Warren Buffett, the Sage of Omaha', is generally considered to be
the worlds most successful investor. His investment vehicle, Berkshire Hathaway, is
Investors would love to know the secret of his success - to know how he became
Americas second or third richest man, and a living legend.
Warren Buffett does not give stock tips, and why should he? He does however, from time
to time, sound out investment principles in his annual letters to Berkshire Hathaway
stockholders, in reports to annual meetings and, from time to time, in the media.
His investment secrets can be gleaned from these comments. This web page represents
what we think those secrets are, but we can never know for sure.
What we can say is that as you discover them, and think about them, they invariably
seem to spell out good, common sense, investment principles.
The best place to start exploring Buffett's ideas is our article on
Warren Buffett's investment principles, which
will lead you, step-by-step, through the tests we believe Buffett uses in determining
which companies to invest in. Or go here for a biography
of Warren Buffet Full list of Warren Buffett articles available at this site
Investment principles of
Warren Buffett - A summary of investment principles explained over the years by the
Oracle of Omaha
Warren Buffet biography - A brief summary of
his life to date.
Warren Buffett's Annual Letter to Shareholders, 2003
- - Our analysis and summary new
Charlie Munger biography - A look at the life and
investment philosophy of the man considered by Warren Buffett a friend and investment
Five things we like about Warren Buffett
- - A few things that we think
contribute to his success, reputation, and character. new
Warren Buffett and brand names - - the importance of a
company having a good brand name.
Warren Buffett on debt - Why successful investors
like buying into companies with financial strength and little debt.
Understanding a company - Buying shares in a
company is just buying a part of a business. You need to understand the business before
Dealing with Inflation - The ability of a company
to raise prices to maintain profitability is what distinguishes a non-commodity company
from a commodity one.
Letting the shareholders nominate the charity
- - The approach that Warren
Buffett's Berkshire Hathaway takes to corporate donations is highly innovative new
Sticking to what you know - Company
managers should focus on a companys core activities and not wander off onto strange
Share buy backs - A company can add value to its shares
by buying some of them back, but only for the right reasons
Return on equity - The ability of a company to earn and
increase high returns on its capital is considered by Warren Buffett essential to a share
investment in that company.
Owner earnings - Warren Buffett looks beyond the balance
sheet and concentrates on genuine owner earnings.
Price/earnings ratio - Determining the right ratio
of price to earnings of a company can influence the decision to invest or not.
Retained earnings - If a company cannot earn more for
shareholders on retained earnings than owners can, it should distribute the profits
Book value - Different intelligent investors have different
opinions about the importance of book value to an investment decision.
Company growth - It is not so much the growth in earnings
of a company that is important, it is how they grow, and in what areas.
Sound management - Successful investors invest in
companies whose management is sound and honest.
The compounding factor
The right price to pay - Determining the correct price at
which to buy.
Bringing it all together - A quick question and
answer session, before you invest
Reviews of Buffett books
Benjamin Graham articles
Case-studies Other resources
Hathaway company website
Hathaway letters to shareholders
Yahoo's Warren Buffett directory