In the investment world Warren Buffett is known as a legend, everyone has heard of him. Warren went from working a paper route as a child to creating a billion dollar company today. Many people try to mimic his investing style and methods. Others believe Buffett has a secret formula for investing that only he knows. But the real reason he’s such a successful investor is because he’s good at what he does and has a lot of years’ experience doing it.
Truth is, Buffett’s techniques to picking stocks are pretty simple and straight forward, and he sticks to the fundamentals. His techniques are not difficult to mimic. I’ve study and read enough books about him to understand how he does what he does. Read the article Techniques to Pick Winning Stocks to learn few of these techniques.
As a young child, Warren Buffett for $3 a day worked as a caddy and also ran a paper route. He was intrigued about thinking of ways to earn money. As he got older he received mentoring from Benjamin Graham, the author of the book The Intelligent Investor. Benjamin Graham taught Buffett how to invest, which has helped contribute to is success.
Buffett would research companies and find their intrinsic value. The intrinsic value would let him know whether or not a company was undervalued. A company was undervalued of its intrinsic value was higher than its market price.
The way he would find a company’s intrinsic value was by studying financial statements and comparing past numbers to present numbers. With the information he found, he would be able to estimate what the actual share price of a company should be, compared to the company’s market share price.
Eventually, he purchased Berkshire Hathaway, which he turned into a holding company. A holding company, is a company that is made up of a bunch of different businesses and investments.
Today Berkshire Hathaway is a publicly traded company that anyone can buy shares of. When I think of buying stock in Berkshire Hathaway, I don’t personally think of it as buying an individual share of a company. But instead, I think when you buy shares in Berkshire Hathaway’s it’s like investing in a mutual fund, a fund that’s managed by Warren Buffett himself.
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