# Warren Buffett



## Investor (13 May 2005)

I am starting a new thread on Warren Buffett, who is widely regarded as the best investor the world has ever seen. I will add to the posts here gradually.

Ladies and Gentlemen, I present to you "The Oracle from Omaha".

As a start, from the internet, I gathered the following:

"THE CROWD began gathering at 6am last Saturday outside the Qwest Centre arena in Omaha, Nebraska. Billboards advertised gigs by U2 and Paul McCartney. Motley Crue had just played Qwest, accompanied by leashed dwarves and PVC-clad trapeze artistes. This crowd was more soberly attired. Shivering on an unseasonably cold morning, they were here to see Warren Buffett, the world’s most successful investor. But he, too, would sing. 
After the 17,000 Buffett fans had taken their seats, giant video screens came to life above a small stage. Buffett appeared wearing dungarees, a wooden shack in the background. “Somewhere over the rainbow. Way up high. There’s a land that I heard of. Once in a lullaby...” Buffett loves to sing. He does it every year, sometimes accompanying himself on a ukulele. 

Before he can get to the song’s tricky bit a tornado destroys the house and whisks Buffett off to Oz on a cartoon adventure, accompanied by his caustic sidekick Charlie Munger as the Tin Man and friends Bill Gates, Microsoft’s co-founder, as the Scarecrow and Arnold Schwarzenegger as the cowardly Lion. 

It’s the start of the Berkshire Hathaway annual shareholder meeting. It is a strange amalgam of shopping trip, county fair, weekend MBA, history lecture and social club. The meeting always starts with a film, made by Buffett’s daughter, Susie. 

Shareholders give the film rapturous applause, but there is trouble in Oz. Buffett is now 74, Munger 81. Both have sharper minds than most men half their age but neither is immortal. Buffett’s wife, Susie, died this year and mortality and succession seem to be much on his mind. 

Like many conglomerates, Berkshire is a bizarre collection of businesses. Among other assets, it owns 8% of Coca-Cola, 12.1% of American Express, 18.1% of The Washington Post, Fruit of the Loom leisurewear, Acme building products and the insurers General Re and Geico. 

What these investments have in common is Buffett. For the long-term investor there have been few opportunities as rich as Berkshire. Since 1965, its Class A stock has returned an average of 26% a year. It now sells for $84,950 (£44,767) a share, valuing Buffett’s 29% stake at $42 billion. 

Buffett has become a hero to the wider business community. Valuing his integrity above all, he has survived the wave of corporate scandals unscathed. Malpractice in the insurance industry has led to regulators in Australia and America probing his companies, and late on Friday Berkshire disclosed that the Securities and Exchange Commission planned to file a fraud complaint against an unnamed executive at General Re, one of its largest insurance businesses. But not even Eliot Spitzer, New York ’s crusading attorney- general, believes Buffett has sinned. He is almost untouchable ”” the patron saint of American capitalism. 

Buffett invited Gates on to Berkshire’s board this year. He described Gates, the only man who is richer than him, as “a trustee of the will”, who can ensure the company is run as Buffett would want it to be. 

But not even Gates and Buffett’s combined wealth and brainpower can halt Buffett’s slide to the high-risk end of the actuarial tables. Investors are worrying about the future. Fitch, a credit-rating agency, recently downgraded its outlook on Berkshire from “stable” to “negative”, noting in its report that Fitch “does not believe Mr Buffett’s talents can be easily replaced, or that Berkshire’s strategies would be sustainable in his absence”. 

BUFFETT and Munger are quite a double act. The two have worked together since the 1960s. Buffett is chatty, cordial, a joker. Munger is patrician and severe ”” Buffett calls him “the abominable no man”. Buffett is a liberal Democrat, Munger a right-wing Republican. They adore each other ”” rarely does one miss an opportunity to praise the other. 

Asked about his best investment, Buffett named Munger, adding “he works cheap, too”. 

The pair spent nine hours last weekend answering questions from shareholders and the press. The topics included Adam Smith; rap music; hedge funds; marriage; the future of newspapers; Coca-Cola; envy; integrity; temperament versus intelligence; social security; hurricanes and Schwarzenegger. 

Buffett opened the meeting: “Good morning. I’m Warren, he’s Charlie. We work together. We really don’t have any choice because he can hear and I can see.” 

Some questions, like how he started investing, Buffett must have been asked a thousand times but are still answered in good cheer. “I got interested when I was seven. I wasted my time before that,” he joked. Buffett and Munger believe you don’t have to be smart ”” well not too smart ”” to be a successful investor: “If you have an IQ of more than 130, you can give the rest of the points away,” said Munger. But for all Buffett’s cheery demeanour, Munger’s mood is a better guide to Buffett’s thinking. Both believe the economy is at a turning point. Berkshire has more than $40 billion it would like to spend. But, because of what they see as the inflated prices businesses are attracting, there are no bargains to be had. “For the first 30 years my ideas outran my capital,” said Buffett. “Now my capital outruns my ideas.” 

We are at a peak, warn the Berkshire boys, and they are looking down into the trough. 

A number of shareholders ask the “Sage of Omaha” about house prices ”” clearly overvalued in some areas, he said. Buffett recently sold a house in Laguna, California, for $3.5m. “It was on 2,000 sq ft of land, maybe one twentieth of an acre, and the house might cost about $500,000 if you wanted to replace it. So the land sold for something like $60m an acre.” 

The housing market is not the worst excess Berkshire’s bosses see. They are also concerned about America’s trade deficit. 

Buffett compared America to “an incredibly rich family” that was “consuming more than we bring in. So we sell off a piece of the farm, or mortgage it. We can’t see what’s being sold. We trade away a bit of the farm every day and the rest of the world is happy to buy it. That can go on for a long time but our children will be paying for it one way or another.” 

Munger is more blunt. He said America had reached the apex of western civilisation and that today society reminded him of “Sodom and Gomorrah”. 

Excesses in the market could trigger a catastrophe at any time, said Buffett. The speed with which money could now be moved by what Munger called “the electronic herd” of hedge-fund managers meant a financial crisis could spiral out of control very quickly. 

“The last 60 years have been the best years for western civilisation. My generation has been very favoured. It is unlikely that the next 60 years will be so favourable,” said Munger. 

Both men said China was bound to be the next great world power. “It’s quite conceivable that China will end up being the most important nation in the world,” said Munger. The scale of the country plus the Chinese work ethic and enthusiasm would make them hard to beat, said Munger. “When I look at a modern symphony orchestra, every instrument that is difficult to play has an oriental face over it,” he said. The West, by contrast, was lazy and decadent “ living in extreme affluence with all these people running hedge funds,” he said. 

PERHAPS it was the warnings of doom, perhaps it was the discount ”” either way at the Berkshire-owned Borsheim’s jewellery store the next day shareholders were shopping like there was no tomorrow. Buffett’s magic was still paying off. 

Jack Fitzpatrick, 26, had come from Reno, Nevada, with his father, Frank, 61. It was junior’s first visit; his father had been coming for 10 years and met his wife in Omaha. 

“When we were kids we never got sports stories, we got Warren’s investment stories. It’s like seeing a part of history,” said Frank. Would he come if Buffett wasn’t here? “No.” What if Gates was speaking? “He’s no Warren Buffett.”


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## Investor (15 May 2005)

*Re: An Introduction to Warren Buffett*

Warren Edward Buffett was born on 30 August 1930. He jokingly says that he was conceived during the fall of the 1929 stock market crash because his stockbroker father had so little to do then.

At the age of six, he purchased a six-pack of Coke bottles for 25 cents and sold them for a nickel each, setting a lifelong benchmark of a 20% investment return. Fifty years later, his company became the largest shareholder of Coca Cola. 

By age eight, he read books about business. By age ten, he checked out every book from the local Omaha library about investing, finance and the stock market. 

At eleven years old, he bought his first 3 shares in a company at $38 per share. The price soon fell to $27, but not long after, went to $40. Warren sold but learned an important and early lesson when the price of that share rose to over $200 each. This first experience of selling based on price instead of value would form a cornerstone in his investment philosophy.

At fourteen, Warren was making $175 a month delivering the Washington Post. Later, his company became the largest shareholder of Washington Post.

He finished high school at age sixteen and had a self made net worth of $6,000. He had already read 100 business books.

Warren graduated with a Bachelor of Science in Economics from the University of Nebraska at the age of nineteen.

At 21, he graduated with a Masters in Economics from Columbia University where he was taught by Benjamin Graham, an important mentor for the young Buffett.

To be continued.......


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## Investor (16 May 2005)

*Re: An Introduction to Warren Buffett*

At the age of 21, Buffett discovered that his mentor, Graham, was Chairman of GEICO insurance. Buffett instinctively knew he had to learn more about it.

