Buffet Rules To Investing In Stock Market
- Thread starter DR OSMAN
- Start date
I agree 100% on his first rule.
One key rule is that Buffett believes investors should avoid going too far afield when buying stocks. Instead, he says investors should make sure they fully understand how a business operates, how it makes money, and the future sustainability of its business model and profits before buying its stock, per CNBC
I already knew this due to my exposure to business in my previous work.
U need to know the company(operation) it's investments, expenses, taxes, supply-chains, target market, market share n growth, sector value n growth. it's value pie also. Some of this hard 'data' on and some isn't. U need to know their 'CEO' plans plus prior experience for 'growth' whether its cutting cost or expanding market share and their strategies and if u need to work out if it's sustainable based on all the hard and soft data.
One key rule is that Buffett believes investors should avoid going too far afield when buying stocks. Instead, he says investors should make sure they fully understand how a business operates, how it makes money, and the future sustainability of its business model and profits before buying its stock, per CNBC
I already knew this due to my exposure to business in my previous work.
U need to know the company(operation) it's investments, expenses, taxes, supply-chains, target market, market share n growth, sector value n growth. it's value pie also. Some of this hard 'data' on and some isn't. U need to know their 'CEO' plans plus prior experience for 'growth' whether its cutting cost or expanding market share and their strategies and if u need to work out if it's sustainable based on all the hard and soft data.
A third rule that Buffett has taken from Graham is to buy stocks with a large "margin of safety," investments that currently sell significantly below their intrinsic value. As CNBC notes, taking this bargain-hunting approach to investing should limit your potential losses in case your estimate of intrinsic value was too high, or if unforeseen events damage a company's once-rosy prospects.
I didn't know this and need to learn it. The value of the stock, it's total stock numbers, vs it's balance sheet(debts, investsment, expenses). U need to ensure the stock ur buying isn't over-valued I agree 100%, I just didn't know the 'method' to calculate, I probably still don't.
But im big proponent on 'business value' it's always in my head about the 'value' of policies, strategies, and productivity, etc in my previous work place, now I need to study 'buffet' method on how he 'calculates' shares on 'value'. Remember value is the most beautiful 'equation' i've understood. It's not about cheap or expensive. U cud buy something cheap but it doesnt perform like in somalia market, or u cud spend more for quality in the west and it will last forever. I suspect he views stock valuation with a similar lense of 'productivity gains' not how cheap or expensive it is.
I didn't know this and need to learn it. The value of the stock, it's total stock numbers, vs it's balance sheet(debts, investsment, expenses). U need to ensure the stock ur buying isn't over-valued I agree 100%, I just didn't know the 'method' to calculate, I probably still don't.
But im big proponent on 'business value' it's always in my head about the 'value' of policies, strategies, and productivity, etc in my previous work place, now I need to study 'buffet' method on how he 'calculates' shares on 'value'. Remember value is the most beautiful 'equation' i've understood. It's not about cheap or expensive. U cud buy something cheap but it doesnt perform like in somalia market, or u cud spend more for quality in the west and it will last forever. I suspect he views stock valuation with a similar lense of 'productivity gains' not how cheap or expensive it is.
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The other stuff I agree about 'noise' I saw this in Somalia where everyone copies each other and I know the rule to wealth is doing what others didn't do, not joining the HORDE which leads to 'saturation', i always knew this by seeing somali culture to business n copying each other, the stock market will be the same with the HORDES running to over-saturate one company lol
The other thing I will add apart of stock strategy using the 'value' principle, u need to know what u want out of the investment to review your 'accuracy' over time and what it's contributing towards in your 'over-all wealth' agenda. Its not about cheating, winning, losing mentality, u need to balance ur 'financial goals', the value of the company which has many dimensions, and the general market conditions, govt stability on 'taxes, regulations' not this 'up n down' crap with govt based on parties.
I know companies will fall under 'emerging, growing, mature', it will also be small-medium-big, all have positives/negatives. The perfect blend of value is coming in while it's in 'growth' and went thru the 'teething' stages and selling when fully 'mature' to other idiots who think their more gas in the stock. U dont want to sell when there is nothing 'left' is the key cuz noone will buy it, u still want to ensure it's on it's 'last legs' but ppl will think it will continue to grow becuz of its 'historical' performance.
The biggest thing buffet didn't consider is 'evaluating' your 'goals'. Do u want 'dividends, equity' do u want 'quick growth' or 'slow growth' in safe companies. If u just want to dump a million into coke and sit off the 'dividend' then u answered ur 'strategy', if ur goal is to build up wealth, then u need to prepare your own expectation first and then u need to carefully analyze each company on how it will contribute to your 'expectation' n 'strategy'.
Trust me BUFFET seems like a 'wiser' investor. The first thing u need to know is what 'u want' and then the 'path' u will take in the stock market. Every company u put money into, review your 'plan' of wealth generation and what this company will 'contribute' to it. Half these idiots r blind in the market place and following others. Do u think following ppl will be wise? i remember following ppl as a youth, it doesn't end well.
Trust me BUFFET seems like a 'wiser' investor. The first thing u need to know is what 'u want' and then the 'path' u will take in the stock market. Every company u put money into, review your 'plan' of wealth generation and what this company will 'contribute' to it. Half these idiots r blind in the market place and following others. Do u think following ppl will be wise? i remember following ppl as a youth, it doesn't end well.
The biggest 'sway' for me is their balance sheet vs stock value(buffet rule), their CEO and his plans(cost reduction, market share expansion, productivity increases across it's business' those r my '3 dimensions' I will carefully 'scan' on CEO, then his 'track record' and what he did in his previous roles. Their 'character' dimension is important to me also, their house n family stability, his contributions to the community he/she lives in and what 'value' came out of it. 'Value' is a 'mindset' if u don't have it, u simply don't and it will effect the company their running.
I want to know they can tap into 'experts' and know when to 'use or discard' their forecasts if they understand the 'margin of error' principle on their previous forecast. I also want to know their 'creative' not just 'book smart', as they need to know when to apply solutions and where/how in the company. I also want to ensure their tapping into 'academics' and their value to the industry innovation or their advice on 'failing' companies. I want him/her to know the 'traits' of failing companies and only academics collect that data as 'wisdom' storage.
U want a 'wise' leader in the company not 'hard or smart' looooooool
I want to know they can tap into 'experts' and know when to 'use or discard' their forecasts if they understand the 'margin of error' principle on their previous forecast. I also want to know their 'creative' not just 'book smart', as they need to know when to apply solutions and where/how in the company. I also want to ensure their tapping into 'academics' and their value to the industry innovation or their advice on 'failing' companies. I want him/her to know the 'traits' of failing companies and only academics collect that data as 'wisdom' storage.
U want a 'wise' leader in the company not 'hard or smart' looooooool
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Don't forget productivity of the company not just hard details, this is a silent killer of companies. The culture, processes, the teams, the skills, the quality of these are just as important to financial details. They usually have productivity 'quality' issues many companies, this is even more important on 'service' companies.
