DISCIPLE-D1
EMPIREHOMES
Warren Buffet
System
|
|
|
|
|
|
|
his secrets
|
WARREN BUFFET QUOTES | |
|
|
|||
|
warren buffet
|
warren buffet
|
warren buffet
|
warren buffet |
| TECHNICAL ANALYSIS | |||||
| CHART ANALYSIS | TRADING STRATEGIES | ||||
| FUNDAMENTAL ANALYSIS | |||||
|
UPDATES & UTUBES
|
THE LETTER | 2000 | |
|
SNOWBALL
|
|||
|
CHINA
|
|
||
| WELLS FARGO |
|
||
|
|
Capital - Risk - Knowledge |
|
Wed Oct 24, 2007 5:32am EDT By Kirby Chien DALIAN, China (Reuters) - Berkshire Hathaway Inc's Warren Buffett said on Wednesday he is scouring the world for big businesses, but is doubtful about finding a good buy in China because the market is too hot. Hong Kong-listed shares in mainland companies (.HSCE: Quote, Profile, Research) have risen 89 percent so far this year, while the main Shanghai index (.SSEC: Quote, Profile, Research) has surged more than two-fold in 2007 and has jumped five-fold since the start of last year. Buffett, speaking to reporters at the opening of a factory owned by an Israeli company he controls, had been asked about Berkshire's investment in PetroChina Co Ltd (0857.HK: Quote, Profile, Research) (PTR.N: Quote, Profile, Research), the country's largest oil and gas producer. Buffett said last week that Berkshire (BRKa.N: Quote, Profile, Research) (BRKb.N: Quote, Profile, Research) had sold its entire stake in PetroChina, netting a huge profit for the insurance and investment company. "It was a very easy decision to buy PetroChina. It was one-third of what it was worth, maybe a quarter. I doubt in the present market I would find something like that. The market has been too hot. I will keep looking," he said. Berkshire at one point had a stake of 11 percent in PetroChina. The shares were worth $3.31 billion at the end of 2006, well above the $488 million that Berkshire paid for them, according to Berkshire's latest annual report. Buffett said he had written to PetroChina Chairman Jiang Jiemin on Tuesday, thanking him for the "terrific" job he and his managers had done for shareholders. Buffett said last week he had sold on valuation grounds, not because of criticism that PetroChina, through its government-owned parent China National Petroleum Corp, is too closely linked to Sudan. The Sudanese government has been blamed for what the White House has called genocide in the Darfur region. NOT ON OUR RADAR Buffett has long lamented his inability to deploy Berkshire's cash hoard, which totaled $47 billion at the end of June. The Omaha, Nebraska-based company owns more than 70 businesses and has some $100 billion of stock and bond investments. Buffett specifically denied that Berkshire was interested in buying shares in China Life Insurance Co (2628.HK: Quote, Profile, Research)(601628.SS: Quote, Profile, Research). "There was a rumor, and that is not true. We don't have anything against it. It just wasn't on our radar screen," he said. Because of Berkshire's huge market capitalisation, any acquisition would have to be big to make an impact on the company, he said. Buffett sidestepped a question about what advice he would give to Chinese stock market investors but was happy to restate his personal investment philosophy. He said he was hunting for well-managed companies in sectors that he understood with an eye to investing for 5, 10 or 20 years. "We cannot dance in and out of businesses," he said. He said he did not mind taking a big bet on a familiar business. "Diversification is a protection against ignorance," he said. "If you understand the business and buy at attractive prices, there really isn't much risk." Turning to the meltdown in the U.S. market for subprime mortgages, Buffett said: "Subprime is a real problem, but there are always problems. But we will get through it. How much pain it will produce, I don't know. It will be significant." Buffett was speaking at the opening of a factory owned by Israel's Iscar International Metalworking Cos, in which Berkshire has an 80 percent stake. (US$=7.4931 yuan)
|
“Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic”
“If you are not willing to own a stock for 10 years, do not even think about owning it for 10 minutes”
A public-opinion poll is no substitute for thought.
Chains of habit are too light to be felt until they are too heavy to be broken.
I always knew I was going to be rich. I don't think I ever doubted it for a minute.
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 buy expensive suits. They just look cheap on me.
I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
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.
If a business does well, the stock eventually follows.
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.
Our favourite holding period is forever.
Price is what you pay. Value is what you get.
Risk comes from not knowing what you're doing.
Risk is a part of God's game, alike for men and nations.
Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
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.
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 team with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
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.
1) Capital Preservation
George Soros and Warren Buffett share one thing in common: Both of them make their billions from investing alone, and had started with nothing.
George Soros is famous for his highly leveraged trades in the forex and futures markets, whereas Warren Buffett is famous for buying businesses for less than what he thinks they are worth. Most investors and traders would say that their first goal in investment is to make a lot of money. But the number one priority for both Soros and Buffet is capital preservation.
“Survive first, and make money afterwards.” - George Soros
“Investing Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.” - Warren Buffett
It may sound oxymoron to say that winning investors should try their best to preserve their capital when it comes to investing. First of all, why is it so important not to lose money? This is the logic: If you lose 50% of your capital, you have to make a 100% profit just to recoup all your losses. It is very easy to lose money, but extremely difficult to make profits. While it is possible that you eventually make enough to go back to square one, it will take a considerable amount of time to do that. And why would anyone want to spend time recouping instead of using that time to make profits?
Capital preservation must be seen as a long-term rule, and not be based on each and every trade. Limit your risk exposure to only trades that are very likely to go your way than not. Have a method to screen for these high probability trades based on your trading criteria.
2) Risk Management
There is risk in doing and not doing everything in life. Risk is unavoidable, and we can’t get around it. People tend to think that investing or trading is a very risky thing to do. This statement reeks of an absolute bias and contains an assumption. First of all, risk is not absolute; it is relative to the individual undertaking the activity. Second, it assumes that in order to make above-average profits, you must expose yourself to bigger risks.
A competent investor or trader most probably won’t find investing or trading to be a risky thing to do. An experienced pilot wouldn’t find flying a plane to be particularly risky, whereas someone without a pilot’s license would think so. While there is always some inherent risk involved, the magnitude of risk is relative to a person’s knowledge, understanding, experience and competence. Someone new to trading will think that trading is a very risky way of making money, and that is true - but to him. He doesn’t yet have a comprehensive understanding of how the markets work, how to get into high probability trades, how to manage his own emotions, and trading would definitely be very risky for someone like that to take the plunge without proper learning and experience.
As for taking big risks in order to make big profits, that may not necessarily the case when it comes to trading or investing. You can reduce risk by aiming for high probability trades or actively manage risk by monitoring and closing out your open positions if it seems that the market is not going your way. You can even completely avoid risk if there seems to be no good trades. There is risk in everything you do - whether you walk home, drive or date a stranger. It is OK to take risks. Have a risk-minimizing system in place so that you can come out profitable in the long-term.
3) Invest In Your Knowledge
There are 4 stages of learning:
- Unconscious incompetence: doesn’t know that he doesn’t know
- Conscious incompetence: knows that he doesn’t know
- Conscious competence: knows what he knows, and knows what he doesn’t know
- Unconscious competence: knows that he knows
Many new traders are in the first stage of unconscious incompetence. They are more prone to losses because they are quite unaware of what they are doing due to their limited knowledge and experience. If you are a new to investing or trading any particular asset, accept that you really don’t know much about it. Make the subject your expertise and dedicate some time to learning more about it. Once you gain more experience with investing or trading, you may not feel anymore that it is so risky to trade compared to when you were clueless about it.
As Warren Buffett says: “Risk comes from not knowing what you are doing.”