He took the train to Washington to learn from a GEICO executive working on a Saturday and repeated the visits for some time. Buffett invested all of his net worth $10,282 at the time, into GEICO. This experience would also help him understand the company that he would one day own in its entirety.

Upon graduation, Buffett worked with his father as a stockbroker and taught a night class (called Investment Principles) at the University of Omaha.

At 24, he was offered employment by Graham in New York. Two years later, Graham retired and Buffett returned to Omaha to launch a home based investment partnership. His net worth was now $140,000.

At 27, he bought his 5 bedroom house in Omaha, for $31,500. This was 10% of his net worth. He still lives in the same house today.

By age 30, he became a millionaire. During the 13 years that he managed the partnership, the average annual return was 29.5% p.a. 

To be continued.....


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## Investor (20 May 2005)

*Re: An Introduction to Warren Buffett*

In 1962, Buffett began buying shares in a textile manufacturing firm called Berkshire Hathaway, based in New Bedford, Massachusetts, for $7 a share, which was a substantial discount to its $17 book value. A year later, the Buffett partnership was its largest shareholder.

Apparently, Buffett later calls this investment to be a mistake. He took control of the company in 1965 and closed it some 20 years later because he was unable to sustain the textile business against cheaper foreign companies.

In 1969, following his most successful year, Buffett closed the partnership and liquidated the $900 million portfolio to its partners because he felt that he could no longer find excellent value investments in a runaway bull market.

At 39, his net worth was $25 million and he owned almost 50% of Berkshire. He then became Chairman of Berkshire and began operating within a publicly traded corporation.

Under a partnership, he selected the partners he wanted. With a public company, other shareholders selected him and he wanted to have the right ones select and the right ones to stay. He does this by communications through his annual letter to shareholders.

Buffett became a billionaire at 56.

With a 29.55% average annual return for 13 years with the previous Buffett partnership and a 22.6% average annual return with Berkshire over 38 years compared to 11% p.a. for the S & P 500, there is no close second place to Buffett's investment record.

To be continued ........


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## Investor (25 May 2005)

*Re: An Introduction to Warren Buffett*

*Meet Mr Market*

The foundation of both Benjamin Graham's and Warren Buffett's investment philosophies is a view of the nature of investment markets that Graham personified in "Mr Market".

In one of his letters to his shareholders, Buffett stated:

"Ben Graham, my friend and teacher, long ago described the mental attitude toward market fluctuations that I believe to be most conducive to investment success. He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr Market who is your partner in a private business. 

Without fail, Mr Market appears daily and names a price at which he will either buy your interest or sell you his.

Even though the business that the two of you own may have economic characteristics that are stable, Mr Market's quotations will be anything but.

For, sad to say, the poor fellow has incurable emotional problems. At times, he falls euphoric and can see only the favourable factors affecting the business. When in that mood, he names a very high price because he fears you will snap up his interest and rob him of imminent gains. 

At other times, he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions, he will name a very low price, since he is terrified that you will unload your interest to him.

Mr Market has another endearing characteristic: He does not mind being ignored. If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic depressive his behaviour, the better for you.

But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: *Mr Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful.*

If he shows up someday in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence.

Indeed, if you aren't certain that you understand and can value your business far better than Mr Market, you don't belong in the game. As they say in poker, "if you've been in the game 30 minutes and you don't know who the patsy is, you are the patsy."

Graham's and Buffett's answer is to use their own, independently derived standard of value for determining when a stock is cheap or expensive.

Graham and Buffett accept market fluctuations as a given. The focus of their investment philosophies is on determining value and the characteristics of a sound investment.


Coming up next .... the margin of safety approach.


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## Investor (25 May 2005)

*Re: An Introduction to Warren Buffett*

*The Margin-of-safety principle*

Another leading prudential legacy from Graham is his margin of safety principle. This principle holds that one should not make an investment in a security unless there is a sufficient basis for believing that the price being paid is substantially lower than the value being delivered. 

Buffett follows this principle devotedly, noting that Graham had said that if forced to distill the secret of sound investment into three words, they would be "margin of safety".

Over 40 years after first reading that, Buffett still thinks those are the right words. While modern finance theory enthusiasts cite market efficiency to deny there is a difference between price (what you pay) and value (what you get), Buffett and Graham regard it as all the difference in the world.


Coming up next .... the application of this principle by Buffett and an example of what can go wrong when the principle is ignored.


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## noirua (17 August 2007)

*Re: An Introduction to Warren Buffett*

A special announcement will be made by Mr Warren Buffet in about an hours time. Before the market opens, no worries. Will be back.


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## noirua (17 August 2007)

*Re: An Introduction to Warren Buffett*

Billionaire investor Warren Buffett, the so-called Sage of Omaha, has signalled he is waiting in the wings to see what buying opportunities emerge from the stock market turmoil.
"Generally speaking, when there's a certain amount of chaos in certain sections, it is unpredictable where the fallout will be, but the fallout offers some real opportunity," the Chairman of Berkshire Hathaway said in an interview with CNBC. "When dislocations occur, things get more mispriced." Earlier this year, he complained it was getting harder to find companies to acquire at suitable valuations.


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## R0n1n (17 August 2007)

*Re: An Introduction to Warren Buffett*

I had found this spreadsheet on my troll through the net. Hope you find it useful. 
(its from Buffett Valuation Worksheet ,January/February 1998, Computerized Investing, www.aaii.com)


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## wbooo (17 August 2007)

*Re: An Introduction to Warren Buffett*

Hi

I too am a Warren Buffet fan, though I do invest in smaller companies using the all the same principles, bar the International brand name, since smaller companies are often more obscure.

How long have you been investing?.  Wouldn't you be better off just reccommending a few Buffet books rather then writing about his strategies.

I find buying in the USA both expensive and a pain in the butt, what with the exchange rate and everything, I have been holding Mcdonalds for about 2.5 yrs, it has doubled since I bought it, I also have Microsoft, I bought it just before they announced their $3 special dividend, the capital price is only up 7% since I bought it, I think I should sell it now.

Over here I have done well with Cochlear Corporate Express, HHG, Westfeilds and some others, my current investments include IDT, COH and CXP, AEC is going to have a bumper year too, but I am fully invested, so can't buy anymore.  I use the Consciousinvestor software to screen my stocks both for the US and Australia, it is the best investment I have ever made, do you use it?


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## R0n1n (17 August 2007)

*Re: An Introduction to Warren Buffett*



wbooo said:


> I use the Consciousinvestor software to screen my stocks both for the US and Australia, it is the best investment I have ever made, do you use it?




I dont, but it sounds interesting. Can you give more info? thanx.


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## noirua (17 February 2008)

*Re: An Introduction to Warren Buffett*

"Warren Buffett Watch" at CNBC.  Has revealed an 8.6% stake, by Berkshire Hathaway, in Kraft Foods and outlines recent increases and reductions in stakes:  http://www.cnbc.com/id/23172142


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## James Austin (23 October 2008)

*Re: An Introduction to Warren Buffett*

for any buffett fans,
the man behind the investor
http://www.abc.net.au/rn/latenightlive/stories/2008/2395868.htm


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## Sean K (9 November 2008)

*Warren Buffett watch*

Well, he's the richest man in the world for the minute.

He must know something and is worth following.

Please add any soundbites, or updates here as they come through. 


*Warren Buffett's Berkshire Hathaway profits tumble*
Tom Bawden | November 08, 2008 

BERKSHIRE Hathaway, the investment firm run by Warren Buffett, the world's richest man reported a 77 per cent drop in third-quarter profits, as a $US1.01 billion loss on derivatives and other investments combined with sharply reduced results from its operations across the board.

The group announced net earnings of $US1.06 billion ($1.6 billion), it’s fourth straight quarterly decline, down from $US4.55 billion the year earlier as so-called operating earnings on its insurance underwriting business plummeted by 83 per cent. 

Profits on investments made by Berkshire’s insurance unit fell by 12 per cent to $US809 million in the third quarter, while the non-insurance businesses it owns contributed a collective profit of $US1.08 billion, 7.8 per cent down. 

Berkshire’s operating profit fell 18 per cent to $US2.07 billion, or $US1335 per share, from $US2.56 billion, or $US1655. It fell short of analysts' average expectation of $US1429 per share. Revenue fell 7 percent to $US27.93 billion. 

Last month, Mr Buffett threw his weight behind US stocks as the man who has always invested his own money in government bonds revealed that he had recently switched most of his personal account into American shares. 

In an editorial published in yesterday's editions of The New York Times, Mr Buffett, the head of the Berkshire Hathaway investment group and the world's richest man, acknowledged that the economic outlook was dire and described the financial world as being in a mess. 

