He does not like organizations that gain a lot in some years and lose even more in others. He looks for a history of steadily increasing earnings, which indicate that the particular company is well and carefully managed. Buffett would consider the evolution on the Return on Equity and Return on Capital ratios in order to determine how the company has performed in the past. In 1977, he said that 'Since businesses customarily add from year to their equity base, we find nothing particularly noteworthy in a management performance combining, say, a 10% increase in equity capital and a 5% increase in earnings per share.'
Buffett does not like debt, especially in the form of long-term debt, so he will not invest in companies with such characteristics. Long-term debt means that any increase in the interest-rate could seriously affect the company's profits and make future cash-flows unpredictable. Buffett said on one occasion, in 1987, that 'Good business or investment decisions will eventually produce quite satisfactory economic results, with no aid from leverage. It seems to us both foolish and improper to risk what is important (including, necessarily, the welfare of innocent bystanders such as policyholders and employees) for some extra returns that are relatively unimportant.'
One of the most interesting features of Buffett's investing techniques is buying value companies at discounted prices, since the public thinks their best days are past. One of the best examples is the investment he did into Coca-Cola in the 1970's, when all other investors thought its heydays were over.
Of course that applying these principles involves a considerable amount of work and research. Warren Buffet takes a very long time before buying a company, since he analyses it from all points-of-view. Purchasing a business is a long-term affair for Buffett. When he decides to invest, he spends a lot of money and wants all of it to bring back even more.
People tend to think that, since Buffett is so huge an investor and since he is so rich, he must hold stock in many companies....
Assessment of Buffett: It would be a great thrill to meet Warren Buffett; in fact it would be the opportunity of a lifetime to take a digital recording device and just chat with him for 15 or 20 minutes. An article in Research Technology Management (Bloomquist 1996) reports that one of the criteria Buffett looks at when considering investing in a company is that organization's commitment to "candor." Buffett is
Warren Buffett Profile & Analysis Warren Buffett Warren Buffett as an entrepreneur is a vexing case as many people view him as a hero of entrepreneurship while others view him as an example of entrepreneurship run amok and/or as a man that engages in behaviors and tactics that run extremely counter to the proper characteristics of entrepreneurship. This report will cover all of that and more. Some introspection towards of the author
He is a strong proponent of improved corporate governance and his record of transparency shows that he holds himself to the same high standards. The most surprising thing about Buffett's leadership style is its simplicity. He ascribes to no complicated methods or models. He has distilled life down to basic wisdom and uncomplicated axioms. He ascribes much of his success to doing what he loves and being a good person
Warren Buffett is widely regarding as one of the greatest investors of all-time. As the chairman of Berkshire Hathaway, he commands an empire that encompasses railroads, candy, homebuilders, and underwear. His company now has a market cap of over $ billion and is widely considered one of the best run companies in the world. Every year, Warren holds his annual shareholder meeting in Omaha, Nebraska. Here over 100,000 participants fly
Business, Personal, Moral Ethics When we know something is right or wrong, good or bad, because of certain facts (not just preferences), we're confronting moral issues. Hurting people is wrong. Wanting vanilla ice cream is probably not, no matter that it may seem offensive to some of us sometimes. Social or cultural institutions that govern our personal principals are imposing moral standards that we can aim to achieve. Business ethics, however, are
Roger Lowenstein's Buffett: The Making of an American Capitalist which is the biography of Warren Buffett. In addition to the actuarial math (of which Buffett is a master), the book is unique among biographies because it spells out the various qualities that have made Buffett such an adroit investor. However, in the opinion of this author, the best quality that he manifested is the quality any good investor must have,
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now