Friday 27th May 2005
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Warren Buffett Wealth
Principles and Practical Methods Used by the World’s Greatest Investor
By Robert P Miles
Reviewed by Vicky Powell
Buffett would no doubt be one of the richest and most famous investors in America with a net worth in the tens of billions of dollars. He is one of the few to ever become a billionaire by investing in the stock market, yet the refreshing thing about him is that he still does his own tax return, receives a conservative $100,000 salary, lives in the same house he purchased 47 years ago and has a small office with relatively few staff.
Written by longtime Buffett expert Robert Miles, Warren Buffett Wealth outlines the principles and practical methods that have made Buffett one of the greatest investors of all time.
If you doubt the legendary status of Buffett, consider this. if you had the foresight to invest $10,000 in 1956 with Warren Buffett when he first started his investment partnership, you would be worth today, after all fees, expenses and taxes, over $300 million.
Obviously the question everyone wants answered, is how does he do it? Well the good news is that there is no secret to building wealth by successfully investing in other people’s businesses – and if you are motivated enough, you can also achieve outstanding results.
Before you rush in though, Buffett believes that guiding principles are the cornerstone of all successful investing. They don’t have to be long and complicated either. Buffett’s investment philosophy can be presented as these two simple rules;
Rule Number One: Don’t lose capital
Rule Number Two: Don’t forget rule number one.
His investment principles include common sense points such as ‘Know what you own’, ‘Research before you buy’ and ‘Own a business not a stock’.
Buffett believes that you should invest for the long-term in companies that you know and have researched thoroughly. Value investors, like Buffett dig deeply into businesses to discover what they’re really worth and attempt to buy a dollar worth of assets for 50 cents. Buffett meticulously selects companies that meet his stringent criteria, studies them closely for months, even years and then decides to invest. Value investing isn’t a game for the impatient who want to see quick results.
Buffett is an independent thinker and subscribes to only one stock data publication, preferring to come to his own conclusions about the value of a business. Accordingly, he did not own any technology stocks when the dot.com bubble burst. “I don’t understand technology so I don’t invest in it.”
In summary, Buffett buys shares in great companies with management of the highest caliber for prices that are less than the companies are worth and invests for the long term.
Warren Buffett Wealth gives an insight into the principles that make Warren Buffett such a sought after icon, and after reading it you will understand why Buffett has such a loyal following of shareholders, CEO’s, managers and employees.
This book will inspire and motivate you to create your own set of guiding principles so you can follow the value investing techniques that are time-proven in any market trend. Exercises at the end of each chapter will further your understanding of the philosophies, principles and practical methods used by Warren Buffett.
Warren Buffett Wealth, $43.95 Hb, is available online through the Good Returns Bookstore at www.goodreturns.co.nz/books
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