The following is an excerpt of Warren Buffet Investment Diary. It contains 38 Golden Rules to investments that he lives by and these are the very same rules containes in the all time classic investment book "The Intelligent Investor" written by his mentor Benjamin Graham.
Here are the rules!
1. Never Lose Money.
2. Never forget rule No. 1.
3. Never invest in a business you cannot understand.
4. Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in stock market.
5. Critical Factor - Determine the intrinsic value of business and pay a fair bargain price.
6. Risk - assuming you know what you are doing,you can reduce your risk by concentrating on only a few holdings.
7. An Investor should hold a small piece of business with the same tenacity that an owner would exhibit if he owned all of the business.
8. Buy a business, don't rent stocks.
9. Ask yourself : Does the business have a consistent operating history?
10. An investor needs to do very few things as long as he/she avoids big mistakes.
11. "Turn-arounds" seldom turns.
12. Focus on Return on Equity(ROE) not on Earning per share(EPS).
13. Look for company with high profit margin.
14. Always invest for the long term.
15. Ask yourself : Does the business have favorable long term prospects.
16. Remember! Stocks market is manic depressive.
17. It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
18. The dumest reason in the world to buy stock is because it's going up.
19. Most people get interested in stocks when everyone is. The time to get interested is when no one else is. You can't buy what is popular and do well.
20. I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out.
21. Our favourite holding period is forever.
22. Risk comes from not knowing what you're doing.
23. If you don't know jewellery, know the jeweller.
24. If you don't feel comfortable owning something for 10 years, then don't own it for 10 minutes.
25. If a business does well, the stock eventually follows.
26. A public opinion poll is not substitute for thought.
27. The most important quality for an investor is temperment, not intellect...You need a temprement that nither derives great pleasure from being with the crowd nor against the crowd.
28. When asked how to become successful in investing, Buffet answered : "We read hundred and hundreds of annual reports every year.
29. I never buy anything unless I can fill out on a piece of paper my reasons...
30. I will tell you how to become rich. Close the door. "Be fearful when others are greedy. Be greedy when others are fearful.
31. If you understood a business perfectly and the future of the business, you would need very little in way of a margine of safety.
32. So, the more vanurable the business is, assuming you still want to invest, the larger merine of safety you need.
33. The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all the durability of that advantage.
34. Investor should remember that excitment and expenses are their enemies.
35. The most common cause of low prices is pessimism, sometimes pervasive, sometimes specific to a company or industry. It's optimism that is the enemy of a rational buyer.
36. Diversification is a protection against ignorance. It makes very little sense for thoes who know what their doing.
37. A low cost index fund is the most sensible equity investment for the great majority of investors. My mentor Ben Graham took this position many years ago and everyting I have seen since convinces me of it's truth.
38. By periodically investing in an index fund the know nothing investor can actually out perform most investment professionals.
Friday, April 29, 2011
Saturday, January 23, 2010
Money is what ever you think it is.
"Perception created reality"
*Remember this quotation! In fact commit it to your mind. If possible repeat it to yourself 3 times a day.
What do I hope to achieve by doing this? Well...it might just give you an idea of why you are where you are in your life.
The truth is, all of us are having exactly what we want in our lives right now.........Let this idea sink in. And the answer will be revealed. Ask yourself honestly what were your desires and what did you do to achieve them?
After an honest self assessment(which might take 1 minute to several years)ask yourself this question.
"What else that I want that is still not achieved?" and
"How do I move around my obstacles to achieve my goals?"
Tips : If the answer comes out incoherent, repeat the process until it makes sense.
*Remember this quotation! In fact commit it to your mind. If possible repeat it to yourself 3 times a day.
What do I hope to achieve by doing this? Well...it might just give you an idea of why you are where you are in your life.
The truth is, all of us are having exactly what we want in our lives right now.........Let this idea sink in. And the answer will be revealed. Ask yourself honestly what were your desires and what did you do to achieve them?
After an honest self assessment(which might take 1 minute to several years)ask yourself this question.
"What else that I want that is still not achieved?" and
"How do I move around my obstacles to achieve my goals?"
Tips : If the answer comes out incoherent, repeat the process until it makes sense.
The Truth about Wealth!
Question 1. Do you need a lot of money to be wealthy?
