Beauty of stocks in the eyes of Warren Buffet

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“I try to buy stock in a business that is so wonderful that an idiot can run them. Because sooner or later, one will”

Warren Buffet.

 

 

At age of 39, Warren was already one of the successful investors with a net worth of $ 25 million, even in midst of this scenario, warren was feeling a little uneasy as he wasn’t able to follow his true discipline of investment since he was having a hard time finding good opportunities to invest his and his investors money as at the time stocks seemed a lot overvalued to him.

The next move of warren was a sort of gamble as to when he thought stocks were grossly overpriced; he sold everything and returned all the money to his investors at a sizeable profit. This move made his investors closer to him and in a way that they won’t shy away from letting him manage their money.

A few years later when the stock market was one of its worst downturns of the twentieth century he was well positioned to take advantage of the situation.

His next move buying shares in BERKSHIRE HATHWAY at $ 7.50 a share in order to flip shares for quick money but he changed his mind on having differences with company’s president.

His next move was to buy a considerable sum of stocks in BERKSHIRE in order to control the company. BERKSHIRE HATHWAY was an undervalued textile company which has several of its mills closed down at the time textile business was not a profitable business in united states

His next move was to swap the 7.5% bond or debenture in exchange for stocks in order to remove shareholders who were in for income-producing security and kept the shareholders who were in for growth of the company. He refrained from modernizing equipment as it was putting good money into a bad place.

Warren figured to take any profit from Berkshire, a failing business and to invest it in a new business with better opportunities. Sensing an opportunity Berkshire moved into insurance business as a core of its business.

The major benefit of this move was that it allowed them to float insurances premiums that had still to be claimed as a capital inflow. This legally allowed them to use other people’s money, virtually for free for their own investments.

Today a single share of BERKSHIRE HATHWAY goes for around $ 300000 and considered as to be a luxury item among the richest of our time.

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Baldev Singh Rawat is Founder of Value Kreation, An International Training Organisation. Baldev is a leading Educator, Author and sought after Public Speaker.