Buffett: I like businesses that I can understand. Let’s start with that. That narrows it down by 90%. There are all types of things I don’t understand, but fortunately, there is enough I do understand. You have this big wide world out there and almost every company is publicly owned. So you have all American […]
Category: Investing Approach
Does the price of undervalued stock fall when general market decline
Here is our question, does the price of undervalued stock fall when general market decline? If you bought some undervalued stocks, and the general stock market, like the S&P 500 index, is expected is decline, will your undervalued securities fall down along with the general market? Warren Buffett, the legendary value investor, said yes as early […]
How inflation swindles the equity investor
Buffett: How inflation swindles the equity investor (Fortune Classics, 1977) By Warren E. Buffett FORTUNE – It is no longer a secret that stocks, like bonds, do poorly in an inflationary environment. We have been in such an environment for most of the past decade, and it has indeed been a time of troubles for stocks. […]
Buffett on gambling industry
Q: Your opinion of the gambling industry? I don’t know about which stocks to recommend, but, as long as we’re talking about the legal ones, gambling companies will have a perfectly good future. The desire of people to gamble is very high, including in stocks. Day trading comes very close to gambling. People like to […]
There is no ideal moment to buy stocks
Coca-Cola went public in 1919; the stock sold for $40 per share. The Chandler family bought the whole business for $2,000 back in the late 1880s. So now he goes public in 1919, $40 per share. One year later it is selling for $19 per share. It has gone down 50% in one year. You […]
Why it is tough to short stocks
Buffett: Companies with a large short interest very often have been revealed as frauds or semi- frauds – not the one my friend runs. Over the years, I’ve probably had 100 ideas of things to short and I would have eventually been right [on almost all of them]. But [because it’s so hard to get […]
An IPO is like a negotiated transaction
Buffett: An IPO is like a negotiated transaction – the seller chooses when to come public – and it’s unlikely to be a time that’s favorable to you. So, by scanning 100 IPOs, you’re way less likely to find anything interesting than scanning an average group of 100 stocks. The seller of a $100,000 house […]