Retirement Investing

Warren Buffet Investing: Philosophy & Strategy

Hailed as the greatest investor of all time, Warren Buffet has amassed a fortune that few can rival. In the recent years, Warren Buffet style investing has enjoyed a lot of financial industry and media attention. Individuals who are anxious to learn his style often spend countless hours pouring through his annual Berkshire Hathaway shareholder addresses for tips, wisdom and insight into the famed investment approach that has made countless individuals very rich.

Warren Buffet emphasizes that a critical investment factor when selecting companies is determining the intrinsic value of a business and paying a fair or bargain price. He does not care about the day to day fluctuations of the market or what the market is likely to do in the future. When analyzing a business, if he does not understand the business or industry then he does commit investment funds to it. In his past business purchasers, he has emphasized this point and makes a consistent reference to good management who know their industry well.

For the average investor trying to emulate Warren Buffet style investing, the investment approach can be confined to operating within your 'circle of competence'. As Buffet once stated, one does not need to be correct many times to make all the difference. In a career that spans over forty years, Buffet stressed that a mere 12 investment decisions have made all the difference. By applying through and diligent research, an investor can realize superior returns by concentrating on only a few specialist holdings.

Much about Warren Buffets investment strategy can be ascertained by the advertisements Buffet began to place in the Berkshire Hathaway annual reports seeking businesses for sale. Specifically, he was looking for companies with consistent earnings power of over 10 million after tax and without substantial debt exposure. The business had to be simple and understandable. High technology stocks were not an option because Buffet admitted that he does not understand them. This was amplified in a future shareholder meeting when Buffet formally apologized to shareholders for missing out on the tech boom. When Buffet purchasers businesses, he usually requires management or the founders who established the businesses to stay on board.

Investors who want to learn more about the Warren Buffet investment style of performance assessment can read the letters provided on the Berkshire Hathaway website. Many books have also been written by authors and can provide a useful history of the types of businesses Buffet has purchased and the conditions leading up to the purchase. His practical and extraordinary business savvy is definitely an investment style that any budding investor can learn from.

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