1969 it was like a LEAKY TOILET in Altoona."

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Pretty cagey, this Buffett. When all the sharp MBAs were crowding into the investment business, Buffett was quietly walking away.


Five years ago, late in 1969, when he was 39, he called it quits on the market. He liquidated his money management pool, Buffett Partnership, Ltd., and gave his clients their money back. Before that, in good years and bad, he had been beating the averages, making the partnership grow at a compounded annual rate of 30% before fees between 1957 and 1969. (That works out to a $10,000 investment growing to $300,000 and change.)

He quit essentially because he found the game no longer worth playing. Multiples on Good Stocks were Sky-High, the go-go boys were "performing" and the list was so picked over that the kind of solid bargains that Buffett likes were not to be had. He told his clients that they might do better in tax-exempt bonds than in playing the market.



* The Johnstown Flood (or Great Flood of 1889 as it became known locally) occurred on May 31, 1889.

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More than 2,200 people died in the Johnstown Flood, a disaster that horrified and fascinated newspaper readers all over the world in 1889.

On May 31 of that year, torrential spring rains broke the structurally deficient South Fork Dam, sending a 40-foot-high wall of water thundering down the Conemaugh Valley at 40 mph. Ninety-nine families perished; 98 children became orphans.



http://www.masteryourfinance.com/forum/ ... +tax#p1736

http://www.thinkfn.com/wikibolsa/Warren ... es_em_1974

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Rule No. 1 : NEVER Lose Money

Rule No. 2: Never forget rule No. 1

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The Larger the amount you lose, the greater the impact on your ability to earn money in the future.

7 Strategies to FATTEN Your Purse
posted by Dennis Ng on 30 Apr 2012 11:57 AM

Among all these books, the book that has the most influence on me is this book published in 1926 entitled, “The Richest Man in Babylon”, written by George Samuel Clason.

4th Cure: Protect your Capital from Losses

Warren Buffett, the richest investor in the world said that the first rule of investing is “do not lose money”, i.e. protect your capital from losses. How can you protect your capital?

Before you invest,

===> you need to find out in the worst case scenario, HOW MUCH you stand to LOSE from the investment.

====> Do not put all your eggs into one basket, diversify your savings into different investments. By doing so, even if some of the investments incur losses, overall, you might still be able to keep your capital intact.

http://www.masteryourfinance.com/forum/ ... =10&t=1351