7 Investment Secrets I Learned From Warren Buffet!

That Made Me $75,983 In Less Than 36 Months Passively!

By Clive Tan and Ken Chee

7 Investment Secrets I Learned From Warren Buffett

7 Investment Secrets I Learned From Warren Buffett! is a copyright-protected production of 8 Investment Private Limited

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7 Investment Secrets I Learned From Warren Buffett

From: Clive Tan & Ken Chee Re: 7 Investment Secrets I Learned From Warren Buffet

Hi there!
Thank you for downloading this FREE report on the investment secrets that we learned from the worlds most successful investor, Warren Buffett and his sidekick, Charlie Munger when we were among the shareholders who attended his Annual General Meeting at Omaha, USA in May 2009. Before we dwell into the details of what went on during that meeting, allow me (Clive) to give a brief introduction about myself and my partner, Ken.

Ken (left) and I at Invest Fair 2010 and on the cover of Shares Investment magazine.

My name is Clive Tan, an ordinary Singaporean man who used to be a High school Teacher. During my days of training to be a teacher, I came into the concept of value investing and was intrigued by it to want to research and read more into value investing. I seek out mentors on investing and in that process, I began to invest my savings from my teaching job into stocks. Over a span of 5 years, I was diligently doing teaching by day and studying investing by night. During that span of time, I achieved a return of compounded 25% per year, which enabled me to start my first business in childcare. Soon after starting my business, I quit my teaching job and went into the business full time. After a couple of years in the childcare business, I met Ken Chee during a program called the Entrepreneur Action Program. We became friends, and at one
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7 Investment Secrets I Learned From Warren Buffett

of our coffee shop meetings, we realized that we have a common interest in investing, more specifically, value investing. We decided to grow our interest further by setting up a mastermind group. What a mastermind group is basically a coming together of people with a common purpose. In this case, the purpose is to understand and apply value investing principles in our investments. The financial crisis in 2008 happened and we knew that we can do something about it to take advantage and take charge of the opportunities arising. Thats why we came together to create an experiential yet intellectual value investing program in Singapore, marketed as the Millionaire Investor Program.

Successful graduates of the Millionaire Investor Program.

It has become very popular and thats when we realized that more people would like to learn about value investing. Since we cannot reach everyone using a program, we decided that a free report will get people started, and thats why we are writing this for you now. As you read this report, we hope that it will inspire you to learn even more about investing and get started on your Financial Freedom and Abundance! Happy Reading!

Clive Tan & Ken Chee

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7 Investment Secrets I Learned From Warren Buffett

Meeting Warren Buffett in Person!

Everything happens for a reason. We arrived a day before the event actually started to collect our international passes. My partner, Ken was so affected by jet lag (after all, we were in the air for over 20 hrs with at least 4 flights between Singapore & Omaha) that we woke up late to go to collect our meeting credentials and because of that, we ran into Warren Buffett himself!

We met the man (with his bodyguards) at a parking lot. Even though we couldnt take a shot together with him, he told us it was fine to snap a picture of him.

So without further ado

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7 Investment Secrets I Learned From Warren Buffett

The 7 Investment Secrets I learned from Warren Buffett

Secret #1: One bird in hand is worth two birds in the bush?
This popular saying basically means that it is better to stick with something you already have, rather than pursuing something you may never get. Charlie commented that this saying is not exactly true; one must consider the context surrounding it. What if there are more than two birds in the bush? How about if the birds are injured? Investment is really about laying out cash, and how much cash one can get back. If a person cannot assess with much certainty the future value of what one can get back, he/she is actually speculating. The more we know about the birds in the bushes, the more certain we are of our Return on Investment. Coming down to a more practical level, one must ask ourselves how certain we are about the returns and whether they are sustainable. Obviously, the more predictable the returns are, the more an investor will be willing to put his cash in, both in terms of amount and duration. The reason why this saying makes sense is when there is a high level of uncertainty in the returns expected. Many a times, quotes not contextualized properly can often lead to mistaken understanding.

#2 Value shouts at you!

According to Warren, when one sees value, it should shout/scream at you. It is widely circulated that Charlie (or any other persons) have never seen Warren take out a calculator/computer to assess whether a company is undervalued or not. Obviously, Warren probably has more processing power in his brain than most people when it comes to investing. It is also a result of him reaching a level of unconscious competence over the years after looking at plenty of businesses and investing opportunities. As I have observed around me, I notice that the people who achieved mastery in their areas are those who keep doing it better and repeatedly. Many world class athletes are a case in point. For that period of exertion that they have
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7 Investment Secrets I Learned From Warren Buffett

(example: less than 10 seconds for 100 meters run), the athletes have clocked in much more hours of intense training. Another simple analogy will be: shopping for a product that you are familiar with. If you are very aware of what the prices are for the product is, you will be very likely to see a great bargain when the price is lower than usual or when it is on sale. Basically, the bargain will shout at you!

#3 Dont be a smart alec!