The man known as the Sage of Omaha, wrote: "Its problems, moreover, have been leaking into the general economy and the leaks are now turning into a gusher. In the near-term, unemployment will rise, business activity will falter and headlines will continue to be scary." 

*Mr Buffett's conclusion is to buy shares in US companies.* "I have been buying American stocks. This is my personal account I am talking about, in which previously I owned nothing but US government bonds. If prices keep looking attractive, my non-Berkshire net worth will soon be 100 per cent in US equities." 

The Times


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## nunthewiser (9 November 2008)

*Re: Warren Buffett watch*

Oh sorry , wrong type of thread , i thought he was selling assets to cover costs ..."Warren Buffett watch " was gunna make a bid and stick it with the brolex


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## Sean K (10 November 2008)

*Re: Warren Buffett watch*



nunthewiser said:


> Oh sorry , wrong type of thread , i thought he was selling assets to cover costs ..."Warren Buffett watch " was gunna make a bid and stick it with the brolex



 LOL

A lot of 'traders' who post here will scoff at this thread because Buffett is an investor who buys and holds for some time and probably doesn't use fib numbers or count 12345 ABC to make an investment decision. 

That's fine, but you can't discount that he's done ok by doing what he does, and that has been investing.

Perhaps the time of Buffett is over, or perhaps this particular time is not his? Or, he's mismanaged his investments the past year and has lost his mojo?

Whatever the case, he's probably got some interesting things to say on the economy and/or investing so I'll add them here for my own interest...

Initial bid on the watch is $1000.


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## Sean K (10 November 2008)

Ooops, just found that there was already a thread on Buffett.

Have merged them.


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## sinner (24 November 2008)

*One for the Buffett fans...*

Just spotted this:

November 19 - Bloomberg (Erik Holm and Shannon D. Harrington): "The cost of protecting against default by Warren Buffett's AAA rated Berkshire Hathaway Inc. has almost tripled in two months... The cost to protect against Berkshire being unable to meet its debt payments, based on credit-default swaps, is more than four times that of rival insurer Travelers Cos. At those levels, the swaps are typical of companies rated Baa3 by Moody's.... one level above junk. The price may have risen on concern that the billionaire's firm could lose a $37 billion bet on world stock market values..."

Anyone know when the "bet" will be called? One to keep an eye on surely...

Apologies if this is too frivolous to start a thread over!


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## chops_a_must (24 November 2008)

*Re: One for the Buffett fans...*

Bit of a crack up when you look at his opinions on derivatives.


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## J.B.Nimble (24 November 2008)

*Re: One for the Buffett fans...*



> Anyone know when the "bet" will be called? One to keep an eye on surely...





A very long wait if you are patient ... doesn't seem like such a big risk over this time frame.


> About a month ago Buffett was sold about $40 billion worth of insurance against the four major indices in the world. The European-style options (which can only be exercised on their expiration dates) were written (sold) are against four major international indices including the S&P 500. The options will expire between 2019 and 2027.
> 
> It’s reported Berkshire received $4.5 billion cash for writing these contracts. Considering the contracts don’t start expiring until 2019, Berkshire is free to do with what it sees fit with the cash.



http://seekingalpha.com/article/107341-buffett-s-gamble-40-billion-bet-on-volatility


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## Naked shorts (24 November 2008)

*Re: One for the Buffett fans...*

The Berkshire Hathaway stock has taken a huge dive on this news.

from almost $120,000 at the start of the month to $76,000
http://finance.google.com/finance?tkr=1&q=NYSE:BRK.A


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## jono1887 (14 August 2009)

Warren Buffets methodology is now fairly widely known but why has any other fund manager or investor been able to match him??


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## prawn_86 (14 August 2009)

*Re: Warren Buffet*

Because he takes an active role in the management of the business. He is more like a private equity firm in that sense. Takes a large stake, replaces the board, changes procedures etc etc, its not just simple 'investing'


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## Nick Radge (14 August 2009)

Because he is a lot smarter than he puts out to be.


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## Knobby22 (14 August 2009)

Agree with previous. Also he is not lazy. Really studies companies in depth.


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## ceasar73 (14 August 2009)

Nick Radge said:


> Because he is a lot smarter than he puts out to be.




Please explain

thanks


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## ROE (14 August 2009)

jono1887 said:


> Warren Buffets methodology is now fairly widely known but why has any other fund manager or investor been able to match him??




Warren is the most famous one but there are hundred other who follow the same principles
and has done well.

Warren is influence by his Partner Charlie Munger a real smart investor too but he doesn't like the spot light Warren get all the spot light and he's a very good investor himself but the guys behind Warren are just as impressive.


Lou Simpson 
the man who manage BRK insurance equity portfolio, amazing records

Ajit Jain 
Excellent risk manager for their re-insurance division, this guys is a genius he can calculate any risk and get Warren to stump up the capital for it and get awesome return ...
could be one of the replacement for Warren to run BRK

Walter Schloss 

Bill Ruane

Tom Knapp

and in Australia we have Uncle Kerr Neilson at Platinum fund

And I dare say many retail investors who profit millions and are unknown to the mass.

The practice works and you can do better than the market return and 
I can only speak from experience 

It sound easy not that easy in practice...patient...judgment..independent thinker... have the guts to double down when everyone bailed and media run wild with crazy headline.

"Margin of safety" "Intrinsic value" often said rarely practice
but if you often practice and rarely spoken you do better


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## Kryzz (14 August 2009)

never realised how much berkshire hathaway traded for until now, $102,150, must be doin something right


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## MRC & Co (14 August 2009)

jono1887 said:


> Warren Buffets methodology is now fairly widely known but why has any other fund manager or investor been able to match him??




George Soros wrote a book, detailing his thought process, reasons and live trades.  Why can't anybody match it?  That's the reason it's called discretionary, nobody can possibly think exactly the same as you, and have the same external influences (Buffett was lucky to be investing with a buy and hold strategy over the biggest boom period seen in his markets EVER recorded in 50,000 years of human civilization, not a bad external influence eh).  

But like ROE says, doesn't mean others don't use similar methods to do well and beat market returns.


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## GumbyLearner (14 August 2009)

Kryzz said:


> never realised how much berkshire hathaway traded for until now, $102,150, must be doin something right




Yes it's amazing. The guy doesn't believe in splits and still lives in the family home in Omaha. A true boss.


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## brettc4 (14 August 2009)

Just out of curiousity, Does anyone here own any Bershire Hathaway Shares, or even been to one their General Meetings.

I have seen a doco on him and the General Meeting looked like the rulling of the bulls to get a seat up close.


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## jono1887 (15 August 2009)

Kryzz said:


> never realised how much berkshire hathaway traded for until now, $102,150, must be doin something right




And to think his partners from his original trading partnership sold out at $43 per share only 40 years ago.



ceasar73 said:


> Please explain
> 
> thanks




He has a photographic memory... apparently he has memorized the balance sheet of every listed company in the US plus many non-listed companies. They guy is just plain brilliant!


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## Trevor_S (15 August 2009)

jono1887 said:


> And to think his partners from his original trading partnership sold out at $43 per share only 40 years ago.




No doubt they had a stop loss in place 

or they sold out on a market correction, patting themselves on the back at the time for their foresight, and are still waiting for it to retrace the lows to buy back in.


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## Tysonboss1 (6 September 2009)

jono1887 said:


> Warren Buffets methodology is now fairly widely known but why has any other fund manager or investor been able to match him??




A little known fact, 

Westfields Has out performed Warren Buffets berkshire hathaway over the years.

So does this make Frank lowy the worlds greatest investor.


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## robots (6 September 2009)

hello,

and starting out with a delicatessen and then moving onto a few other properties, amazing alright Tyson

thankyou
professor robots


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## Nick Radge (6 September 2009)

Post 2004 WDC has an annualized return of 2.1%.


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## Tysonboss1 (6 September 2009)

Nick Radge said:


> Post 2004 WDC has an annualized return of 2.1%.




Good to see it's still out performing bershire hathaway then.


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## Tysonboss1 (6 September 2009)

Kryzz said:


> never realised how much berkshire hathaway traded for until now, $102,150, must be doin something right




After running a business for over forty years without ever paying a dividend, you would want to hope your shares are worth that much.

so if the figure is right that his shares were worth $43 a bit over 40 years ago. that means they have doubled in valued a bit over 11 times, That shouldn't be to difficult for an astute investor if all earnings are retained and compounded.

The Bad thing is without dividends being paid, Investors are forced to sell to realise earnings meaning very few people would have held long enough to have the benefit of all that compounding.

Don't get me wrong though, I am a big fan of buffet. Just wish they would pay divy, I would proballly take a slice then.


