Why Buffett Weighs Both Book Value and Intrinsic Value

Everyone wants to invest like Buffett, and while understanding things like his rules for running a business, investing mindset, personality traits, and even his morning routine can help you better understand the genius that is the Oracle of Omaha, there is way more to studying Buffett’s investing stratagems than simply reading quotes on the internet. In fact, much of Buffett’s wisdom comes from his unique understanding of accounting and financial principles and ideas.

One of those ideas which seems to be mostly overlooked is the importance of intrinsic value over book value. Buffett, in his annual shareholder letters, often writes how he and his partner Charlie Munger rarely measure companies based on their book value. Intrinsic value, instead, is the most important part of making a decision. Continue reading ‘Why Buffett Weighs Both Book Value and Intrinsic Value’ »

Why Not JetBlue?

Warren Buffett taking a stake in the four major U.S. airlines— American Airlines, Delta Air Lines, United Continental, and Southwest Airlines— quickly became big news after the billionaire almost suffered a big loss in 1995, leading the octogenarian to speak out against airline investments in years past.

It’s unclear what made Buffett change his mind about airlines, though it could be because of cheaper oil and increased travel. Speculations aside, clearly something has changed, as his investments totaled 1.3 billion before factoring in Southwest (which was announced after the original 3), leaving us with another question: Why did Buffett leave out JetBlue? Continue reading ‘Why Not JetBlue?’ »

Should Buffett Sell His Fossil Fuel Stocks?

The Nebraska Peace Foundation, an advocacy organization that strives for peace, increased civil rights, and a focus on environmental issues, decided to submit a formal proposal to Mr. Warren Buffett himself in regards to his companies that are involved in fossil fuels.

The letter itself proposes that Berkshire Hathaway, the conglomerate owned by Buffett, sells it’s stakes in companies that are involved in fossil fuels over a period of 12 years. It is a formal proposal to be considered on next year’s shareholder meeting; May 6, 2017. Continue reading ‘Should Buffett Sell His Fossil Fuel Stocks?’ »

Why Warren Buffett Hangs On to Cash

The way that most investors make money is off of stocks and the rising of value in their investment portfolio. For that reason, it’s easy to see how many investors would consider cash a waste. You aren’t going to be making any money off of cash stocks that are just sitting around. In fact, it’s a common perception in modern day investing that if you have cash sitting around, your financial advisor is not very good.

However, Warren Buffett has never gone with the flow when it comes to investing, and his stance on cash is nothing short of unorthodox when compared to the modern investing mindset. In fact, at any given time Berkshire Hathaway, Buffett’s company, has been known to have upwards of $70 billion cash on hand. But why? Continue reading ‘Why Warren Buffett Hangs On to Cash’ »

Business Principles and Practices of Berkshire Hathaway

Warren Buffett’s management of Berkshire Hathaway pulled the company from the brink of collapse and formed it into a multi-billion dollar company that owns and operates more than 50 other companies. And, while there isn’t any one thing that has led to the success of Buffett and his corporation, the business practices, principles, and philosophy certainly have helped.

In the 1983 Shareholder Letter, Buffett spelled out exactly what shareholders could expect, and many of those practices continue today. Continue reading ‘Business Principles and Practices of Berkshire Hathaway’ »

3 Types of Companies Buffett Avoids

Investing is a tricky business. It involves strategy, foresight, and even hindsight. A lot of people look to Warren Buffett for advice, and he freely offers it. He runs one of the most successful conglomerates in the world, plus, he’s got some strategies that are pretty easily followed— like these three types of companies that Buffett avoids making investments in.

1) Young Companies

Continue reading ‘3 Types of Companies Buffett Avoids’ »

Buffett’s Shareholder Letter Highlights: 1983

Since Warren Buffett took over the management of Berkshire Hathaway in 1965, he has written an Annual Shareholder Letter outlining the progress of the company, setting goals, and discussing the culture and methodology of Berkshire Hathaway. And, while a good portion of each letter is devoted to a rundown of numbers for Berkshire Hathaway, scattered throughout each article is quite a bit of Buffett’s down-to-earth mentality and some fantastic financial advice.

In this series, I’m going to go through and highlight some of the best letters from 1965 through the present. There won’t really be that much of an order, and we won’t do every year, but inside you’ll find not only an interesting insight into Berkshire Hathaway, but also history and the mind of the Oracle of Omaha himself.

Today, we’re going to take a look at the Shareholder Letter from 1983. This letter has been lauded as one of the top five best letters written by Buffett. But first we’ll get some background on what was going on in Berkshire Hathaway that year. Continue reading ‘Buffett’s Shareholder Letter Highlights: 1983’ »

5 Reasons Not to Invest like Buffett

While Warren Buffett is often looked to for advice, and he does have a lot of knowledge to share, doing exactly what Buffett does is not always the answer— or even an option. Buffett shares great general knowledge, but as a billionaire his actions are just going to be different than yours. Keep that in mind while you are investing! You can follow Buffett’s advice while not doing exactly what he is, and to help put you at ease, here are 5 reasons you may not be able to invest like Buffett.

1) You have different goals than him.

Continue reading ‘5 Reasons Not to Invest like Buffett’ »

Buffett’s Shareholder Letter Highlights: 1977

Since Warren Buffett took over the management of Berkshire Hathaway in 1965, he has written an Annual Shareholder Letter outlining the progress of the company, setting goals, and discussing the culture and methodology of Berkshire Hathaway. And, while a good portion of each letter is devoted to a rundown of numbers for Berkshire Hathaway, scattered throughout each article is quite a bit of Buffett’s down-to-earth mentality and some fantastic financial advice.

In this series, I’m going to go through and highlight some of the best letters from 1965 through the present. There won’t really be that much of an order, and we won’t do every year, but inside you’ll find not only an interesting insight into Berkshire Hathaway, but also history and the mind of the Oracle of Omaha himself.

Today, we’re going to take a look at the Shareholder Letter from 1977. This letter has been lauded as one of the top five best letters written by Buffett. But first we’ll get some background on what was going on in Berkshire Hathaway that year.

Continue reading ‘Buffett’s Shareholder Letter Highlights: 1977’ »

Buffett’s Grandson Follows in Same Footsteps with i(x) Investments

Howard Warren Buffett, grandson of Warren Buffet, has started a journey following in his grandfathers footsteps. H.W. Buffett, age 33, is a professor at Columbia’s School of International and Public Affair, runs a farm in Nebraska, and has his own investment agenda as well.

Howard W. Buffett co-founded an investment company called i(x) Investments, which is your usual conglomerate with a twist: it focuses on human needs and social change. The basis of the company is actually solid, as companies that are philanthropic tend to have a higher profit for shareholders than companies that are not. Continue reading ‘Buffett’s Grandson Follows in Same Footsteps with i(x) Investments’ »