Answer. NO
Question 2. Do you need luck to have what you want?
Answer. NO
Question 3. Working hard is the only way to be wealthy?
Answer. NO
These are the three question answered after attending a seminar that I paid $5000 for recently. If these three question does not surprise you in any way, then you should not be reading this article. But if these questions about wealth shakes your believes about money and wealth, then this might be a revelation.
In the following article I will be talking about some very important topics that, if understood correctly will give you a new perspective on where you are and where you could go.
Answer. NO
Question 2. Do you need luck to have what you want?
Answer. NO
Question 3. Working hard is the only way to be wealthy?
Answer. NO
These are the three question answered after attending a seminar that I paid $5000 for recently. If these three question does not surprise you in any way, then you should not be reading this article. But if these questions about wealth shakes your believes about money and wealth, then this might be a revelation.
In the following article I will be talking about some very important topics that, if understood correctly will give you a new perspective on where you are and where you could go.
Thursday, December 10, 2009
The Youngest Millionair In The World
The Youngest Millionaire who started his company in his bedroom at the age of 16 and went on to sell his first company for 40 million to Yahoo. That was not all. He started another company and went on to sell it for 300 million.
Listen to words of wisdom from this young enterpruner. The definition of "preception created reality".
Listen to words of wisdom from this young enterpruner. The definition of "preception created reality".
Wednesday, December 9, 2009
The F Word?
Wait a minute! It not what you think. The word is FEAR.
There are many things that people fear. Top on the list is the fear of public speaking and getting a drill put into your mouth by the dentist. And the list goes on....
But what I want to talk about is how different people deal with their fear and how it effects their lives. For many, fear run their lives and a small minority use fear as a stepping stone for self improvement.
For majority of people, fear stands for how they feel and what they can or can not do in their lives. From my own personal experience, I found out that most of my fears are without merit. It something my conscious or sub-conscious mind conjures up. So the word fear stands for :
False
Evidence
Appearing
Real.
But the question might be raised, " Dont successful people experience fear?"
Yes they do. But it how they view and act upon their fear that makes them successful. For the successful people the word fear stands for :
Fail
Early
And
Responsibly.
Successful people know that we are all not perfect and there is already a set number of failures in life to be experienced. So they fail more then anyone else, and in the process they learn and grow faster then anyone else. Fear is seen as a partner in their definite success in life.
There are many things that people fear. Top on the list is the fear of public speaking and getting a drill put into your mouth by the dentist. And the list goes on....
But what I want to talk about is how different people deal with their fear and how it effects their lives. For many, fear run their lives and a small minority use fear as a stepping stone for self improvement.
For majority of people, fear stands for how they feel and what they can or can not do in their lives. From my own personal experience, I found out that most of my fears are without merit. It something my conscious or sub-conscious mind conjures up. So the word fear stands for :
False
Evidence
Appearing
Real.
But the question might be raised, " Dont successful people experience fear?"
Yes they do. But it how they view and act upon their fear that makes them successful. For the successful people the word fear stands for :
Fail
Early
And
Responsibly.
Successful people know that we are all not perfect and there is already a set number of failures in life to be experienced. So they fail more then anyone else, and in the process they learn and grow faster then anyone else. Fear is seen as a partner in their definite success in life.
Sunday, December 6, 2009
Li ka Shing's Secret of Manging and Wealth Accumulation
This is a condensed version of a article I read recently. It has wisdom that worth taking note.
"Li Ka Shing was born in a poor family in China. After half a century of hard work and struggle, he became a household name in the business community(a "Who's Who" in Forbes and Fortune Magazine). He attributes his extraordinary success, to hard work and diligence. But here he shares his secrets of managing and accumulating wealth.
Li Ka Shing believes that before a person reaches the age of 20, all his money should come from working hard using his own two hands. Between the age of 20 to 30 is the time to work hard earning money and simultaneously saving money. After the age of 30, the importance of investing and managing money is greatly increased. After middle age, how much you earn is less important; it is how to manage your money that becomes important.
The importance of continued patience - If a person can start saving HK$14,000 a year, and invest all the accumulation into stock and real estate investment, obtaining 20% average annual rate of return, after 40 years his wealth will accumulate to HK$102,810,000 and become a 100X millionaire(yi-wan-fu-weng). Many people who attend Li Ka Shing's talk comment, "If it takes 40 years to become a "yi-wan-fu-weng", it takes too long."