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## jono1887 (6 September 2009)

hasnt berkshire hathaway averaged 20+% over the last 40 years straight with not a single negative year. I dont think WDC has anywhere near matched Buffet's record


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## Tysonboss1 (6 September 2009)

jono1887 said:


> hasnt berkshire hathaway averaged 20+% over the last 40 years straight with not a single negative year. I dont think WDC has anywhere near matched Buffet's record




Here is a quote of the back of Frank lowy's book "Pushing the limits"

*An investment of $1000 in westfield shares in 1960 was worth $133,200,000 at the end of 2000 (assuming all dividends were reinvested). This performance is unrivalled in Australia and out strips the growth offered by internationally renowned investors sauch as george soros and warren buffet.*

But yes to answer your question berkshire has had negative years, Last year being an example. I think berkshire has averaged growth of 23%p/a

Warren Buffet is richer than Frank Lowy, But frank has achieved faster growth.

Warren has just had more years of compounding due to franks later start, Franks early years were spent trying to survive the Holocaust and later moving to israel where he fought in the Israel war of independence, before moving to Australia and starting a deli in his late 20's.


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## Mr J (6 September 2009)

jono1887 said:


> Warren Buffets methodology is now fairly widely known but why has any other fund manager or investor been able to match him??




I'm sure many do, they just relatively unknown. Buffet is known because he's huge, not because he's the best. Of course, some will argue that he became huge by being the best, but I think that's a little naive. A large reason for his success is that he's been around for so long. I'm sure better investors have come and gone during that time. There's also a lot of hype surrounding him, shown by this thread.



> He has a photographic memory... apparently he has memorized the balance sheet of every listed company in the US plus many non-listed companies. They guy is just plain brilliant!




Did you hear that from someone down at the pub?


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## jono1887 (6 September 2009)

Mr J said:


> Did you hear that from someone down at the pub?




No, its in his biography. But he does have a photographic memory.. theres some quote from his saying how he was able to get though highschool and first yr uni getting 100% all through his exams by reading the text book the night before.


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## jono1887 (6 September 2009)

Tysonboss1 said:


> Here is a quote of the back of Frank lowy's book "Pushing the limits"
> 
> *An investment of $1000 in westfield shares in 1960 was worth $133,200,000 at the end of 2000 (assuming all dividends were reinvested). This performance is unrivalled in Australia and out strips the growth offered by internationally renowned investors sauch as george soros and warren buffet.*
> 
> ...




frank lowry didnt gain from pure investing did he? but berkshire hathaway has had negative years (stock price fallen) but never had a year of actually balance sheet loss.


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## Tysonboss1 (6 September 2009)

jono1887 said:


> frank lowry didnt gain from pure investing did he? but berkshire hathaway has had negative years (stock price fallen) but never had a year of actually balance sheet loss.




Until last year westfield had a better claim.

For 47 years straight, westfields profits grew every year. not a single year went by where their profits fell or stagnated for 47 years. last year was WDC first year where they reported a profit smaller than the year before.

I don't really no what you mean by he didn't gain from pure investing.

Westfields is a company that invests in and operates shoppong centres.

Berkshire is a company that invests in and operates many types of businesses.

Berkshire is not strictly an investment company, they own and operate many businesses.


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## Tysonboss1 (6 September 2009)

By the way I am not trying to detract from warren's achievements. I am just trying to give credit where credit is due, and point out that we have a home grown figure who has out performed most of the "gurus".


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## jono1887 (7 September 2009)

How exactly did Frank Lowry do it?


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## drsmith (7 September 2009)

jono1887 said:


> How exactly did Frank Lowry do it?



Westfield's model for much of it's history has been for the development company (Westfield Holdings) to build and/or redevelop shopping malls and sell them into the trusts (first Westfield Trust and later Westfield America Trust) for a profit. The three entities were then merged into Westfield Holdings in 2003.


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## Tysonboss1 (7 September 2009)

jono1887 said:


> How exactly did Frank Lowry do it?




In his late twenties Frank and his friend John saunders were running a deli together. They realised that with the Post WW2 immigration they was a shortage of land being subdivided, so the bought a farm and subdivided it into house lots,... their company name was "westfield" West from being in western sydney and fields because they were subdividing farm fields.

After a while they learned that commercial property was more profitable, So they started with a few small shopping centres.

Westfields has built it's fortune by three main ways,

1, Building and redeveloping shopping centres, some of which are onsold in full or a % to instutional investors to free up capital, but then managed by westfield.

2, Owning shopping centres in full or a certain % as an investment.

3, Managing shopping centres ( not all westfield shopping centres are owned by the group, some are managed under longterm head leases ).

As Dr smith said, Frank Created two trusts (westfield trust and westfield america trust), He then listed the trusts and sold the bulk of the westfield properies into the trust. this freed up westfields capital to allow them to contiune growing while also producing a predictable rental return to investors of the trust.

The Trusts have since been merged together with the management and development company to form westfield group.

(westfield holdings + Westfield trust + westfield america Trust = westfield group. )


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## Tysonboss1 (7 September 2009)

jono1887 said:


> How exactly did Frank Lowry do it?




If you like reading, His book is called "pushing the limits". It's a good read.

follows him growing up as a jewish boy during nazi occupation, where his dad and brothers were taken to concentration camps. It tells of his role  during the israel war of independance where he was in combat. and it tells how through sheer determination and hard work he became one of australias richest men.

Frank until very recently worked 6 and a 1/2 days a week, and when ask what it was like to work for westfield he said,

" I drive myself and spare no effort, It's a sheer slog that allows for no laziness of mind or body. I allow myself no latitude and give up all comforts day and night until I achieve my goal. "


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## GumbyLearner (3 November 2009)

Buffett to takeover US Rail Corp Burlington Northern. Saying "I love these bets."

http://www.businesswire.com/portal/...d=news_view&newsId=20091103005847&newsLang=en

 “Our country’s future prosperity depends on its having an efficient and well-maintained rail system,” said Warren E. Buffett, Berkshire Hathaway chairman and chief executive officer. “Conversely, America must grow and prosper for railroads to do well. Berkshire’s $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry.

“Most important of all, however, it’s an all-in wager on the economic future of the United States,” said Mr. Buffett. “I love these bets.€


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## Temjin (4 November 2009)

But is he always right? This recent action has contradict what he used to say from the past.

http://market-ticker.denninger.net/archives/1572-Berkshires-Big-Bet.html



> Berkshire's Big Bet.
> 
> The amusing part of Berkshire buying BNI (Burlington Northern) isn't that he's doing it at what looks to be a ridiculous premium to the current stock price (although below the historic high) - it is that he's splitting Berkshire's "B" shares in doing it.
> 
> ...




There have been a number of other commentators who are wondering why Buffet is making this move.  

Certain ppls would obviously say Warren Buffet can never be wrong as he is promoted as an oracle after all. He must know something we don't. But in my opinion, he has been far too optimistic about the US economy given his traditional background and love for his own country. (nothing wrong with that) 

At the end, a bet is a bet. Nothing is guaranteed.


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## alphaman (4 November 2009)

Interesting how WB is buying now rather than waiting for a better price. Obviously he thinks the US economy will not just recover, but will do so soon. 

BRK's P/E should be high, because short-term earnings are abnormally low. P/E of 52 will easily halve when BRK's earnings go back to historical levels.


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## GumbyLearner (4 November 2009)

Temjin said:


> But is he always right? This recent action has contradict what he used to say from the past.
> 
> http://market-ticker.denninger.net/archives/1572-Berkshires-Big-Bet.html
> 
> ...




Mmmm Copenhagen 

http://www.moneymorning.com/2009/11/03/berkshire-hathaway/

The deal also represents a complete reversal of the stance Berkshire took on railroads just a few years ago.

“Warren and I have hated railroads our entire life,” Charles T. Munger, the vice chairman of Berkshire Hathaway, said in 2007, the year his company first started investing in Burlington. “They’re capital-intensive, heavily unionized, with some make-work rules, heavily regulated, and long competed with a comparative disadvantage versus the trucking industry, which has a very efficient method of propulsion (diesel engines) and uses free public roads. Railroads have long been a terrible business and have been lousy for investors.”

But rising prices for diesel fuel, growing highway congestion and growing environmental concerns helped change Berkshire’s position.

*“As oil prices go up, higher diesel fuel raises costs for rails, but it raises costs for its competitors, truckers, roughly by a factor of four,” Buffett told shareholders in 2007 at his company’s annual meeting.* “There could be a lot more business there than there was in the past.”

Unlike trucks, trains don’t get stuck in traffic and when trains carry 100 tons over 1,000 miles, *they produce 45% less pollution than a long-haul truck does, according to Burlington.*


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## AlterEgo (5 November 2009)

jono1887 said:


> hasnt berkshire hathaway averaged 20+% over the last 40 years straight with not a single negative year.