In the academic world and life in general, it is often preached or assumed that high intelligence is a prerequisite to in life. While that may apply to certain contexts, there are increasing research reports that showed that it may not be the case. In fact, Charlie went on to say that a person could have an IQ of 150 and still be a disaster in investing. Another person with IQ of 120 and operates within his circle of competence, will be able to do much better! Having said that, I think to be a good investor (or a great human being!) requires a certain level of intellect. Once past a certain point, the extra intellectual ability will contribute a lesser role to the overall success of the person. Instead, the next point will become more important.

#4 Investing is simple but not easy because of emotional instability

Instead of intellect, the key to investment success is emotional stability. Investing is simple but not easy because of emotional stability. What is emotional stability about? In simple terms with regard to this, it refers to the way a person handles his/her emotions when the investments make or lose money. Fear and greed are two emotions that the investor can never run away from. How he/she handle those, in spite of all the knowledge that he/she has is crucial to investment success. When the stock market drops like a rock, say down 50% or even more, many people will intellectually know that it is the time to buy. However, they will hesitate (and hesitate) due to their fear of being wrong and also fear of going against the crowd.

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7 Investment Secrets I Learned From Warren Buffett

On the other hand, when the market is bullish, and many people around him/her seems to be making money so easily, it is hard for the person not to also join in the herd to buy stocks when it seems so easy to make money. How one keeps ones sanity in the face of market fluctuations is the key to true investment success.

#5 Leverage is what causes trouble for you.

Leverage has been instrumental in making a lot of people wealthy and also a lot of people broke. It is a double-edged sword. Because of leverage, gains and losses can be magnified many times, making it the ultimate tool for the speculator. In Warrens opinion, leverage is what causes trouble for you. After all, when everyone is rushing for the exit door at the same time, there will be many casualties. Think about this, people who did not leverage on borrowed money, the most they could lose is what they have in the market. However, for those who have leveraged heavily, the money lost could be more than what they even own in total, making them the candidates for bankruptcy. In addition to the famous quote referring to derivatives as financial weapons of mass destruction, Warren also stressed that derivatives pose great risk to financial well being because many people think they are safe from overleveraging.

#6 Two ways to protect yourself from inflation

With increasing inflationary worries and concern, it was inevitable that there were questions ask about inflation and how to combat it. According to Buffett, the best protection against inflation is your own earning power. After all, if you are the best doctor, lawyer, teacher, or whatever, you will get your share of the national economic pie, regardless of the value of the currency. The second way to protect you against inflation is to invest in a great company. People will give up their own earnings to enjoy whatever products your company is making.

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7 Investment Secrets I Learned From Warren Buffett

His sidekick, Charlie Munger, suggest becoming a brain surgeon and investing in Coca Cola. I would say that it is a more specific way to combat inflation. After all, very few patients will be arguing with the brain surgeon on the price of his/her services at that critical stage in life.

#7 Warren will teach 2 courses on investing

Warren was asked to explain his investment strategies and how to teach that to the next generation. He explained that he will teach 2 courses on the following: 1) How to value a business 2) How to think about markets Being able to value a business is essential to be an investor. Warren mentioned that one should start with his circle of competence, that is, invest in companies or assets that one understands. Knowing where that edge of the boundary is important. There are a lot of people who do not realize that there is a fundamental difference between price and value, causing many to overpay for their stocks (or other assets). For a business, valuing it basically take three approaches: dividends, income and assets. To be able to value a company is not just an exercise in the analysis of the numbers in the company; it is also being able to assess the future viability of a business. Most importantly is the ability to assess the intrinsic value of a business to be able to pay a low or at most fair price with an adequate margin of safety for the investment. Warren likes to use Benjamin Graham (Warrens teacher & mentor) analogy of a character called Mr. Market to illustrate the behavior of the markets. Imagine that there is this fictional character whose mood swings from being extremely optimistic to being extremely pessimistic. The prices that Mr. Market will quote will swing in accordance to his mood. If he is very optimistic, the prices in which he will quote will be high. If pessimistic, the prices in which he will quote will be low. There are some people who think that value investors like pessimism. Actually, thats not quite accurate. Value investors are not necessarily optimistic or pessimistic. Value investors just like the low prices that pessimism brings.

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7 Investment Secrets I Learned From Warren Buffett

Are You Ready To Be A Value Investor?

Warren Buffett and his company, Berkshire Hathaway, have seen many crises throughout their many years of investing. The success that Warren Buffett and Charlie Munger have brought to their investment results bear testimony to their sound investment principles. Their nuggets of advice are derived from their experiences and learning from them will bring you (and many others who are reading this report) to the next level of applying the principles and secrets that work for this legend. With this report, we hope that it has served its purpose of enlightening you to the merits and principles of value investing. Putting these secrets to work is the next stage that you will need to do in order to achieve the kind of financial abundance that you deserve. For more information on how you can become an even better value investor, just click on the link below and Ill tell you more:

www.StockMarketInvesting101.com

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