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Why Warren Buffett Reads Annual Reports

Why Warren Buffett Reads Annual Reports

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Most investors never review company annual reports. It’s easy to understand why. Full of facts, figures and detailed accounting notes, these reports are hard going. They’re not exactly bedtime reading. However, annual reports often contain valuable information for investors. As such, they shouldn’t be overlooked, no matter how dry the material is. So, what’s the best way to read these reports? Is there anything we should be on the lookout for that might provide insight into a company’s financial position…

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How To Start Investing: 5 Simple Steps

How To Start Investing: 5 Simple Steps

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Over the past 10 years, I’ve learned a lot about the stock market and what it takes to start investing and successfully and build wealth. Most new investors trip up because they make some simple mistakes, which are quite easy to avoid if you know what to look for in the first place. However, if you don’t know what to look for, these mistakes could become costly learning experiences. With that in mind, here are my five simple steps to…

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How Phil Fisher’s “Common Stocks and Uncommon Profits” Changed Warren Buffett’s View Of Investing

How Phil Fisher’s “Common Stocks and Uncommon Profits” Changed Warren Buffett’s View Of Investing

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Warren Buffett was taught how to invest by Benjamin Graham, who is considered to be the Godfather of value investing. In the early years of his career, Buffett followed Graham’s style of investing closely. He concentrated his efforts on finding so-called “cigar-butts,” stocks trading at bargain-basement valuations due to structural issues.  Here’s Buffett explaining the approach in his 1989 letter to Berkshire Hathaway shareholders:  “If you buy a stock at a sufficiently low price, there will usually be some hiccup…

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Warren Buffett’s Advice On How To Value A Business

Warren Buffett’s Advice On How To Value A Business

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Warren Buffett has been investing in stocks since his teenage years. Over the past seven decades, he’s bought and sold thousands of stocks across sectors and industries accumulating hundreds of billions of dollars in value for himself and his investors along the way. During his lengthy career, Buffett has become skilled at calculating intrinsic value, the underlying value of a business based on its fundamentals. Warren Buffett: Starting with the cash flow statement The exact process Buffett uses varies from…

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Second-Level Thinking: What Is It And Why You Need It

Second-Level Thinking: What Is It And Why You Need It

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Understanding the numbers is just one part of investing. To be a successful long-term investor, you need not only understand the numbers but also the psychological traits required to be able to capitalise on your analysis. Personally, I believe that understanding psychological drawbacks/benefits of investing is more important than being a numbers person. If you can’t control your emotions, no matter how much work you put into researching an opportunity, it will all be for nothing. Howard Marks, the CEO, and founder…

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Warren Buffett: How Phil Fisher’s Scuttlebutt Method Should Be Used

Warren Buffett: How Phil Fisher’s Scuttlebutt Method Should Be Used

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In 1960, Warren Buffett read a book that changed his investment mentality forever. The book was called “Common Stocks and Uncommon Profits,” and it was written by Phil Fisher in 1958. In the book, Fisher described what he called the scuttlebutt method for finding investments. This method was the process of discovering as much about a company and its products as possible. To do this, Fisher recommended interviewing competitors as well as listening to rumours on the business “grapevine.” He…

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The Best Method To Overcome Uncertainty It To Embrace It

The Best Method To Overcome Uncertainty It To Embrace It

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Investors currently have to grapple with one of the most uncertain investing environments in recent history.  There are so many things going on right now it’s challenging to figure out which is the most pressing, especially from an investment perspective. The coronavirus is a global health emergency, and it has caused untold economic pain around the world.  Brexit is also on the agenda once again. It’s looking increasingly likely that the UK and EU will fail to reach an agreement…

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Mohnish Pabrai: Avoid Stocks You Don’t Understand

Mohnish Pabrai: Avoid Stocks You Don’t Understand

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The highly successful growth investor Peter Lynch once advised investors to “buy what you know.” Another way to interpret this is to buy what you understand. Lynch isn’t the only successful investor that has recommend the principle of sticking to companies you understand. Warren Buffett, Charlie Munger, Seth Klarman and Mohnish Pabrai have all stated that this one of the essential principles in the world of finance. Warren Buffett calls his sphere of understanding his circle of competence. He will…

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Lessons from Wall Street’s Four Great Bottoms

Lessons from Wall Street’s Four Great Bottoms

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Professor Russell Napier spends most of his time studying financial markets. Author of The Solid Ground investment report for institutional investors and co-founder of the investment research portal ERIC, Russell has been writing global macro strategy for institutional investors since 1995. He’s also a student of financial mistakes. He set up the not-for-profit Library of Mistakes in 2014, a library dedicated to avoiding mistakes. The professor set the Libary up with the simple goal of educating the financial world about…

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When Is The Right Time To Start Buying Stocks?

When Is The Right Time To Start Buying Stocks?

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At the time of writing, the MSCI World Index is up around 21% from its March low. This performance has stunned analysts and investors around the world. It seems to me this is one of the most hated stock market rallies of all time. It is easy to see why analysts are skeptical. The global economy is reeling from the coronavirus crisis. While governments are doing everything they can to help businesses survive, surging levels of unemployment, rising corporate failures,…

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What Warren Buffett’s See’s Candies Can Teach Us About Business

What Warren Buffett’s See’s Candies Can Teach Us About Business

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Many business owners and managers believe that growth is the single most crucial factor in defining a company’s success. Nowhere is this trend more evident than the tech sector. Companies like Uber and WeWork have filled the past few years spending tens of billions of investors’ capital growing their top lines without any prospect of a positive return on this investment. These are not the only companies spending billions without any visible return. Companies of all shapes and sizes regular…

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The Best Investors Only Act On Their Best Ideas

The Best Investors Only Act On Their Best Ideas

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According to Investopedia, 630,000 companies are traded publically on stock exchanges around the world.  Of these, less than 5,000 trade on US exchanges and 2,080 are listed on the London Stock Exchange, which claims to be the world’s most international of global exchanges. With so many options out there, investors are spoilt for choice when it comes to choosing investments. But this level of choice is not necessarily a good thing.  Most companies underperform Of the thousands of public companies…

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