It hasn't averaged those sort of returns for a long time though. Here's a graph of Berkshire Hathaway shares off Yahoo Finance. Note the flattening of the graph since '98/'99. If we drew a trend line from the peak in '98 through to the peak in '07 before the crash, that works out to an compounded annualised return of around 6.5%. Also note that the low this year is equal to the high back in '98, so no gains made in 11 years to that point. In fact, practically no gains were made in the period from '98 through to '05 either. Peak in 1998 - current works out to a compounded annualised return of approx. 2%.


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## condog (6 November 2009)

Prior to last years correction BH had achieved 25%+ compound annual growth.

Not sure what it is now....  WDC may have got that in the past, but it certainly is not set to achieve anything like that any time soon.....  with 62% debt and ROE at 23% 28% 13% -4% and 1.2% for the last 5 years its in a different league now...

Irrespective of what BH is doing this year Buffets methods are the benchmark ....  he is insperational and his methods for intrinsic valuation are fantastic.


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## Julia (6 November 2009)

condog said:


> Irrespective of what BH is doing this year Buffets methods are the benchmark ....  he is insperational and his methods for intrinsic valuation are fantastic.



If you find him inspirational, would you say you can apply his methods for intrinsic valuation to stocks you are considering buying yourself, and if so, how confident would you then feel that those stocks are going to make you money?
In what period of time?

Do you think any factors other than intrinsic valuation need to be considered before buying a stock?


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## bunyip (7 November 2009)

Buffet's so called 'buy and hold forever' strategy is a poor description of his methodology. I can recall a number of times over the last 15 or 20 years when he was said to have retreated to 70 - 80% cash. 
Also, he apparently invests staggering amounts of money into markets other than stocks....metals, currencies, commodity futures etc.

I think most of us will be disappointed in our results if we think we can emulate Buffet by buying stocks in good companies because we think they're cheap and have great future prospects.
Below is some info I pulled off the net.....it may give some better insights into what he actually does. 

_Despite his desire to hold "forever" when first buying a stock, Buffet doesn't actually do it all that often. Contrary to popular belief, Buffet buys and sells stocks all the time. His approach is better described as "Buy with a long-term perspective, hold while ignoring intermediate business and market fluctuations, and sell when long-term business prospects are no longer attractive." Or in short: "Buy and hold until the facts change." 

The primary reason Buffet has held stocks like Washington Post and Coca-Cola for so long is that they have retained the attributes he originally found attractive. But over the last decade, Buffet has sold holdings such as McDonald's, Disney and Freddie Mac when he felt they were no longer worthy of his capital._


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## condog (7 November 2009)

Julia said:


> If you find him inspirational, would you say you can apply his methods for intrinsic valuation to stocks you are considering buying yourself, and if so, how confident would you then feel that those stocks are going to make you money?
> In what period of time?
> 
> Do you think any factors other than intrinsic valuation need to be considered before buying a stock?




I do apply his methods to almost every stock I buy and own on a regular basis. I used to do all the calculations myself but have since becoming far more time poor and money rich found it significantly better to use my time earning money, investing and using stockval for my fundamental analysis.....  

In terms of time frame it varies......  The last month its been hard to find great fundamental buys for the short term, because almost all the high ROE, low debt, stocks have been very expensive relative to current and projected earnings....  However with the correction of last week several opportunities have poked their heads up with good fundamental stocks under value or around value...

If im looking for long term buys I will generally try to buy between 20% undervalued and 5% over value sometimes up to 10%.... They are my long term yielding stock....

With some short term plays I might see a safe stock with good or average ROE at say 30-50% undervalue.....  I then do some research and buy it if everything looks OK and there is no apparent reason for its price drop.... I look to sell these anywhere between 10% under and 20% over value ASAP. Some have been a matter of days while others have been weeks....

Relative strenght index often helps time a short term play - below or around 20 in a stock that is just oversold for some wierd reason, but has excellent fundamentals is usually an easy 10-20% profit within days.

Im not inclined to quote stocks as this might be taken as advice.

In terms of how confident I am..... Thats why I predominantly stick to yielding stocks , because during downturns in sentiment, I still get dividends and keep buying.... So im supremely confident....I never hold or buy a stock that I think will not make good money......

Sounds arrogant I know....but it has not let me down...

In terms of other factors to consider....yes other factors need considering.....

The trend of the market and sector is important.... The outlook for the economies your company earns from is crucial, the managment and their track record for (the hated) capital raisings, and destructions of share value....

Also some stocks can come out with great intrinsic value relative to price because everyone hates the stock for good reason....

So look for amongst other things...
Good outlook of economy, sector, companies markets
HIgh ROE
Low debt to equity - definitely below 50% and preferably 0%-30% for me
A history of no or extremely productive capital raisings
High ROFE
Stable or increasing ROE (take into account last year smacked most companies, although several sailed through with improved ROE)
Low liabilities - pref less then 50% of price but some companies like DTL have high liabilities and still perform with excellence.

A few of the  stock I hold that I think have excellent fundamentals
DTL, LYL, BHP, JBH, Count (expensive ), MND, MMS, 


This is not advice, nor recommendations. It is offered as opinion only and in no way should be relied on for decisions.  Seek your own expert advice.


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## condog (7 November 2009)

bunyip said:


> _
> 
> I think most of us will be disappointed in our results if we think we can emulate Buffet by buying stocks in good companies because we think they're cheap and have great future prospects.
> 
> _




Ive copied a lot and could not be happier, before during and after the biggest correction in recent history. 

Secondly Id always rather buy a great company at an expensive price then a rubbish company at a cheap price.  But using buffets methods allows me and many others to buy good companies at fair prices.

Chin up, have a go...


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## Julia (7 November 2009)

Thank you for your explanation, condog.  Good that you're so happy.  I gather you don't engage with charting at all?



condog said:


> Ive copied a lot and could not be happier, before during and after the biggest correction in recent history.
> 
> Secondly Id always rather buy a great company at an expensive price then a rubbish company at a cheap price.  But using buffets methods allows me and many others to buy good companies at fair prices.
> 
> Chin up, have a go...



Well, Bunyip, there ya go!  You've just got the good oil from condog!
Now you might be able to make a buck, huh!


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## noirua (7 November 2009)

bunyip said:


> Buffet's so called 'buy and hold forever' strategy is a poor description of his methodology. I can recall a number of times over the last 15 or 20 years when he was said to have retreated to 70 - 80% cash.
> Also, he apparently invests staggering amounts of money into markets other than stocks....metals, currencies, commodity futures etc.[/I]




That's the problem in having too much money to invest. If he has $1 billion in a stock he can only increase or reduce as everyone appears to know soon after he makes a move. Some investments are in private companies and convertibles that may never receive a market quote.
It's a matter of opinion as to whether it would be a point of greatness to do so well at investing as to be able to move markets.


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## condog (8 November 2009)

Julia said:


> Thank you for your explanation, condog.  Good that you're so happy.  I gather you don't engage with charting at all?




Im very familiar with charting and have used it lots in the past...   the thing is though the longer I invest the more I realize its the pure fundamentals that drive price upwards more then anything else and charting only helps identify entry and exit points...

I guess what Id like to get across is that charting is great but only do it on good fundamental stocks....

The other aspect is, I used to want my trading to consume my free time, now I want my investing to free my time up, so I can spend it doing things I enjoy, while still earning.....Fundamental investing does just that.....You can buy confidently and in most cases walk away and come back on most days and your way ahead.... I do incorporate a bit (just Elliot waves to keep an eye on things and RSI for buy sell triggers on entry and exit points when needed).

Im not sure of the experience or size of the portfolio of most in this thread, but I think as a huge generalization you will find most early and small investors have a preference for charting while most bigger experienced investors get sick of the work load and look for an easier way to make sure their money is working. Clearly there'd be some huge portfolio chartists, but as a rule I think charting allows new / small investors to feel they have some more control then they actually have...

Also for me investing is all about increasing your leverage (not borrowing) just leverage..... The more shares or property I own the more chance I have of asset prices and earnings  going up ........(see rich dad poor dad for detail) and the easier it gets...


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## Mr J (8 November 2009)

AlterEgo said:


> It hasn't averaged those sort of returns for a long time though. Here's a graph of Berkshire Hathaway shares off Yahoo Finance. Note the flattening of the graph since '98/'99. If we drew a trend line from the peak in '98 through to the peak in '07 before the crash, that works out to an compounded annualised return of around 6.5%. Also note that the low this year is equal to the high back in '98, so no gains made in 11 years to that point. In fact, practically no gains were made in the period from '98 through to '05 either. Peak in 1998 - current works out to a compounded annualised return of approx. 2%.




Linear graph:


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## Julia (8 November 2009)

condog said:


> The other aspect is, I used to want my trading to consume my free time, now I want my investing to free my time up, so I can spend it doing things I enjoy, while still earning.



