Learn to invest with Buffett

Chapter 3

Chapter 1 Section 2 Trust your instincts and stick to your own judgment
Don't expect any miracles from our portfolio of securities.Although some of our main holdings are very powerful and profitable companies, their stock prices are not cheap.However, they may double in value over the next ten years.There is a possibility that after ten years in the future, their earnings per share will maintain an annual growth rate of 6% to 8%, but its stock price will eventually grow more or less towards the growth rate of earnings per share. rate close.Of course, the managers of these companies will think that our forecast for the stock is a bit too conservative, and we hope they are right.

--Warren Buffett
In 2005, two changes occurred in Berkshire's portfolio due to corporate events: Procter & Gamble acquired Gillette, and American Express spun off Ameriprise Financial.In addition, Berkshire has also significantly increased its holdings of Wells Fargo shares, while at the same time building positions in Anheuser-Busch and Wal-Mart shares.In the case that Buffett has not made a move for five years, since the bubble of American Internet technology stocks burst in 5, the stock god Buffett has started to act again.

In 1999, Berkshire's rate of return was only 0.5%, compared with the U.S. stock market rose by 21% that year. Judging from the situation at the time, Buffett lagged behind the market by 20.5%. In his investment worst performance in history.But by 2000, the U.S. stock market had plummeted by 9.1%. At that time, Buffett's profit reached 6.5%, which exceeded the index by 15.6% in the same period. In 2002, the S&P500 index fell by 22%, and Buffett's profit reached 10%, surpassing the index by 32%, and people began to continue to cheer the name of the stock god.

However, in Buffett’s early investment, it can be found that his investment method has made him a lot of money, but the stock market volatility at that time was not very large, so it is relatively easy to make money, which is more firm. The effectiveness of Buffett's investment methods, and his ability to stick to his investment methods for a long time.It is worth mentioning that Buffett is not a person who is easily persuaded by others. Buffett calls this "internal scorecard", and it is difficult for others to influence Buffett's thinking.For example, an example of the success of value investing is that although it is impossible to see whether the investment is right or wrong in the short term, the facts always prove that Buffett is right after a period of time, so no one else has been able to get an investment like him for so many years results.

Buffett's personality has gradually contributed to this investment method. He is excited about investing, which is different from the thrill of gambling.Buffett is a person who is very sensitive to data. Before he makes an investment choice, he can rarely be persuaded by others, and he has already scored the investment in his mind.Buffett is not emotional at all when it comes to investment. He always stands on a very objective point of view. When he does business, he completely separates his personal feelings from his personal friendship. For example, he is a good friend with the president of AIG. The boss of AIG could actually ask Buffett to rescue them, but Buffett didn't do this. He made a clear distinction between public and private.After studying AIG's financial statements, Buffett felt that he could not understand AIG's financial products department, and that AIG had too much debt to deal with.

Investment motto:

In the cruel and realistic stock market, even Buffett has to face doubts and ridicule when investing, let alone ordinary investors!Only by sticking to one's own beliefs can you beat the market for a long time.

(End of this chapter)