Presentation is loading. Please wait.

Presentation is loading. Please wait.

Rule 1: Never lose money. Rule 2: Never forget Rule No. 1 “ ”

Similar presentations


Presentation on theme: "Rule 1: Never lose money. Rule 2: Never forget Rule No. 1 “ ”"— Presentation transcript:

1 Rule 1: Never lose money. Rule 2: Never forget Rule No. 1 “ ”

2 Brief Overview - Life Story Born 30 August 1930 (Age 82) Started investing at 11 using his parent's accounts Net worth of 53.8 billion (Forbes 2012; #2) Termed Omaha Oracle for foresight in investing Done by: Lim Yuet Tung & Gregory Tan & Ng Jia Neng & Tan Cheng En

3 Lifestyle Extremely Thrifty No Cell Phone/ Desktop Computer 5 bed-room house for $34,500 (1958) Contributes his wealth to charity 82nd birthday million to each of his children's charitable funds "If you’re in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99% Done by: Lim Yuet Tung & Gregory Tan & Ng Jia Neng & Tan Cheng En

4 Placement of Money Mostly in stocks Invests heavily in stocks Charity Deeply believes in philanthropy Provides for his children’s charitable funds Done by: Lim Yuet Tung & Gregory Tan & Ng Jia Neng & Tan Cheng En

5 Buffett’s Rules of Investment #1 – Be cheap If you are frugal in the way you live, this behavior will pervade your investment style and allow to you save and invest more money. #2 – Be Patient Wait, wait, wait for the right time to buy. The most patient investors are the best prepared for opportunities when they come, e.g. market turbulence brings stocks of great companies to trade at very cheap valuations. Done by: Lim Yuet Tung & Gregory Tan & Ng Jia Neng & Tan Cheng En

6 Rules of Investment #3 – Go against conventional wisdom Attempt to be fearful when others are greedy and to be greedy only when others are fearful. Going against the crowd can be an effective way to make money. #4 – Stick to what you know Stay within your circle of confidence. If you don't understand what a company does or how it makes money, you should avoid it. Done by: Lim Yuet Tung & Gregory Tan & Ng Jia Neng & Tan Cheng En

7 Rules of Investment #5 – Be self-confident You must be able to act without affirmation from others (or the market) on your investment decisions. #6 – Buy companies cheap Warren Buffett is a true value investor. Buying companies cheap is what being a value investor is all about. Purchase stocks below their intrinsic value. Ignore earnings per share. Look for solid return on equity, operating margins and low/no debt. Also, look for companies that generate a lot of cash and have consistent operating history over a long period of time (greater than 5 years). Done by: Lim Yuet Tung & Gregory Tan & Ng Jia Neng & Tan Cheng En

8 Rules of Investment #7 – Buy companies with competitive advantages Warren Buffett calls this an "economic moat" which gives a company barriers or protection from its competition. Examples of sustainable competitive advantages include a strong brand identity, patent protection etc. #8 – Buy big positions Combine patience (Rule #2), going against the crowd (Rule #3), self-confidence (Rule #5) and buying cheap (Rule #6), and it puts you in a position to bet big. Traditional investment strategy advises to minimize exposure to risk with diversification. But, when Warren Buffett likes something, he buys big... and these bets pay off. Done by: Lim Yuet Tung & Gregory Tan & Ng Jia Neng & Tan Cheng En

9 Rules of Investment #9 – Buy and hold... For a long long time This doesn't mean buy stocks and forget about them. Tracking performance is key and so is getting out when necessary (stocks are over-valued, trouble is in the horizon, etc). In a nutshell, invest only in companies that will outperform for decades. Done by: Lim Yuet Tung & Gregory Tan & Ng Jia Neng & Tan Cheng En

10 Company Features (Fundamental) Investing in stocks based on their intrinsic value Value is measured by the ability to generate earnings and dividends over the years. Buffett targets successful businesses with excellent economics and competent management, which he seeks to buy at a price that makes economic sense, defined as earning a long-term annual rate of return of at least 15%. Consumer monopolies Buffet is looking for consumer monopolies, selling great products in which there is no effective competitor (e.g. USA Today, Coca Cola, Marlboro, Disney). This could be either due to a patent or brand name or similar intangible that makes the product unique. Done by: Lim Yuet Tung & Gregory Tan & Ng Jia Neng & Tan Cheng En

11 Company Features (Fundamental) Upward trends Buffett looks for strong long-term growth as well as an indication of an upward trend. Look at the 10-year history, and the 5-year history and discard companies that have gyrating earnings. It’s a good sign if the latest period is growing faster than the overall period. Companies with histories of strong per share earnings that have suffered temporary setbacks in the most recent year would still be acceptable. Proposed Criteria: Consistent 10 year EPS (earnings per share) growth streak, with ideally not more than 1 year of declines and no negative EPS years. Done by: Lim Yuet Tung & Gregory Tan & Ng Jia Neng & Tan Cheng En

12 Company Features (Fundamental) Financial Status A lack of long-term debt is seen as a good indication that a company has a durable competitive advantage (as it will spin off a lot of cash), whereas companies in a price-competitive business will need to constantly invest to stay ahead of the competition. Proposed Criteria: Long-term debt burden less than 5x current net earnings and ideally less than 2x Done by: Lim Yuet Tung & Gregory Tan & Ng Jia Neng & Tan Cheng En

13 Company Features (Fundamental) A field/sector that he understands Company is stable economically Company is undervalued Buy cheap, sell for a good profit Trustable associates / High reputation Able to ensure that funds are well kept; high chance of return Stable workforce Ensures operations of company Done by: Lim Yuet Tung & Gregory Tan & Ng Jia Neng & Tan Cheng En

14 Some Words of Advice… It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently

15 Thank You!

16 Sources    investor-warren-buffett-mary-buffett investor-warren-buffett-mary-buffett  eyes/?Authorised=false eyes/?Authorised=false   heart/ heart/  lessons-from-warren-buffett/ lessons-from-warren-buffett/ 

17 Sources  buffett.html buffett.html  capital-spending/ capital-spending/   best-yielding-stock-holdings-as-of-q best-yielding-stock-holdings-as-of-q  inspire-your-investing inspire-your-investing-2310  shots/what-to-make-of-warren-buffetts-murky-early-years/article / shots/what-to-make-of-warren-buffetts-murky-early-years/article /  

18 Sources  buffett/ buffett/  slideshow/ slideshow/   ?page= ?page=2   words/story-e6frfmdr words/story-e6frfmdr


Download ppt "Rule 1: Never lose money. Rule 2: Never forget Rule No. 1 “ ”"

Similar presentations


Ads by Google