OK, I understand that.  Level of capital invested also makes a considerable difference.



> Im not sure of the experience or size of the portfolio of most in this thread, but I think as a huge generalization you will find most early and small investors have a preference for charting while most bigger experienced investors get sick of the work load and look for an easier way to make sure their money is working. Clearly there'd be some huge portfolio chartists, but as a rule I think charting allows new / small investors to feel they have some more control then they actually have...



Interesting view.  It hasn't been my impression of people on this forum on the whole.  Others may like to comment on this?
I'd have thought rather it was simply a preference for some people to take a technical approach.

If you read this thread:
https://www.aussiestockforums.com/forums/showthread.php?t=17861
where the OP suggests the market has been 'stagnant' over the last ten years, it's an example of why some people become disenchanted with fundamental investing.  Clearly you do use charts for timing purposes to overcome the problem described.



> Also for me investing is all about increasing your leverage (not borrowing) just leverage..... The more shares or property I own the more chance I have of asset prices and earnings  going up ........(see rich dad poor dad for detail) and the easier it gets...



Sure.  Goes to my remark above about levels of capital.

Thanks for interesting post.


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## condog (9 November 2009)

AlterEgo said:


> It hasn't averaged those sort of returns for a long time though. Here's a graph of Berkshire Hathaway shares off Yahoo Finance. Note the flattening of the graph since '98/'99. If we drew a trend line from the peak in '98 through to the peak in '07 before the crash, that works out to an compounded annualised return of around 6.5%. Also note that the low this year is equal to the high back in '98, so no gains made in 11 years to that point. In fact, practically no gains were made in the period from '98 through to '05 either. Peak in 1998 - current works out to a compounded annualised return of approx. 2%.




With volatility like that you can pick a lot of scenarios like that to try and mount arguments that its fantastic or pathetic....

Similarly someone could mount arguments about how stunning a 10 year return was if they picked another time period....

The best way to judge a stock like that is to draw a line through it with maximum contact points ... we could argue about tops, bottoms, middles etc.... 

But reality is find the trend line and use it as your benchmark....... then do what buffet would do.. 

Right now on face value $100K looks about $20K below its long term average.... and roughly $20-60K below its intrinsic value depending on which methods your using.

And on intrinsic valuation http://www.creativeacademics.com/finance/IV.html it would appear even further undervalued...  This is only one calulator available...I suggest using several...

If he was you and looking to buy BH......he would be doing it right now while its out of favour and while everyone else cannot see its value.


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## bunyip (9 November 2009)

condog said:


> I guess what Id like to get across is that charting is great but only do it on good fundamental stocks....
> Im not sure of the experience or size of the portfolio of most in this thread, but I think as a huge generalization you will find most early and small investors have a preference for charting while most bigger experienced investors _*get sick of the work load*_ and look for an easier way to make sure their money is working.




An investor who gets 'sick of the workload' of charting can expand his time frame which will in turn contract his workload. 
It's a commonly believed fallacy that charting necessitates hours each day glued to your screen.

A Forex trader has the choice of gluing himself to his screen, watching 5 minute or 1 minute charts, or trading from end of day data and spending just 10 or 15 minutes or so each day studying his charts, placing his orders, and managing his trades.

A stock trader or investor has the choice of spending hours each day watching his charts update in real time, or he can spend just half an hour or so each day by downloading his data at days end, running his analysis over the stocks of his choice, and placing his orders for next day.

Or if he really wants to lighten his workload, he can use the completely workable and profitable approach advocated by people like Stan Weinstein and Alan Hull, and spend just an hour or so each weekend checking his charts, placing his orders, and managing his existing trades.

If you want to add some basic fundamental analysis to the mix, and incorporate it with your charting, then well and good. 
But to assume that charting is, by necessity, very time consuming, is completely wrong. Yes, it can be very time consuming if you let it be, but alternatively you can take most of the work and time out of it if you go about it a different way. 
The way I use charting, it creates far less workload than fundamental analysis.


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## bunyip (10 November 2009)

Here's a useful link for anyone who thinks charting creates a heavy workload. 
And for those who know it doesn't.

http://www.youtube.com/watch?v=wEypGm5ahCI


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## Tradesurfer (17 November 2009)

it is true a common misconception about technical analysis is that it is only for those trading very short term or daytrading.

In fact- if one use monthly charts and a simple moving average of 20 periods, investors/traders would have captured the bull and bear trends over the past 20 years and been quite successful.


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## bunyip (17 November 2009)

Tradesurfer said:


> it is true a common misconception about technical analysis is that it is only for those trading very short term or daytrading.
> 
> In fact- if one use monthly charts and a simple moving average of 20 periods, investors/traders would have captured the bull and bear trends over the past 20 years and been quite successful.




So true.
People often say things like _'TA is great if you want to catch short term moves'._
or
_'TA is great if you want to make a quick buck'._

Well they're partly right, but they're only telling half the story.
Yes, TA is great for short term players. And the other half of the story is that it's also good for longer termers who want to ride the big trends to completion.

TA will get you an early entry into most trends. 
How long you stay in the trend thereafter depends on the duration of the trend, and the suitability of your methodology to trend-riding.

Anyone whose read Stan Weinstein's book from cover to cover will be aware that he has two methods of trailing his stops.....one for traders and the other for longer term investors who are chasing the bigger moves.

Something as simple as a trailing stop on a 100 day EMA goes a long way to capturing the bigger trends.

I remember something said by Ivan Krastins, author of *'Listen To The Market',* during his presentation to an ATAA meeting one night_....."If you want to catch the bigger trends, go to a longer timeframe'._


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## Wysiwyg (17 November 2009)

bunyip said:


> Something as simple as a trailing stop on a 100 day EMA goes a long way to capturing the bigger trends.




Always interesting to discover trading techniques but on this suggestion with BHP there would have been an exit no less than 8 times from 2003 to the ATH in 2008. The 100 day EMA.


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## bunyip (17 November 2009)

Wysiwyg said:


> Always interesting to discover trading techniques but on this suggestion with BHP there would have been an exit no less than 8 times from 2003 to the ATH in 2008. The 100 day EMA.




Yep - nothing is perfect.....every technique we care to name works fantastic sometimes, not so good other times. 
Even so, the 100 day EMA as an exit system would have captured several sizeable chunks of profit from BHP if you'd re-entered in the direction of the trend each time you got stopped out.

I notice the words 'novice trader' below your name. When you have more experience you'll realise there's no holy grail....there's only strategies that work reasonably well more often than not.


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## condog (22 November 2009)

bunyip said:


> there's no holy grail....there's only strategies that work reasonably well more often than not.




So Ture.....

And this is exactly why Im predominently a value investor..... because after trying multiple strategies over many years, its as close to the holy grail as I have *"yet found"*.....with the minimum workload, lower risk and great returns..... 

Theres a lot of strong arguments in here for both sides. They both have a role and are oth fantastic tools and educators...  Personally i feel a successful stock investor will use both in an over lapping style.....  

But now after experiencing and using both, I would never be caught without fundamental, where as I could comfortably choose to use technical as well or not...

As the saying goes "When the tide goes out, we will see who is swimming without any pants......."  Inevitably it will be those who are investing in stock that are fundamentally poor....


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## bunyip (22 November 2009)

condog said:


> So Ture.....
> 
> And this is exactly why Im predominently a value investor..... because after trying multiple strategies over many years, its as close to the holy grail as I have *"yet found"*.....with the minimum workload, lower risk and great returns.....
> 
> ...




I don't doubt it.

But investors who bought WDC five years ago because it was a fundamentally sound stock at attractive values have also been caught without any pants.

The mistake I see investors making over and over again on this forum is buying stocks which they consider are fundamentally sound, but whose price is going nowhere or down.

Buying a fundamentally sound stock while the price is going nowhere or heading south is just downright silly, when you could instead buy good, well managed companies whose sound fundamentals are being confirmed by their rising stock price.

The primary aim of investment should be to keep our money constantly growing. The best way of achieving this is to buy performing stocks, rather than tying up our money for years in non-performers.
By all means add the proviso that they must have decent fundamentals. *But above all else their stock price must be performing.*

I once subscribed to a newsletter that rated stocks according to the consensus opinion of 20 different fundamental analysts.
If 14 of the 20 analysts liked stock A and only 10 liked stock B, stock A got the higher rating of the two.
Each edition of the newsletter listed the ten stocks with the highest rating.

My plan was to use technical analysis to pick timely entries into the highest rated of these much admired stocks.

My plan didn't work. Why? Because almost every one of the highly rated stocks in the newsletter was heading south with a vengeance....nobody in his right mind would have bought them unless he was wanting to lose money. 
And they continued heading south for quite some time afterwards.

