Question

Can you explain about Mr. Warren Buffet's investment methods? What does he think before he invests and please write his real examples of successful investment.

Identify and explain the possible factors that might have made him one of the most successful money makers from the stock markets?

Please explain your own idea as possible as you can

Answer 1

Warren Buffet is an American business man, he is a chairman of Berkshire Hathaway. He is one of the world's richest people. He is considered to be one of the greatest investors in the world. He is a self made Billionaire. His investment strategies help people to earn good returns.

His investment strategies are as following:

Value investing- He has a long term value investing approach, he invests into value stocks that are undervalued and have potential to grow up in future. He purchases the stocks that are below its intrinsic value (undervalued) and hold them for longer time. He invests into stocks for longer term perspective. Companies with good earnings, pay higher dividends. If you are not selling stocks and not getting capital appreciation, at least you are getting dividend.

Fundamentally good- Warren Buffet invests into the companies those are fundamentally strong, he looks at enterprise value and he invests into quality stocks.

ROE- Buffet focuses on Return on equity rather than earning per share. He considers his overall capital employed in the stock and how much return, he is getting from it. EPS just tells earning on one share.

Do not be emotional- He does not take any decision being emotional. He becomes prepared for each and every decision. He analyzes the companies very well whether the company may fall in bad times or not.

Lower debt companies- Buffet always invests into the companies that have lower debt, he avoids the companies with higher debt because debt brings interest burden for the companies and because of this, profit gets affected.