Simplicity - Warren Buffet
Warren Buffet, who has donated billion to charity. Here are some very interesting aspects of his life:
1. He bought his first share at age 11 and he now regrets that he started too late!
2. He bought a small farm at age 14 with savings from delivering newspapers.
3. He still lives in the same small 3-bedroom house in mid-town Omaha , that he bought after he got married 50 years ago. He says that he has everything he needs in that house. His house does not have a wall or a fence.
4. He drives his own car everywhere and does not have a driver or security people around him.
5. He never travels by private jet, although he owns the world's largest private jet company.
6. His company, Berkshire Hathaway, owns 63 companies. He writes only one letter each year to the CEOs of these companies, giving them goals for the year. He never holds meetings or calls them on a regular basis. He has given his CEO's only two rules.
Rule number 1: do not lose any of your share holder's money.
Rule number 2: Do not forget rule number 1.
7. He does not socialize with the high society crowd. His past time after he gets home is to make himself some pop corn and watch Television.
8. Bill Gates, the world's richest man met him for the first time only 5 years ago. Bill Gates did not think he had anything in common with Warren Buffet. So he had scheduled his meeting only for half hour. But when Gates met him, the meeting lasted for ten hours and Bill Gates became a devotee of Warren Buffet.
9. Warren Buffet does not carry a cell phone, nor has a computer on his desk.
His advice to young people: Stay away from credit cards and invest in yourself and Remember:
A. Money doesn't create man but it is the man who created money.
B. Live your life as simple as you are.
C. Don't do what others say, just listen to them, but do what makes you feel good.
D. Don't go on brand name; just wear those things in which you feel comfortable.
E. Don't waste your money on unnecessary things; just spend on things that you really need.
F. After all it's your life, then why give others the chance to rule your life."
Important quotes of Warren Buffet:
1) Rule No 1: Never lose moneyRule No 2: Never forget rule No 1.
2) It is easier to stay out of trouble than it is to get out of trouble.
3) The market like the lord ,helps those help themselves. But unlike the lord, the market does not forgive those who know not what they do.
4) Don't try to jump over seven-foot bars; look around for one-foot bars that can step over.
5) The chains of habit are too light to be felt until they are too heavy to be broken.
6) It is not necessary to do extraordinary things to get extraordinary results.
7) Look at stocks as small pieces of a business.
8) Invest in a business that even a fool can run, because somebody a fool will.
9) With investment you make, You should have the courage and the conviction to place at least 10% of your net worth in that stock.
10) If a business does well, the stock eventually follows.
11) The reaction of weak management to weak operations is often weak accounting.
12) In a difficult business, no sooner is one problem solved than another surfaces-never is there just one cockroach in the kitchen.
13) You don't have to make money the same way you lost it.
14) With enough insider information and a million dollars, you can go broke in a year.
15) If principles become dated, they are no longer principles.
16) If calculus or algebra were required to be a great investor, I would have to go back to delivering newspapers.
17) It is only the tide goes out that you learn who has been swimming naked.
18) If you hit a hole in one on every hole, you would not play golf for very long.
19) Never ask a barber if you need a haircut.
20) Forecasts usually tells us more of the forecaster than of the forecasts.
21) There seems to be some perverse human characteristic that likes to make easy things difficult.
22) Diversification is a protection against ignorance.
23) Brokers make money on activity, You make your money on inactivity.
24) You only have to do a few things right in your life so long as you don't do too many things wrong.
25) If you let yourself be undisciplined on the small things, you will probably be undisciplined on the large things as well.
26) When proper temperament joins up with the proper intellectual framework, then you get rational behavior.
27) The fact that people are full of greed or folly is predictable. The sequence is unpredictable.
28) Be fearful when others are greedy and be greedy only when others are fearful.
29) The most important thing to do when you are in a hole is to stop digging.
30) If at first you do succeed, quit trying.
31) Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.
32) Risk comes from not knowing what you are doing.
33) If you can't make mistakes, you can't make decisions.
34) Investment must be rational, If you don't understand it, don't do it.
35) In the business world, the rear view mirror is always clearer than the windshield.
36) For some reason people take their cues from price action rather than from values. Price is what you pay. Value is what you get.
37) At the beginning, prices are driven by fundamentals and at some point, speculation drives them. It is the old story: what the wise man does in the beginning the fool does in the end.
38) A pin lies in wait for a bubble and when the two eventually meet, a new wave of investors learn some very old lessons.
39) I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for 5 years.
40) What we learn from history is that people don't learn from history.
41) Look at stock market fluctuations as your friend rather than your enemy-profit from folly rather than participate in it.
42) Uncertainty actually is the friend of the buyer of long-term values.
43) No matter how great the talent or effort, some things just take time: You can't produce a baby in a month by getting nine women pregnant.
44) If the past history was all there was to the game, the richest people would be librarians.
45) I would be a bum on the street with a tin cup, if the markets were efficient.
