Tuesday, 29 October 2013

Buffett's confession

Buffett's advice and investment principles have proven, time and again, to be a safe  for millions of investors.

Occasionally misaligned investors will yell out, "But it's different this time!" and occasionally they will be right.

Change is constant, but these investment principles have endured.

"That is why they are called principles,"  Buffett once quipped.

From the 1996 annual report of Berrkshire Hathaway:  
"Your goal as an investor should be simply to purchase, at a rational price, a part interest in an easily understood business whose earnings are virtually certain to be materially higher, five, ten, and twenty years from now.  Over time, you will find only a few companies that meet those standards - so when you see one that qualifies, you should buy a meaningful amount of stock."  

You cannot find a better touchstone than that.

Buffett's confessed that "what I do is not beyond anybody else's competence."   

Yet, it is extraordinary how resistant some people are to learning anything, even when it is in their self-interest to learn!.

Additional notes:

Buffett invariably follows the same strategy.

He looks for companies:
1.  he understands.
2.  with favourable long-term prospects,
3.  that are operated by honest and competent people, and,
4.  that are, importantly, available at attractive prices.

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