Warren Buffetts 3 Investment secrets

Warren Buffetts 3 Investment secrets

Warren Buffett has matured into arguably the best stock market investor of all time. He has changed his investment philosophy from his earlier investment career.

Though Warren Buffett has changed his philosophy from a value investor into a quality investor 3 secrets still shine through.

First - Allow a "margin of safety"

This basically means buying an asset or company at a substantial realized or unrealized discount. Its like buying real estate
at under replacement cost or buying a business with substantial hidden tangibles, intangibles or real estate. Eddie Lampert did this when he bought Sears back in the mid 2000s. At the time Sears had almost $10 billion dollars of under appreciated real estate that was not being counted on its balance sheet. The best real estate has now been morphed into Seritage Growth Properties (SRG) https://www.google.com/finance?q=NYSE%3ASRG&ei=1NdRV9GABYaiefmEiegJ
Funny mentioning this though that Warren Buffett bought an almost 10% stake in Seritage Growth Properties for his own account. Investing along side Warren Buffett is usually a great way to make money. I am up 11% from where I bought Sertiage Growth Properties.

Second - Buy exceptional quality companies at reasonable prices

This way of thinking has resulted in Warren Buffett being able to take a billion dollars and turning it into $300 billion in equity. He owns a railroad (Burlington Santa Fe BNSF), Marmon, and a few billion dollar revenue companies. It can be said that the tax policy Warren Buffett lobbies in Congress has allowed him to do this. What is the tax policy you say? He
has always wanted a substantial inheritance tax so that business families would have to sell their stakes in great companies.

Third - Invest in your "circle of competence"

If you dont know medicine dont invest in biotech stocks is basically Warren Buffetts thinking. He always invested in things
when dropped on your feet would hurt. It has only become in recent memory that Warren Buffett has invested in technology through IBM and he is down a good amount from where he bought that stake. Though it can be said that IBM is buying back 2 - 5% of its shares every few years through a share repurchase program whereby if this goes on for 20 to 30
years Warren Buffett may be the last one owning IBM, which I honestly believe will happen.

I hope you enjoyed this article.