Li Ka Shing answers "Managing and accumulating wealth take a long time". You will not be able to see any results within a short time. Any person who wish to use any method of managing wealth to get-rich-quick, his wish is totally hopeless and destined to fail. Based on Li Ka Shing's method, after working hard for 10 years, a person can only accumulate enough to buy a car, very far from the objective of becoming a yi-wan-fu-weng. Therefore, a wealth-accumulator needs to realize that the activities of managing wealth is a "marathon run", not a "100 meter dash". What you need is stamina, and not explosive sprint. To invest, manage and accumulate wealth, you need a long period of waiting time to see the results.
At first it seems difficult, later it becomes easy. If a person can save HK$14,000 and obtain an average annual rate of return of 20%, after 20 years, the accumulated wealth is only HK$2,610,000- far behind the objective of HK$100 million.
Only after continuing the wealth accumulation plan for 40 years, can a person reach the platform of yi-wan-fu-weng, accumulating HK$102,810,000. In conclusion, Li Ka Shing also confesses that, "It's easier to earn the second 10 million than the first one million."
Saturday, December 5, 2009
The Greatest Discovery
When I was working and observing people(which is my hobby), I discovered that no matter how much you know in terms of knowledge, it's totally different when you put what you have learnt into practice.
That's when I discovered that being rich is a state of mind and not a thing to acquire. All rich people spend their time in sharpening and honing their skill in attracting more wealth into their life. The word "JOB" stands for Just Over Broke. That right! If you have a job and if that's your only income, then you will always be "just over broke". The rich consider a JOB as a waste of their time.
Before we get into what is the richest game in the world, we must understand who are the players in this game.
First you have the Employees.
Second is the Self Employed or Small Business Owner.
Third is the Business Man
And the forth is the Investor.
You can always tell from their Language, which category they fall under.
An employee will always ask "I want a safe secure job with benefits."
A self employed or small business owner will say things like " I charge you by the hour or I charge 5% for one job."
A businessman will say things like "I am looking for a system and the best minds to expand my business."
An investor will say things like "What is my ROI(Return On Investment) and how soon can I see my money back?"
Each have different Emotions that drive them.
An employee is driven by Fear and Insecurity. They often don't plan for the future and live only for today.
A self employed is driven by pride and is usually a perfectionist. You will find doctors, lawyers and skilled craftsman in this category.
A business man is driven by patients. They can go for years without being paid.
An investor is totally different as they are unemotional. To them, it doesn't matter what happens, they make money either way. It just a matter of how much they make and how soon they see their money back.
Knowing this different players and what drives them will help you in identify which group you fall in and chart out your growth as a person. Which eventually will determine what kind of life you will live.
That's when I discovered that being rich is a state of mind and not a thing to acquire. All rich people spend their time in sharpening and honing their skill in attracting more wealth into their life. The word "JOB" stands for Just Over Broke. That right! If you have a job and if that's your only income, then you will always be "just over broke". The rich consider a JOB as a waste of their time.
Before we get into what is the richest game in the world, we must understand who are the players in this game.
First you have the Employees.
Second is the Self Employed or Small Business Owner.
Third is the Business Man
And the forth is the Investor.
You can always tell from their Language, which category they fall under.
An employee will always ask "I want a safe secure job with benefits."
A self employed or small business owner will say things like " I charge you by the hour or I charge 5% for one job."
A businessman will say things like "I am looking for a system and the best minds to expand my business."
An investor will say things like "What is my ROI(Return On Investment) and how soon can I see my money back?"
Each have different Emotions that drive them.
An employee is driven by Fear and Insecurity. They often don't plan for the future and live only for today.
A self employed is driven by pride and is usually a perfectionist. You will find doctors, lawyers and skilled craftsman in this category.
A business man is driven by patients. They can go for years without being paid.
An investor is totally different as they are unemotional. To them, it doesn't matter what happens, they make money either way. It just a matter of how much they make and how soon they see their money back.
Knowing this different players and what drives them will help you in identify which group you fall in and chart out your growth as a person. Which eventually will determine what kind of life you will live.
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