Some Great Investment Ideas From the Master of Investment, Warren Buffett

Value investing made simple: Here I write about greatand sell at the right prices, there is no need to worry
ideas from Warren Buffett, and share some ideasbecause you will make money. Why? … because
about making money on the stock market. Let meyou are able to profit from folly and profit from
share some great investment ideas and concepts ofmarket fluctuations.
value investment from the famous Buffett with you:3. Another metaphor here : Warren Buffett once
1. Many people buy stocks and see them as piecesmentioned a bridge and suggested that you do not
of paper that give dividends or capital appreciation.drive heavy trucks over a bridge meant for heavy
Yes, that is actually what stocks are, but Warrenloads, but rather, you drive light trucks over a bridge
Buffett suggests a different approach. Why not seethat can bear more load. This is the idea of margin of
stocks as parts of businesses? Every stocksafety. This is also a key concept: the margin of
certificate is linked to a company. Stocks are indeedsafety in investment.
linked to businesses, and the prices of the paperAnother way of looking at it would be: it's better to
stem from the businesses. This key insight meansbuy a dollar for 40 cents than it is to buy a dollar for
that the stocks yield money when the businesses70 cents. This enables you to make money. The key
are healthy. You can therefore make investmentlearning point is this: We learn the value approach.
decisions by asking the following questions:Just as we do not want to fall over a precipice by
Is there a market for the product? Is the particulardriving a heavy truck over a bridge, and just as we
company doing well now and does it seem likely towant to make money by buying dollars cheap, we
do well in the future? Is the company under goodshould do the same for stock investments. We
management, or are the people in control known forshould have a margin of safety.
not being trustworthy?4. Last but not least, use common sense. This is a
Simply put: see the stocks as linked to businesses,great idea but may prove harder than the more
and apply fundamental analysis to make money ontechnical aspects of value investing, like margin of
the stock market. Warren Buffett reads a lot ofsafety and fundamental analysis, and other elements
annual reports and therefore he makes a lot ofof Buffett's system. The reason is that this needs to
money when the decisions turn out right.come via experience. Diversification may not be a
2. Use market fluctuations to your own personalgood idea if you know what you are doing, but if
advantage to make money in the stock market. Thisyou don't then diversification might save you. That
is a great idea. Warren Buffett and Ben Grahamkind of common sense is sometimes counterintuitive
often talk about Mr Market. This is an allegory. Itand may take some time to acquire.
goes like this: A man called Mr Market turns up everyWhat have we learnt here in this short article on
day and quotes prices. He is basically a price quotervalue investing?
and does nothing but quote prices, and you mustDon’t see stocks as paper!
decide whether to buy or to sell. Market fluctuationsProfit from folly; don’t join in!
therefore help you if you can sell to Mr Market whenAlways have a margin of safety.
he quotes high and buy from him when he quotesUse your investment common sense.
low. Mr Market is occasionally optimistic and thenHope you glean several insights from this article.
again sometimes pessimistic, but as long as you buyThanks for reading and cheers!