Warren buffet

Ace-stockpicker and ofcourse now an empire

builder
General info

◦ Born in Omaha in 1930.

◦ Father, Howard Buffett, was a stockbroker and
Republican congressman.
◦ Buffett ran away once.
◦ He bought his first stock, Cities Service Preferred,
at $38 a share. It dropped to $27 a share, but then
rose back to $40, at which point Buffett sold. Cities
subsequently rose to $200 a share.
His ideologies
Understandable businesses

◦ Stick with stocks in your “circle of competence” .If

you don't understand the business, you can't value
the stock.
◦ Thinks of investment success as being not how
much you know but how realistically you define
what you don’t know.
◦ Will improve your ability to ascertain whether the
business has favourable long-term prospects.
Favourable long term prospects

◦ Focus on companies with a clear, sustainable

comparative advantage, or “moat”. A moat will help
protect the company against competitors.
◦ Look for high return on equity, a consistently
strong free cash flow, and limited debt.
◦ Act as if you “own a lifetime decision card with only
20 punches on it.” Each time you invest, you have
one few investment available for next time. This will
help you look for only the best opportunities.
Good managemnet

◦ Look for managers who treat the shareholders'

capital with owner-like care and thoughtfulness.
◦ When Buffett buys a business, he buys its
management as well—Buffett does not get involved
with day-to-day activities nor helps with major
strategic decisions.
◦ Buffett asks, “Is management rational?”, “Is the
management candid,” and “does the management
resist the institutional imperative?”
Buy at an attractive price

◦ Look at raw data, not analyst summaries. Focus on

understanding the picture, not precise points.
buffet;It is better to be approximately right than
precisely wrong.“
◦ Understand that majority of stocks are not
compelling so ignore them. But when you find stock
you like, show conviction, and buy a ton of it.
◦ Don't worry about macro trends. Focus on long-
term business value--the size of the coupons down
the road.
Time horizon

◦ Buffett: “If you aren't willing to own a stock for ten

years, don't even think about owning it for ten
minutes.“
◦ “ When we own portions of outstanding business
with outstanding managements, our favorite
holding period is forever.”
THANK YOU