Warren Buffett

Buffett’s early life: He began working at his father's brokerage at the age of 11, and that same year made his first stock purchase, buying Cities Services preferred shares for $38 each. He sold them when the price reached $40, only to see them rocket to $200 a few years later. This taught him the importance of investing in good companies for the long term

Do you know that he ran the partnerships out of his bedroom?

His investment strategy:Buffett employed a three-pronged approach:

1) Generals: undervalued securities that possess margin of safety and meet expected return-to-risk

2) characteristics Arbitrages: company events that are not related to broader market changes, such as mergers and acquisitions, liquidation, etc.

3) Controls: build sizeable holdings, ally with other shareholders or employ proxies to effect changes in companies.

Buffett's philosophy on business investing is a modification of the value investing approach of his mentor Benjamin Graham. Graham bought companies because they were cheap compared to their intrinsic value.

He was of the belief that as long as the market undervalued them relative to their intrinsic value he was making a solid investment. He reasoned that the market will eventually realize it has undervalued the company and will correct its course regardless of what type of business the company was in.

The following are some questions to determine what business to buy, based on the book Buffettology by Mary Buffett:

*Is the company in an industry of good economics, i.e., not an industry competing on price points.

*Does the company have a consumer monopoly or brand name that commands loyalty?

*Can any company with an abundance of resources compete successfully with the company?

*Are the earnings on an upward trend with good and consistent margins?

*Is the debt-to-equity ratio low or is the earnings-to-debt ratio high, i.e. can the company repay debt in few years from its earnings?

*ROE is consistent over its history and high compared to industry averages?

*Is it more than 12%? Or does the company have high and consistent Return on total capital?

*Does the company retain earnings for growth?

The business should not have high maintenance cost of operations, low capital expenditure or investment cash outflow. This is not the same as investing to expand capacity.

*Does the company reinvest earnings in good business opportunities?

*Track record of management accomplishing these investments?*Is the company free to adjust prices for inflation?

Warren Buffett

There was a one hour interview on CNBC with Warren Buffett, the second richest man who has donated $31 billion to charity.

Here are some very interesting aspects of his life:

1. He bought his first share at age 11 and he now regrets that he started too late!

2. He bought a small farm at age 14 with savings from delivering newspapers.

3. He still lives in the same small 3-bedroom house in mid-town Omaha , that he bought after he got married 50 years ago. He says that he has everything he needs in that house. His house does not have a wall or a fence.

4. He drives his own car everywhere and does not have a driver or security people around him.

5. He never travels by private jet, although he owns the world's largest private jet company.

6. His company, Berkshire Hathaway, owns 63 companies. He writes only one letter each year to the CEOs of these companies, giving them goals for the year. He never holds meetings or calls them on a regular basis. He has given his CEO's only two rules. Rule number 1: do not lose any of your share holder's money. Rule number 2: Do not forget rule number 1.

7. He does not socialize with the high society crowd. His past time after he gets home is to make himself some pop corn and watch Television.

8. Bill Gates, the world's richest man met him for the first time only 5 years ago. Bill Gates did not think he had anything in common with Warren Buffet. So he had scheduled his meeting only for half hour. But when Gates met him, the meeting lasted for ten hours and Bill Gates became a devotee of Warren Buffet.

9. Warren Buffet does not carry a cell phone, nor has a computer on his desk.

His advice to young people: "Stay away from credit cards and invest in yourself and Remember:

A. Money doesn't create man but it is the man who created money.

B. Live your life as simple as you are.

C. Don't do what others say, just listen them, but do what you feel good.

D. Don't go on brand name; just wear those things in which u feel comfortable.

E. Don't waste your money on unnecessary things; just spend on them who really in need rather.

F. After all it's your life then why give chance to others to rule our life."

Warren Buffett

Warren Edward Buffett is a U.S. investor, businessman, and philanthropist. He is one of the most successful investors in history, the primary shareholder and CEO of Berkshire Hathaway, and in 2008 was ranked by Forbes as the 2nd richest person in the world with an estimated net worth of approximately $62 billion.

Buffett is often called the "Oracle of Omaha" or the "Sage of Omaha” and is noted for his adherence to the value investing philosophy and for his personal frugality despite his immense wealth.

Buffett is also a notable philanthropist, having pledged to give away 85 percent of his fortune to the Gates Foundation. He also serves as a member of the board of trustees at Grinnell College.

In 1999, Buffett was named the top money manager of the twentieth century in a survey by the Carson Group, ahead of Peter Lynch and John Templeton. In 2007, he was listed among Time's 100 Most Influential People in the world.