I say again.....Buying a fundamentally sound stock while the price is going nowhere or heading south is just downright silly, when you could instead buy good, well managed companies whose sound fundamentals are being confirmed by their rising stock price.


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## Calliope (22 November 2009)

If Philip Adams is against him, Buffett must be doing something right;  



> An ominous story in the business press: Warren Buffett has just bought one of America's largest freight railways. Not because he believes in public transport but because the company hauls coal - like that endless procession of coal trucks I see trundling through the Hunter Valley. Buffett sees zero risk to coal profits. He says coal will remain the main source of power generation for the next 50 years.




Buffett if right because there is no affordable or practical alternative.

http://www.theaustralian.com.au/news/opinion/saddle-up-for-the-coal-war/story-e6frg7fx-1225798569915


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## motorway (22 November 2009)

Wysiwyg said:


> Always interesting to discover trading techniques but on this suggestion with BHP there would have been an exit no less than 8 times from 2003 to the ATH in 2008. The 100 day EMA.




yes... That is because a 100 day moving average or a Day anything means ZIP.

DISTRACTION --- FALSE SIGNALS
OBLIVION --------MISSED SIGNALS

LONG TERM INVESTOR ?

maybe a simple 3 box reversal chart with a BOX size to follow the MAIN TIDE =PRIMARY TREND

SOME simple orthodox use of 45 degree lines

Only Take Signals with the TREND

In at The Bottom
Out at the TOP
and IN again at the Bottom

The coastline of PRICES
offers profits at every SCALE
Because there ARE REAL TRENDS

*Once you get rid of TIME FRAMES
*


This is at obvious INVESTOR SCALE...

and no attempt to finesse entry eg at the LOW POLE 

For Discussion

Set this on auto alert
and you need to look three times in 6 YEARS

Such approach is for ALL TIME HORIZONS


Motorway


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## Timmy (25 November 2009)

Came across an article from Bill Gross that explains Buffett’s purchase in terms of Buffett expecting low returns in coming years.  It is a long article, but worth persevering with; if not, here are probably the most relevant points in the article re the Burlington Northern purchase:
_
Almost all money market accounts – totaling over $4 trillion dollars, shown in Chart 1 – yield close to nothing, so close to nothing that I mistakenly did a double take when reviewing my monthly portfolio statement. "Yield on cash," read the buried line on page 15 of the report, ".01%." …

OK, so where does that leave you, the individual investor, the small saver who is paying the price of the .01%? …

Two suggestions. First ... the New Normal is likely to be a significantly lower-returning world. Diminished growth, deleveraging, and increased government involvement will temper profits and their eventual distribution to investors in the form of dividends and interest. As banks, auto companies and other corporate models become more regulated and therefore more like utilities and less like Boardwalk and Park Place, they will return less.

Which brings up the second point. If companies are going to move toward a utility model, why suffer the transformational revaluation risk of equities with such a low 2% dividend return? Granted, Warren Buffet went all-in with the Burlington Northern, but in doing so he admitted it was a 100-year bet with a modest potential return. Still, Warren had to do something with his money; the .01% was eating a hole in his pocket too. … why not just buy utilities if that's what the future American capitalistic model is likely to resemble. Pricewise, they're only halfway between their 2007 peaks and 2008 lows – 25% off the top, 25% from the bottom. Their growth in earnings should mimic the U.S. economy as they always have, and most importantly they yield 5-6% not .01%! _
Source: http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2009/Dec+Gross+Anything+but+01.htm

ps.  Gross is not your run-of-the-mill market commentator.
Wikipedia article: http://en.wikipedia.org/wiki/William_H._Gross


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## Aussiejeff (5 February 2010)

Even He is not immune from the general malaise...



> Feb. 4 (Bloomberg) -- *Warren Buffett’sBerkshire Hathaway Inc. was stripped of its last AAA credit rating by Standard & Poor’s after the billionaire investor agreed to buy railroad Burlington Northern Santa Fe Corp*.
> 
> Berkshire, which is taking on debt to fund the $26 billion takeover, was cut one level to AA+ from S&P’s highest grade, the ratings firm said today in a statement. The downgrade comes the same day Berkshire filed to sell $8 billion of notes to fund the Burlington Northern purchase, and concludes a review that S&P announced on Nov. 4, the day after Berkshire disclosed the deal.



http://www.bloomberg.com/apps/news?pid=20601087&sid=aCZQMYAzx8ts&pos=3


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## Wysiwyg (27 July 2010)

Tysonboss1 said:


> Because Trading is much more akin to gambling than it is to Investing. Traders make money through share price speculation, they hope to make money by second guessing the market and make assumptions on what the share price will be hours or days later, this is pure speculation.
> 
> Investing is the opposite of trading, an investor looks to the asset itself to generate the return over time where traders look to other traders hoping some one will come along and pay a higher price in the short term.
> 
> ...



Thank you so much for this video series. Four things I noticed about Warren Buffett in the interviews is his modesty, humbleness, lightheartedness and giving. However like many people I feel no desire to create such great financial wealth and have no desire to try and emulate his methodology. I would probably fail with the desire for profiting in the near term.

These canny investors are rare because as Charles Munger said along these lines, 'if we were interested in cars and women then we wouldn't be great investors'.


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## CanOz (27 July 2010)

Warren is very good at what he did, and continues to do. A truly intelligent, intuitive investor.

One in a million.



CanOz


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## MrBoJangles (24 October 2010)

I'm 3/4 way through the book written by his daughter-in-law, Mary Buffett, "Buffettology" - an easy and interesting read IMO.

Mr Bo


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## Tysonboss1 (30 October 2010)

MrBoJangles said:


> I'm 3/4 way through the book written by his daughter-in-law, Mary Buffett, "Buffettology" - an easy and interesting read IMO.
> 
> Mr Bo




Next on the book club list,

The intelligent investor by ben graham

then

security analysis by ben graham.


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## medicowallet (30 October 2010)

Julia said:


> Interesting view.  It hasn't been my impression of people on this forum on the whole.  Others may like to comment on this?
> I'd have thought rather it was simply a preference for some people to take a technical approach.




In my opinion, it depends upon how you got the capital.

Why would I want to chart etc, and do something which _may_ produce better results, when I could spend my time more productively elsewhere.

Quite a few people use shares to diversify their investments.

eg My business provided the capital for me to diversify into shares. I invest this, without charting. I can make much better return on investment in a business, but want to spread risk, and don't have the time to watch stocks all day.


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## Peter2047 (10 November 2010)

Didn't Warren said that the derivatives are weapon of mass distruction ? But his company is also invested in derivatives.


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## Tysonboss1 (19 November 2010)

Peter2047 said:


> Didn't Warren said that the derivatives are weapon of mass distruction ? But his company is also invested in derivatives.




I think only about 2% of berkshires assets are in derivatives. 

And yes he does believe they are a weapon of mass destruction, especially when used in a speculative manner. 

How ever the way warren makes calculated entries into the derivative markets is almost an extension of his insurance and underwriting businesses.

Warren also is very skilled at valuing securities so he can value derivatives in much the same way as he values businesses and this gives him the ability to sell option is a very rational safe manner.


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## robusta (27 February 2011)

Well looks like Todd Combs is the first "annointed one"

http://www.berkshirehathaway.com/letters/2010ltr.pdf


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## ROE (5 March 2011)

Tysonboss1 said:


> I think only about 2% of berkshires assets are in derivatives.
> 
> And yes he does believe they are a weapon of mass destruction, especially when used in a speculative manner.
> 
> ...




Actually Warren doesnt price these securities and insurance underwriting 
it's Ajit Jain. This guy is very good at pricing risk...When he tell Warren to underwrite something Warren will act without question.

Warren is pretty good himself but he has many highly skillful people working for him and associate with many great investors..

Taking advices from these guys aren't bad ...they have timeless and priceless principles that are given to us for FREE  and if you practise them you too can do very well in the market.

Walter Schloss Lou Simpsons Charlie Munger  etc...


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## robusta (8 October 2011)

Well it looks like he is at it again. Volatility = opportunity.

Buying Mastercard

http://jutiagroup.com/20111007-warren-buffett-just-bought-189000-shares-of-this-forever-stock/

Exposure to India

http://articles.economictimes.indiatimes.com/2011-10-04/news/30242494_1_dq-food-retailer-dairy-queen

Buying about 4 billion in common stock in the most recent quarter

http://www.bloomberg.com/news/2011-...ion-in-common-stock-during-third-quarter.html

Almost forgot they are also generating so much cash there is enough left over for a share buyback.


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## Timmy (13 December 2011)

From The Onion. *Language warning.
*



From the "Funny 'Cause its True " department.


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## TMC93 (13 December 2011)

Timmy said:


> From The Onion. *Language warning.
> *
> View attachment 45511
> 
> ...