Here are some of the thumb rules that legendary investor and worlds richest man follows to create and grow his wealth. He simply follows Keep It Simple Stupid (KISS) Principles.
1. Choose Simplicity over Complexity
When investing, keep it simple. Do what’s easy and obvious.
If you don’t understand a business, don’t buy it.
2. Make Your Own Investment Decisions
Don’t listen to the brokers, the analysts, or the pundits. Figure it out for yourself.
Become a value investor. It’s proven to be a very rewarding technique over the long term.
3. Maintain Proper Temperament
Let other people overreact to the market.
To succeed in the market, you need only ordinary intelligence. But in addition, you need the kind of temperament to help you ride out the storms and stick to your long-term plans. If you can stay cool while those around you are panicking, you can surely prevail.
4. Be Patient
Think 10 years, rather than 10 minutes.
Don’t dwell on the price of stocks. Instead, study the underlying business, its earnings capacity and its future. If the question is, “How long will you wait?” – “If we’re in the right place, we’ll wait indefinitely” says Buffet.
5. Buy Business, Not Stocks
Once you get into the right business, you can let everyone else worry about the stock market.
Business performance is the key to picking stocks. Study the long-term track record of any company that is on your buy list. Buffet looks for following five main things before investing in a company.
(i) Business he can understand
(ii) Companies with favorable long-term prospects
(iii) Business operated by honest and competent people
(iv) Businesses priced very attractively
(v) Business with free cash flow
Don’t think about “stock in the short term.” Think about “business in the long term”.
6. Look for a Company that is a Franchise
Some businesses are “franchises”. Franchise generates free cash flows.
7. Buy Low-Tech, Not High-Tech
Successful investing is rarely a gee-whiz activity. It’s less often about rockets and lasers and more often about bricks, carpets, paint, shaving blades and insulation.
Do not be tempted by get-rich-quick deals involving relatively complex companies (e.g., high-tech companies). They are the most unpredictable in the long run. Look for the absence of change. Look for the business whose only change in the future will be doing more business, e.g Gillette Blades.
8. Concentrate Your Stock Investments
A the “Noah’s Ark” style of investing – that is, a little of this, a little of that. Better to have a smaller number of investments with more of your money in each.
Warren Buffet, who has donated billion to charity. Here are some very interesting aspects of his life:
1. He bought his first share at age 11 and he now regrets that he started too late!
2. He bought a small farm at age 14 with savings from delivering newspapers.
3. He still lives in the same small 3-bedroom house in mid-town Omaha , that he bought after he got married 50 years ago. He says that he has everything he needs in that house. His house does not have a wall or a fence.
4. He drives his own car everywhere and does not have a driver or security people around him.
5. He never travels by private jet, although he owns the world's largest private jet company.
6. His company, Berkshire Hathaway, owns 63 companies. He writes only one letter each year to the CEOs of these companies, giving them goals for the year. He never holds meetings or calls them on a regular basis. He has given his CEO's only two rules.
Rule number 1: do not lose any of your share holder's money.
Rule number 2: Do not forget rule number 1.
7. He does not socialize with the high society crowd. His past time after he gets home is to make himself some pop corn and watch Television.
8. Bill Gates, the world's richest man met him for the first time only 5 years ago. Bill Gates did not think he had anything in common with Warren Buffet. So he had scheduled his meeting only for half hour. But when Gates met him, the meeting lasted for ten hours and Bill Gates became a devotee of Warren Buffet.
9. Warren Buffet does not carry a cell phone, nor has a computer on his desk.
His advice to young people: Stay away from credit cards and invest in yourself and Remember:
A. Money doesn't create man but it is the man who created money.
B. Live your life as simple as you are.
C. Don't do what others say, just listen to them, but do what makes you feel good.
D. Don't go on brand name; just wear those things in which you feel comfortable.
E. Don't waste your money on unnecessary things; just spend on things that you really need.
F. After all it's your life, then why give others the chance to rule your life."
Important quotes of Warren Buffet:
1) Rule No 1: Never lose moneyRule No 2: Never forget rule No 1.
2) It is easier to stay out of trouble than it is to get out of trouble.
3) The market like the lord ,helps those help themselves. But unlike the lord, the market does not forgive those who know not what they do.
4) Don't try to jump over seven-foot bars; look around for one-foot bars that can step over.
5) The chains of habit are too light to be felt until they are too heavy to be broken.
6) It is not necessary to do extraordinary things to get extraordinary results.
7) Look at stocks as small pieces of a business.
8) Invest in a business that even a fool can run, because somebody a fool will.
9) With investment you make, You should have the courage and the conviction to place at least 10% of your net worth in that stock.
10) If a business does well, the stock eventually follows.
11) The reaction of weak management to weak operations is often weak accounting.
12) In a difficult business, no sooner is one problem solved than another surfaces-never is there just one cockroach in the kitchen.
13) You don't have to make money the same way you lost it.
