> Warren Buffett Blog: September 2015

Wednesday, September 30, 2015

Try and dont give up easily

When Warren Buffett was first getting started in his career as a young man, he originally wanted to work with his idol, and author of "The Intelligent Investor," Benjamin Graham, but Graham rejected him because he wasn't Jewish.

But Warren Buffett wouldn't take no for an answer, and continued pitching Graham ideas until he eventually hired him.

Monday, September 28, 2015

Resist borrowing money when investing unless you know what you are doing

Over the past 50-60 years, Charlie and I have never permanently lost more than 2% of our personal worth on a position. We've suffered quotational loss, 50% movements. That's why you should never borrow money. We don't want to get into situations where anyone can pull the rug out from under our feet. 

Thursday, September 24, 2015

Diversification vs Stock Picking | Warren Buffett

If it's your game, diversification doesn't make sense. It's crazy to put money into your 20th choice rather than your first choice. 

'Lebron James analogy.' 

If you have Lebron James on your team, don't take him out of the game just to make room for someone else. If you have a harem of 40 women, you never really get to know any of them well.

Concentrate your assets if you know what you are doing

Charlie and I operated mostly with five positions. If I were running 50, 100, 200 million, I would have 80% in 5 positions, with 25% for the largest. In 1964 I found a position I was willing to go heavier into, up to 40%. I told investors they could pull their money out. None did. The position was American Express after the Salad Oil Scandal. In 1951 I put the bulk of my net worth into GEICO. Later in 1998, LTCM was in trouble. With the spread between the on-the-run versus off-the-run 30-year Treasury bonds, I would have been willing to put 75% of my portfolio into it. There were various times I would have gone up to 75%, even in the past few years. If it's your game and you really know your business, you can load up. 

Wednesday, September 23, 2015

Simplicity, low cost and strength to stop attacks from competitors will bring success

I don’t want a business that’s easy for competitors. If you’ve got a wonderful castle, there are people out there who are going to try and attack it, and take it away from you. And I want a castle that I can understand, but I want a castle with a moat around it. I want a business with a moat around it. I want a very valuable castle in the middle. And then I want…the Duke who’s in charge of that castle to be honest and hard working and able. And then I want a big moat around the castle, and that moat can be various things.

The moat in a business like our auto insurance business at GEICO is low cost. I mean people have to buy auto insurance, so everybody’s going to have one auto insurance policy per car basically, or per driver. And…I can’t sell them twenty…but they have to buy one. What are they going to buy it on? They’re going to buy it based on service and cost. Most people will assume the service is fairly identical among companies, or close enough, so they’re going to do it on cost, so I gotta be the low cost producer. That’s my moat. To the extent my costs get further lower than the other guy, I’ve thrown a couple of sharks into the moat.

Monday, September 21, 2015

Holding cash to buy

Billionaire investor Warren Buffett has built a cash pile in recent years, with his company Berkshire Hathaway holding a record cash levels of $67 billion, prior to its $37 billion acquisition of US industrial group Precision Castparts last month. 

Wednesday, September 16, 2015

Warren Buffett defends Hillary's and her email controversy

It [Hillary Clinton's use of personal email as Secretary of State] hasn’t been handled well, but I’ve handled some things badly in my life too. I do not consider that determinative at all of the kind of person she would be as president.

I believe that she has a vision for America that’s very similar to mine, in terms of everybody being included in the prosperity we enjoy.

Monday, September 14, 2015

Investing edge quote from Charlie Munger

“You have to figure out what your own aptitudes are. If you play games where other people have the aptitudes and you don’t, you’re going to lose. And that’s as close to certain as any prediction that you can make. You have to figure out where you’ve got an edge. And you’ve got to play within your own circle of competence.” - Charlie Munger - Warren Buffett's right hand man.

Friday, September 11, 2015

China will continue moving forward and long term buy

Warren Buffett thinks China is a great bet for the long term. Buffett cites World War 1 and 2 and economic downturns America faced in the past as an example of how a country can recover. Buffett believes China will make similar progress. Watch the video for his full views.

Thursday, September 10, 2015

Warren Buffett bullish bets on Aerospace and Titanium

In August 2015, Warren Buffett’s Berkshire Hathaway bought Precision Castparts at a price of $235.00 per share, amounting to nearly $32.5 billion in cash. The details of the transaction are less important than what the billionaire from Omaha’s logic was behind the acquisition. By his own admission, he bought it at a high price—especially considering PCP’s 52-week low was $186.00 a share.

Buffett is clearly bullish on aerospace; and Precision Castparts is a world leader in the manufacturing of highly complex titanium alloys and other metal parts for that sector. Titanium casting is not for everyone. There are but a handful of specialists worldwide; PCP just happens to be the most important one. The company admits that the highly-specialized nature of its products and production processes have acted as a barrier to potential competitors. Not surprisingly, PCP ranks first or second in each of its markets and any would-be challenger would have to face massive investments just to catch up—let alone compete.

Tuesday, September 8, 2015

Warren Buffett investments drop in recent market sell off

Warren Buffett seems to have also been negatively affected by the recent market selloff.

Buffett’s Berkshire Hathaway the insurance company turned investment conglomerate run by the billionaire, appears to have lost $11.2 billion in value from its stock market investments, on paper at least, during the worst of the downturn from mid-July to the end of August. 

That represents a 10.3% drop. The good news for Buffett: His, and his investment team’s, performance was likely not much worse than everyone else’s. During the same time, the S&P 500 fell 10.1%.

Friday, September 4, 2015

Wednesday, September 2, 2015

Warren Buffett has lot of cash to buy more stocks

When the stock market declines, Warren Buffett and Berkshire Hathaway usually get ready to make a ton of money. In 2008, at the nadir of the financial crisis, Buffett invested $5 billion in Goldman Sachs. Three billion dollars went to General Electric a month later.

In August of 2011, Buffett invested in Bank of America. The markets were in a full-on panic over Bank of America's mortgage loan problems. Meanwhile, Buffett calmly stroked a check for $5 billion. In all, Berkshire invested more than $25 billion in deals during the crisis.

By 2013, those investments had already returned $10 billion to Berkshire.The returns are stunning, but they're only possible because Berkshire had the ability to write $25 billion of checks to actually make the investments.

This time around, the company has even more cash at the ready. As of June 30,Berkshire reported cash and equivalents of $66 billion, with free cash flow of $4.6 billion for the quarter.That is just an absurd amount of money, and it sits at the willing and capable hands of perhaps the greatest opportunist of all time, Warren Buffett.