The Warren Buffett Way of Investing

While considering to purchase a business, there are certain things that needs to put in place. You might have be willing to buy a business but do not want to make mistakes, then i will implore you to read this post to the end. In this post, i will be using Warren Buffett as a case study into buying a business.

Credit

As much as we know that we might not have the financial capacity to buy shares or companies like Warren does, it does not ignore the fact that there are certain things that we could learn from his system/mode of operation in buying shares and businesses. Warren has a down to earth way of considering businesses while he follows the same strategy, some of them are:

He believes that, either a business he is considering to buy as an entity or the one he is evaluating on stock purchase, there is no difference between the both and that means he is going to treat the both equally.
He always gets a company he understands.
The business should have a reputable consistent earning history.
The business must have a long-term prospect that has the ability to show good return with little debt.
The business must be operated by a group of honest and competent individuals.
The business also needs to be made available at an attractive price.
The business needs to have a constant earning power.
A beautiful equity reward.
An efficient management system.
His interest is usually in companies that are within the range of $5 billion to $20, he believes in the principle of the larger the better.
He always has a promise for complete confidentiality.
He promises to always deliver on the basis of quick response.
The company’s product has to be in large part proprietary.
The business has to be well styled and efficiently useful.
The consultants have to be knowledgeable as well as enthusiastic.

Buffett has a philosophy that owning a shares of stock implies that he owns a business and not just a piece of paper. The best type of business to own is the one that will be able to employ a large amount of capital at a very high return rate

In order to conclude this post, I will end it with a statement made by Benjamin Graham.

Warren Buffett described those words as the ‘nine most important words ever written about investment’. Benjamin Graham says "an investment could be regarded as most intelligent when it is businesslike’’.