The Investing Philosophy Of Warren Buffet

Why would you want to learn the investing philosophy of Warren Buffet? Try $52 Billion. This was his net worth at one time.So, you can learn a lot by learning his investment philosophy. Warren Buffet is one of the most famous stock investors in the world. The thing that impresses me most is his simple lifestyle and philanthropy. Whatever, let's discuss the investing philosophy of Warren Buffet.

He is a long term investor unlike most of us who are day traders or swing traders. Warren Buffet thinks in terms of value and growth. He studies a company thoroughly before investing in it and looks for value, quality and growth before investing in that company. He thinks like a owner of a company when investing in that company not like a day trader who is only interested in taking profit in the short term.

Investing Philosophy of Warren Buffet is just what Benjamin Graham taught in his famous book,"The Intelligent Investor." He read that book at a very early age. Throughout his investing career, he has been a firm disciple of Ben Graham. It was Ben Graham who talked of the stock having an intrinsic value. It was Warren Buffet who took that idea and practically applied it when investing in stocks.

Warren Buffet thoroughly studies a company, its business, its management before making an investment in it. He looks for those companies that have an intrinsic value that is higher than the market value. What it means is that those companies have a sound foundation but have gone out of favor with the markets for one reason or other. Overtime, their stock price will climb up to the intrinsic value. He invests long term. This is what he looks for in a company when investing:

1. Management: He puts the management of the company on the top and studies it thoroughly. A poorly run company in a long term business has the potential of making a comeback. When he find that the company is being poorly run, he tries to change the management after investing in that company. Most of the time, this strategy has worked very well on the long haul. You should also study the company management before investing in that company.

2. A Business That Has Long Term Potential: He believes in investing in those businesses that have a long term potential like insurance. He has invested in insurance companies. He has also invested in other companies that had a long term business potential. He thinks that these businesses are going to growing over the next many decades so he invests in them and most of the time, he has been proven to be right.

3. Buying At Discount: As said above, he calculates the intrinsic value of a stock and only buys it when the stock is under-priced by the market. He never buys those stocks that he thinks are overpriced. He never invested in the tech bubble rather stayed away from it thinking most of the technology stocks in the early 2000 to be overpriced. He was proved right by the market when the tech bubble burst.

4. Investing Long Term: Think of the stock as an ownership right. Understand the company, understand its business, understand its management and then invest in that company for a couple of years!