Warren Buffett is the world's third richest
man with an estimated fortune of over $52bn. But unlike the other billionaires that
feature in Forbes' list of the 10 richest people in the world, Buffett doesn't
have a retail empire, an oil well or a brain for computing to show for it -
simply a lot of share certificates.
The 81-year-old made his money through
identifying companies that he believed were worth more than their market value,
investing in them and holding that investment for the long-term. And it's
certainly paid off. Class A shares in his company Berkshire
Hathaway were $15 when he first took over in 1965 - they were valued at
$103,500 per share by the end of August 2011. It sounds remarkably simple, but given the
ups and downs of the stock market, it takes a high level of discipline, nerve
and conviction in your decisions.
Although Buffett has never written a book
detailing his investment style, much can be gleaned from the annual letter he
sends to Berkshire shareholders.
He doesn't view the purchase of shares in a
company as buying a stake in that business, but believes that the investor
should feel that they are actually buying that business outright. Because of
that he looks for quality management, a durable competitive edge and low
capital expenditure.
Companies tend to have a strong brand name -
Coca Cola, McDonalds and Gillette feature in his holdings - and a good history
of solid earnings growth. We run through how Buffett invests his money.
Warren Buffett Money Making Magic Rules are
Rule No.2: Never forget rule No.1.
So make money with making
the right investment.......................................
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