 I'm reading his biography book at the moment. As much as i love his story, this made me laugh!


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## Timmy (13 December 2011)

TMC93 said:


> I'm reading his biography book at the moment. As much as i love his story, this made me laugh!




He is a high achiever on a monumental scale, at or near the top of his field. 
I've read one of his biographers too, great stuff. So much to learn from Buffett.


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## ROE (18 February 2012)

http://finance.fortune.cnn.com/2012/02/09/warren-buffett-berkshire-shareholder-letter/

He explained a bit on Gold mania


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## kmlk (28 October 2014)

Hey Guys

Everyone knows Warren Buffett and his successes... now he has a few but effective principles he abides by when he invests. Now one of his principles is investing in companies (GENERALLY) that are worth over $5 Billion USD. Obviously on the ASX, this isn't quite possible as he also 'doesn't' like to invest in commodity stocks. 

Anyway my question is what size company worth $5 billion in the US would be equivalent to an Australian company?


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## McLovin (28 October 2014)

kmlk said:


> Hey Guys
> 
> Everyone knows Warren Buffett and his successes... now he has a few but effective principles he abides by when he invests. Now one of his principles is investing in companies (GENERALLY) that are worth over $5 Billion USD. Obviously on the ASX, this isn't quite possible as he also 'doesn't' like to invest in commodity stocks.
> 
> Anyway my question is what size company worth $5 billion in the US would be equivalent to an Australian company?




I think that's a problem you don't need to worry about until you're running a $250b company.

Seriously, is there any reason other than the fact BRK is too large to make under $5b worthwhile?


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## VSntchr (28 October 2014)

McLovin said:


> Seriously, is there any reason other than the fact BRK is too large to make under $5b worthwhile?




NOPE!
And in fact (as you know), being a smaller investor presents perhaps one of the biggest advantages available in the markets...assuming of course the investor has skill.


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## luutzu (28 October 2014)

McLovin said:


> I think that's a problem you don't need to worry about until you're running a $250b company.
> 
> Seriously, is there any reason other than the fact BRK is too large to make under $5b worthwhile?




What if he does run a company of similar size? haha... You're right there.

Though to be fair, klmk might meant to ask what characteristics of an equivalent $5 billion Buffett company are there in Australia.

First, I think Buffett does invest in commodities - i remember reading he made a bundle in silver or nickel; he also bought into oil/gas companies.

Back to question, beside the size of BRK's capital making a large acquisition preferable, Buffett look for companies whose position and operation are hard to replicate or compete with, whose business is simple but whose defensive moat is wide.

If you take that general approach and apply to ASX, the Australian economy is relatively small compare to the US and a strong and highly established company might not need to be of sales or size at $5B to dominate or be impressive. I guess it depends on the industry, but say one with $2 or $2.5 billion might qualify as a big whale in most Australian industry.


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## kmlk (28 October 2014)

luutzu said:


> What if he does run a company of similar size? haha... You're right there.
> 
> Though to be fair, klmk might meant to ask what characteristics of an equivalent $5 billion Buffett company are there in Australia.
> 
> ...




Yeah that is what I meant, I was thinking a company worth about 500mil in Australia > 1 Billion would be equivalent. But that is true being small with skill makes it a lot easier, I can't see how much more Buffett can grow... BuT I guess overall he hasn't been wrong yet...


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## luutzu (28 October 2014)

kmlk said:


> Yeah that is what I meant, I was thinking a company worth about 500mil in Australia > 1 Billion would be equivalent. But that is true being small with skill makes it a lot easier, I can't see how much more Buffett can grow... BuT I guess overall he hasn't been wrong yet...




Maybe not "worth" because that indicate market price... Sales would be what i'd look at. There are companies that earn nothing and a couple of dudes would think it's worth a hundred million or two.

Berkshire could grow much further. It's decentralised and unless his successor thought to bring everything under the one umbrella... Being decentralise enable management to make investments as they see fit and return excess cash to him if they see nothing worthwhile... so the limit might be reach if there's a nuclear winter or something.


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## Wysiwyg (22 November 2014)

America and carbon emission reductions??? Would Mr. Buffet invest in a car dealership if one of the greatest carbon emitters in the world, hydrocarbon fueled vehicles, are going to be phased out. Nuh.



> By Chris Bruce
> Posted Oct 3rd 2014 7:30AM
> 
> When Warren Buffet makes an investment, people pay attention. That's just one of the perks of being one of the richest men in the world, and his latest move is a big one. Buffet's Berkshire Hathaway investment company is to hopping into the auto business in a huge way by buying Van Tuyl Group, the nation's largest privately owned auto dealer network, for an undisclosed sum.




http://www.autoblog.com/2014/10/03/warren-buffet-buys-us-largest-car-dealer/#continued


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## dlineinvestor (22 November 2014)

Apparently someone on this forum bought them in back 1969 (can't remember who now)
Wonder if they are still holding.
5 shares please ... lol


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## Value Collector (26 November 2014)

Wysiwyg said:


> America and carbon emission reductions??? Would Mr. Buffet invest in a car dealership if one of the greatest carbon emitters in the world, hydrocarbon fueled vehicles, are going to be phased out.




Car's are not going to be phased out, dealerships will just switch to selling alternative vehicles when they become available eg. Electric cars.

When analogue CRT Televisions got phased out, and everyone bought LCD FLAT screens, was that bad or good for the people dealerships selling televisions?

if there is to be a big transition, the dealerships will be winners. It wont change their business model, they will still be making money selling the new cars, getting commissions on finance and insurance packages,

Actually, maybe thats buffets value adding play, considering he is already in the auto insurance business, seems like some good cross promotion opportunities to sell more auto insurance and finance packages.


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## The Falcon (26 November 2014)

Value Collector said:


> Car's are not going to be phased out, dealerships will just switch to selling alternative vehicles when they become available eg. Electric cars.
> 
> When analogue CRT Televisions got phased out, and everyone bought LCD FLAT screens, was that bad or good for the people dealerships selling televisions?
> 
> ...




Fragmented market, which is required to exist, opportunity to cross sell Geico and finance, loans to dealership for inventory purchases etc.


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## Wysiwyg (29 February 2016)

This quote drew a smile. 



> The octogenarian also revealed a secret of his longevity in his letter.
> 
> During Berkshire Hathaway's upcoming shareholders' meeting, he would consume enough Coke and candy "to satisfy the weekly caloric needs of an NFL lineman," he said.
> 
> "There's nothing like eating carrots and broccoli when you're really hungry," he added, "and want to stay that way."


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## noirua (11 April 2021)

April 10, 2021


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## noirua (25 April 2021)

23 Quotes from Warren Buffett on Life and Generosity
					

In a season of giving, here's some inspiration from the most generous person in America - Warren Buffett.




					www.forbes.com


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## noirua (14 August 2021)

Warren Buffett calls it right with an EV battery - Autobala
					

Warren Buffett is making a lot of investments right with his patience and prudent buy-and-hold strategy. And it’s becoming clear that he’s doing it again in an electric car. For investors investing in technology, it would be wise to consider how Omaha sages see the future of this sector. Read...




					autobala.com


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## noirua (3 October 2021)




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## noirua (9 December 2021)




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## The Triangle (9 December 2021)

noirua said:


>




I hate investing in a company where a lawyer is at the top as MD, CEO, Chairman.   Charlie has to be the exception to the rule.

_"thinly traded securities - that were incredibly cheap statistically - with small amounts of money"   _This is the real advice that people don't ever follow.   They see a stock crash and quote the greedy when others fearful and think that's how buffet made money.   I personally find that sub ASX300 stocks can deliver amazing returns.  Big players can't invest in them because they are just too small to move the needle.

The other quote/advice which I don't think he said in this interview (i only skimmed it) is you're better off buying a great company at a fair price than a bad company at a great price - or something along those lines.


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## The Triangle (31 January 2022)

Warren Buffett is having the last laugh
					

It's been a tough start to the year for investors in big tech companies. Cathie Wood's ARK Innovation fund, a big owner of Tesla, Zoom and Roku, has plunged nearly 30%. And speculative meme stocks like GameStop and AMC have been crushed.




					edition.cnn.com
				




Interesting little 'oh wait Warren is actually still pretty good' article.   

Berkshire winning over the S&P, Dow and nasdaq over a 1 year period.  Only losing to the Nasdaq over 2,5,10,20 year periods.   Will be interesting to see how things are in 6 months.


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## Tyre Kicker (31 January 2022)

Charlie M quoting Oscar Wilde re Bitcoin…

‘The pursuit of the uneatable by the unspeakable’.

Love it.


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## noirua (28 March 2022)




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## noirua (17 April 2022)




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## noirua (18 April 2022)




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## noirua (10 September 2022)




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