In order to understand how to invest as a Buffett value investor you need to understand how to value a business.
In this lesson we’ll describe a small business, how money flows through the business, and how to value a business.
When you become an investor of a stock, you are actually becoming a part “owner” of the company that stock represents. So, in order to be a successful owner you need to understand business. Understand: Warren Buffett does not invest in stocks, he invests in businesses. Whether you are investing in 1 share or 2 million shares, you need to look at each stock as owning a business. You must grasp this concept in order to become a value investor. Continue reading Value A Small Business
WHO TAUGHT WARREN BUFFET HOW TO VALUE INVEST?
People often ask, “who did Warren Buffett learn from”?
Before working with Benjamin Graham, the “Godfather Of Value Investing”, Buffett read his authored books Security Analysis and The Intelligent Investor.
Both books are suggested reading for aspiring value investors, although these books are difficult to understand for beginning investors. Security Analysis covers more of the technical side of stock analysis. But that’s why we are here, to simplify and to make it easier to learn about the successful investing strategies of the most successful investor of this era. Continue reading The “Godfather” Of Value Investing
Warren Buffett invests by using both value investing and value trading, but with a lot more emphasis on value investing methods. It’s a rarity that Buffett trades his stocks. There has to be specific reasons why he would sell stock that he owns. We’ll get into those reasons later.
What is value investing?
The general goal of value investing is to accumulate quality assets that will continue to put money into “your pocket”.
Buffett Value Investing
Buffett uses value investing as his main investing strategy and does it very well. Here’s a general overview of what he does when he invests. Continue reading What Is Value Investing?
Before we define what Value Investing is we need to define what is an asset first. Understanding these fundamentals will enable us to build a foundational understanding of how Warren Buffet invests so that we may replicate how to invest using his strategies.
An asset is considered to be something that continuously puts money into your pocket. Usually it is something that generates money passively.
For example, your job isn’t an asset because you need to work that job in order to generate the money. For instance, a plumber who works for a plumbing company. He or she needs to work to get a paycheck therefor the job isn’t considered an asset. But if you own or invest in a plumbing company, and it’s sustainable and profitable, it is an asset for you.
To illustrate this further we’ll determine whether the following are assets or liabilities: Continue reading What Is An Asset?
Firstly, to understand how to invest like Warren Buffett you must understand the basics of how he invests. Buffett invests using what is called value investing in the investing world.
To understand the concept of value investing, we must first lay down the foundation and define what is value trading vs. value investing. We’ll begin with value trading first.
To make the understanding of value trading easy and clear, we’ll illustrate it by observing Kyle McDonald’s website and experiment One Red Paper Clip.
What Kyle did was, as an experiment, he wanted to see what he could trade for one red paper clip and continuously trade the items that he got up for more “valuable” items. Continue reading Value Trading Versus Value Investing: Value Trading