Tag: Value Investing

Since publicly traded companies report their performance on a quarterly and annual basis, it may be tempting to assign a special significance to their results during those periods. Nevertheless, Warren Buffett argues that there is nothing particularly extraordinary about a one-year timeframe.

“The fact that the Earth revolves around the sun really is not totally connected to most business activities, or the fruition of most investment ideas, or anything of the sort,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “We have to report every year, and, you know, I care about the yearly figures in that sense. I don’t really care about them, totally, as a measure of what we’re doing.”

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Warren Buffett focuses on individual stocks and their value as partial ownership of companies rather than their daily price movements or whether the market as a whole is up or down.

“We look at individual businesses. And we don’t think of stocks as little items that wiggle around on the paper and that have charts attached to them,” Buffett said at the 1999 Berkshire Hathaway annual meeting. “We think of them as parts of businesses.”

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© 2022 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Risk for Warren Buffett is not just the risk that a business has at the moment, but also includes the risks it may face many years in the future.

“We think of business risk in terms of what can happen, say 5, 10, 15 years from now, that will destroy, or modify, or reduce the economic strengths that we perceive currently exist in a business,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “When we look at businesses, we try to think of what can go wrong with them. We try to look [for] businesses that are good businesses now, and we think about what can go wrong with them. If we can think of very much that can go wrong with them, we just forget it. We are not in the business of assuming a lot of risk in businesses.”

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

If a sector you know nothing about is booming, should you still buy it? Not if you are Warren Buffett.

“We will never buy anything we don’t think we understand,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “And our definition of understanding is thinking that we have a reasonable probability of being able to assess where the business will be in 10 years.”

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

While financial commentary on TV and in print is often filled with predictions as to which direction the stock market will move, it is not something that Warren Buffett spends any time trying to predict. In fact, as Buffett points out, if he could be successful in predicting price movements, he wouldn’t ever need to buy stocks, as it would be totally unnecessary. He could just bet on stock futures.

“Charlie and I haven’t the faintest idea where the stock market is going to go next week, next month, or next year. We never talk about it. You know, it never comes up,” Warren Buffett said at the 2008 Berkshire Hathaway Annual Meeting. “Obviously, if we could guess successfully a high percentage of the time where the stock market was going to go, we would do nothing but play the S&P futures market. There wouldn’t be any reason to look at businesses and stocks.”

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Some sectors seem to excite investors more than others, but Warren Buffett is quick to remind investors that no matter the source all dollars are equal.

“A dollar earned from a horseshoe company is the same as a dollar earned from an internet company” Buffett said at the 1999 Berkshire Hathaway annual meeting. “It is not worth more, based on whether it comes from somebody named dot-com, you know, or somebody that named, you know, the Old-Fashioned Horseshoe Company. The dollars are equal.”

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© 20223David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Stock prices can become disassociated from the underlying value of companies, especially in times when extreme speculation grips the market, but in the long run they more closely align. It is something that Benjamin Graham noted years ago in The Intelligent Investor, and Warren Buffett firmly agrees.

“Ben Graham was right when he said that in the short run it’s a voting machine, and the long run it’s a weighing machine,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “Sooner or later, the amount of cash that a business can disgorge in the future governs the value it has, that the stock commands in the market. But it can take a long time.”

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© 2022 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Leverage, the use of borrowed money to increase your return, may be tempting, but Warren Buffett warns against it. Even, rich, successful investors can be ruined when circustances turn against them.

“Whenever a bright person, a really bright person, goes broke that has a lot of money, it’s because of leverage,” Buffett said at the 1999 Berkshire Hathaway annual meeting. “It would be almost impossible to go broke without borrowed money being in the equation.”

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© 2022 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Warren Buffett cites hockey legend Wayne Gretzky for an important principal in investing when it comes to looking at formulas, such as P/E ratios.

“It’s the future that counts,” Buffett said at the 1995 Berkshire Hathaway annual meeting. “It’s like what I wrote there, what Wayne Gretzky says, to go where the puck is going to be, not where it is.”

Hear Buffett’s full explanation

See the complete Lessons From Warren Buffett series

© 2022 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.