Where is Warren Buffet investing his money?
Many people look to the stock market for a source of quick gains. You can lose as much as you can gain. Fancy brokers have analytics that can tell you which stocks are trending up, and which are trending down. But, in the long run that is not definite and tells you nothing about what will happen several years from now. Investing in stocks is like a marriage. If you pick someone with the right intrinsic attributes you might be better off — at least that is how elderly people in India think.
The rest of the world is excited about Facebook, Starbucks, Apple Computers, and Twitter Stock.
But, Warren has his money in proven winners. He likes investing in companies that have a dominance or almost a corner in the market that they are in. He likes companies with a long and proven stable and consistent track record, intrinsic value, etc. He likes companies that have a sustainable competitive advantage! He also likes companies that are undervalued, and whose long term price per earnings ratio are favorably low! future earnings potential is another huge factor! He likes Coca Kola, IBM, Wells Fargo, Exxon Mobile, and many other very old and stable companies to name a few!
Fun stocks that are popular with the public like Facebook might make you feel good when you are purchasing them. But, they often are overvalued. Smart investors look at the price per earnings ratio of stocks before a purchase. But, what a company made in the last twelve months means very little. What matters to me is how their earnings have been over the last ten years, and whether their earnings show steady growth, stagnation, instability, or decline! If your stock’s price is 100 times as high as its yearly earnings, not only is it unlikely your shares will have future earnings, but if the stock stops being popular, you could lose your equity fast.
On the other hand, stable companies like Coca Cola, Walmart, Proctor and Gamble, and other pillars of society are likely to be around in forty years. Their profits are steady. Those might not be exciting or glamorous stocks, but you will be more likely to retire with them than some of the newer and less stable companies.
Tweets:
(1)Many look to the stock market as a place for fast gains, but you can lose more than you gain!
(2)If you pick stocks with intrinsic value, you will be better off in the long run
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