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Recently read a book by Preston Pysh and Stig Brodersen on Warren Buffett& #39;s investing and accounting understanding.
Key takeaways-
Key takeaways-
1/
Value investors like Warren Buffett and Benjamin Graham believe the stock market moves in the short term due to emotions and in the long term due to value.“In the short run, the market is a voting machine, but in the long run it is a weighing machine.
Value investors like Warren Buffett and Benjamin Graham believe the stock market moves in the short term due to emotions and in the long term due to value.“In the short run, the market is a voting machine, but in the long run it is a weighing machine.
The metaphor suggests that in the short term prices are driven by sentiment while in the long term trends are driven by something you can actually measure more concretely — financial results.
2/
They believe market doesn’t offer value; it offers price. When Market are in high spirits and prices are high, we sometimes experience a bubble. It occurs when there is no sustainable relationship between the value and the price of a company.
They believe market doesn’t offer value; it offers price. When Market are in high spirits and prices are high, we sometimes experience a bubble. It occurs when there is no sustainable relationship between the value and the price of a company.
3/
For value investing to work, you must remove the time element that often dictates impulsive decisions. The best way to do so is to increase your level of knowledge. As your knowledge increases, your confidence improves and your understanding of truth and facts becomes clear.
For value investing to work, you must remove the time element that often dictates impulsive decisions. The best way to do so is to increase your level of knowledge. As your knowledge increases, your confidence improves and your understanding of truth and facts becomes clear.
4/
When Markets are in a bad mood, it is the time to accumulate stock and start using the inevitable human behaviour to your advantage.
Remember, poorly performing stock markets are your advantage—if you choose and act on them wisely.
When Markets are in a bad mood, it is the time to accumulate stock and start using the inevitable human behaviour to your advantage.
Remember, poorly performing stock markets are your advantage—if you choose and act on them wisely.
5/
Buffett emphasizes on the importance of Interest rates, Inflation and Bonds in order to get a better understanding over businesses and equity markets.
Buffett emphasizes on the importance of Interest rates, Inflation and Bonds in order to get a better understanding over businesses and equity markets.
6/
When considering a new investment, you should aim to easily determine whether technology will significantly change the demand or use of the product. Value investing is about finding persistent and predictable products with long-term prospects
When considering a new investment, you should aim to easily determine whether technology will significantly change the demand or use of the product. Value investing is about finding persistent and predictable products with long-term prospects
Invest in companies that are stable and understandable. If a company is not stable, you cannot reduce the risk and value the company properly. If you cannot understand the company, you cannot determine whether the business is profitable now and will be in the future.
If you understand the company, you will understand the fundamentals that drive the profit, thereby also understanding the company’s competitive edge. Company with no moat will be outmatched over time by competitors, no matter how persistent the demand is for its products/services
7/
The tax system favours the value investor over the average investor. If you ever wondered why Warren Buffett’s holding period is forever, this is why.
You can read more about this on @10kdiver & #39;s thread about the same. https://twitter.com/10kdiver/status/1297203173673730049?s=20">https://twitter.com/10kdiver/...
The tax system favours the value investor over the average investor. If you ever wondered why Warren Buffett’s holding period is forever, this is why.
You can read more about this on @10kdiver & #39;s thread about the same. https://twitter.com/10kdiver/status/1297203173673730049?s=20">https://twitter.com/10kdiver/...
8/
And finally he talks about the importance of researching about who runs the company and how management of a company is an agent for shareholders. This agent should serve his interest at all times; that interest is to make the most of his invested capital.
And finally he talks about the importance of researching about who runs the company and how management of a company is an agent for shareholders. This agent should serve his interest at all times; that interest is to make the most of his invested capital.
