Offbeat Warren Buffett’s three best investing tips — including 'margin of safety' — explained

06:40  07 may  2018
06:40  07 may  2018 Source:   cnbc.com

Buffett explains something people still don't understand about bitcoin

  Buffett explains something people still don't understand about bitcoin Billionaire investor Warren Buffett tells Yahoo Finance why buying cryptocurrency should be thought of as speculation, not an investment.That's because it lacks intrinsic value, Buffett says.

Warren Buffett : Good habits may be more important than IQ. Buffett attributed his eventual success to this investing framework. 3 ) Margin of Safety .

— Warren Buffett , 1999 Berkshire Hathaway Annual Meeting. Buffett stressed the importance looking at companies that are within his areas of expertise to avoid large investing mistakes. 3 ) Margin of Safety .

Warren Buffett © CNBC/Getty Images Warren Buffett Warren Buffett is one of the most celebrated investors in history. Many accomplished fund managers credited their success to following the Oracle of Omaha's common sense value investing philosophy.

Buffett's track record is unparalleled. From 1965 to 2017, Berkshire Hathaway's rising market value generated a 20.9 percent annual return compared to S&P 500's 9.9 percent, resulting in a cumulative gain of 2,404,748 percent versus the market's 15,508 percent return.

CNBC researched Buffett's strategy combing through decades of Berkshire Hathaway meeting transcripts using the Buffett Archive to find his best wisdom and strategies for the average investor.

Warren Buffett's Berkshire Hathaway buys 75 million more Apple shares, report says

  Warren Buffett's Berkshire Hathaway buys 75 million more Apple shares, report says Warren Buffett has upped his already big stake in Apple by 75 million shares. Buffett made the disclosure to CNBC ahead of Berkshire Hathaway's Saturday's shareholder meeting.Warren Buffett's big bet on Apple just got a whole lot bigger.

Warren Buffett ' s three best investing tips — including ' margin of safety ' — explained . Some of Berkshire’s best investments have experienced scandals in the past, including American Express Co. and car insurer Geico, he said.

Buffett attributed his eventual success to this investing framework. 3 ) Margin of Safety . This chart explains why Warren Buffett ' s lieutenant spends all his time on one project. Yahoo Finance. Catalan separatists to try again to elect Puigdemont.

Here is what we found.

1) Circle of competence

"Different people understand different businesses. And the important thing is to know which ones you do understand and when you're operating within what I call your circle of competence." — Warren Buffett, 1999 Berkshire Hathaway Annual Meeting

Buffett stressed the importance looking at companies that are within his areas of expertise to avoid large investing mistakes. He wants to know how a business makes money and be confident on the sustainability of its profit streams over the long-term. He called the process "judging the future economics of a business."

He said if an investor is not sure if a company is within his or her circle of competence, it likely is not.

2) Piece of a business

Warren Buffett says bitcoin is 'probably rat poison squared'

  Warren Buffett says bitcoin is 'probably rat poison squared' Warren Buffett is not a fan of investing in bitcoin. The Oracle of Omaha reiterated his negative view on the cryptocurrency, according to CNBC's Becky Quick.Tweet LinkBitcoin is "probably rat poison squared," he said. Buffett is presiding at the Berkshire Hathaway 2018 annual shareholder meeting on Saturday.In January Buffett warned investors about the craze over bitcoin and other cryptocurrencies in interview with CNBC."In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending," the chairman and CEO of Berkshire Hathaway said then.

Warren Buffett ' s three best investing tips — including ' margin of safety ' — explained . Some options for navigating today's stock market. Among the S&P 500 companies, 47 will report earnings next week, including Nvidia Corp.

This podcast explains the 4 rules that Warren Buffett uses when investing in stock This is what Warren Buffett calls margin of safety . Think about it as building a bridge that can withstand the weight of a 10,000 pound truck.

"And I read Ben's [The Intelligent Investor] book in 1949 when I was at University of Nebraska, and that actually just changed my whole view of investing. And it really did, basically, told me to think about a stock as a part of a business … Once you crank into your mental apparatus that you're not looking at things that wiggle up and down on charts, or that people send you little missives on, you know, saying buy this because it's going up next week, or it's going to split, or the dividend's going to get increased, or whatever, but instead you're buying a business." — Warren Buffett, 2002 Berkshire Hathaway Annual Meeting

Buffett wasn't born a great investor. He admitted he couldn't make any money in stocks even after reading many investing books as a teenager.

But everything changed when Buffett read Ben Graham's classic "The Intelligent Investor." The book's key tenet is to look at each stock purchase as buying a slice of a business and avoid being distracted by stock price movements.

Warren Buffett: 'I don’t have to do a thing' to own more of Apple

  Warren Buffett: 'I don’t have to do a thing' to own more of Apple Warren Buffett is fan of Apple's large stock buyback program.On Tuesday, the smartphone maker announced a new $100 billion stock buyback program.

us news Warren Buffett believes investors should buy stocks within their "circle of competence" to succeed in the stock market .

Just a few Warren Buffett books include The Life Lessons & Rules for Success and the Top 20 Secrets in Life and Business Collection. He calls this having a Margin of Safety . These Warren Buffett books explain why and how Competitive Advantage works.

Buffett attributed his eventual success to this investing framework.

3) Margin of Safety

"On the margin of safety, which means, don't try and drive a 9,800-pound truck over a bridge that says it's, you know, capacity: 10,000 pounds. But go down the road a little bit and find one that says, capacity: 15,000 pounds." — Warren Buffett, 1996 Berkshire Hathaway Annual Meeting

When Buffett analyzes a prospective investment, he wants the value at his entry price to be much lower than his value estimate for the company. The difference between the two figures is his "margin of safety," which limits the size of losses in case there are errors in his business analysis or assumptions.

"The margin of safety concept boils down to getting more value than you're paying," Buffett's partner Charlie Munger once said.

Buffett: Your most important decision is not financial .
Legendary investor Warren Buffett says your success depends on one crucial but less obvious choice.In HBO's 2017 documentary, "Becoming Warren Buffett," the investing legend says the biggest decision of your life will be whom you choose to marry.

—   Share news in the SOC. Networks

Topical videos:

This is interesting!