14) With enough insider information and a million dollars, you can go broke in a year.
15) If principles become dated, they are no longer principles.
16) If calculus or algebra were required to be a great investor, I would have to go back to delivering newspapers.
17) It is only the tide goes out that you learn who has been swimming naked.
18) If you hit a hole in one on every hole, you would not play golf for very long.
19) Never ask a barber if you need a haircut.
20) Forecasts usually tells us more of the forecaster than of the forecasts.
21) There seems to be some perverse human characteristic that likes to make easy things difficult.
22) Diversification is a protection against ignorance.
23) Brokers make money on activity, You make your money on inactivity.
24) You only have to do a few things right in your life so long as you don't do too many things wrong.
25) If you let yourself be undisciplined on the small things, you will probably be undisciplined on the large things as well.
26) When proper temperament joins up with the proper intellectual framework, then you get rational behavior.
27) The fact that people are full of greed or folly is predictable. The sequence is unpredictable.
28) Be fearful when others are greedy and be greedy only when others are fearful.
29) The most important thing to do when you are in a hole is to stop digging.
30) If at first you do succeed, quit trying.
31) Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.
32) Risk comes from not knowing what you are doing.
33) If you can't make mistakes, you can't make decisions.
34) Investment must be rational, If you don't understand it, don't do it.
35) In the business world, the rear view mirror is always clearer than the windshield.
36) For some reason people take their cues from price action rather than from values. Price is what you pay. Value is what you get.
37) At the beginning, prices are driven by fundamentals and at some point, speculation drives them. It is the old story: what the wise man does in the beginning the fool does in the end.
38) A pin lies in wait for a bubble and when the two eventually meet, a new wave of investors learn some very old lessons.
39) I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for 5 years.
40) What we learn from history is that people don't learn from history.
41) Look at stock market fluctuations as your friend rather than your enemy-profit from folly rather than participate in it.
42) Uncertainty actually is the friend of the buyer of long-term values.
43) No matter how great the talent or effort, some things just take time: You can't produce a baby in a month by getting nine women pregnant.
44) If the past history was all there was to the game, the richest people would be librarians.
45) I would be a bum on the street with a tin cup, if the markets were efficient.
Here are some of the thumb rules that legendary investor and worlds richest man follows to create and grow his wealth. He simply follows Keep It Simple Stupid (KISS) Principles.
1. Choose Simplicity over Complexity
When investing, keep it simple. Do what’s easy and obvious.
If you don’t understand a business, don’t buy it.
2. Make Your Own Investment Decisions
Don’t listen to the brokers, the analysts, or the pundits. Figure it out for yourself.
Become a value investor. It’s proven to be a very rewarding technique over the long term.
3. Maintain Proper Temperament
Let other people overreact to the market.
To succeed in the market, you need only ordinary intelligence. But in addition, you need the kind of temperament to help you ride out the storms and stick to your long-term plans. If you can stay cool while those around you are panicking, you can surely prevail.
4. Be Patient
Think 10 years, rather than 10 minutes.
Don’t dwell on the price of stocks. Instead, study the underlying business, its earnings capacity and its future. If the question is, “How long will you wait?” – “If we’re in the right place, we’ll wait indefinitely” says Buffet.
5. Buy Business, Not Stocks
Once you get into the right business, you can let everyone else worry about the stock market.
Business performance is the key to picking stocks. Study the long-term track record of any company that is on your buy list. Buffet looks for following five main things before investing in a company.
(i) Business he can understand
(ii) Companies with favorable long-term prospects
(iii) Business operated by honest and competent people
(iv) Businesses priced very attractively
(v) Business with free cash flow
Don’t think about “stock in the short term.” Think about “business in the long term”.
6. Look for a Company that is a Franchise
Some businesses are “franchises”. Franchise generates free cash flows.
7. Buy Low-Tech, Not High-Tech
Successful investing is rarely a gee-whiz activity. It’s less often about rockets and lasers and more often about bricks, carpets, paint, shaving blades and insulation.
Do not be tempted by get-rich-quick deals involving relatively complex companies (e.g., high-tech companies). They are the most unpredictable in the long run. Look for the absence of change. Look for the business whose only change in the future will be doing more business, e.g Gillette Blades.
8. Concentrate Your Stock Investments
A the “Noah’s Ark” style of investing – that is, a little of this, a little of that. Better to have a smaller number of investments with more of your money in each.
Portfolio concentration – the opposite of diversification – also has the power to focus the mind. If you’re putting your eggs in only a few baskets, you’re far less likely to make investments on impulse or emotion.
9. Practice Inactivity, Not Hyperactivity
There are times when doing nothing is a sign of investing brilliance.
Be a decade’s trader, not a day trader.
10. Don’t Look at the Ticker
Tickers are all about prices. Investing is about a lot more than prices. It is about value. It is about wealth.
Abstain from looking at share prices every day. Study the playing field and not the scoreboard. Know the value of something rather than the price of everything.
