Probably one of the greatest investors in the history of modern capitalism is Warren Buffet. There are very few people who can beat the market consistently and they deserve amazing praise because the humbling market is constantly fighting you to return your profits. You have to work hard to not develop a bias and establish way that you view stocks that is unique to yourself. While Warren may try and enlighten us with his methods, they are unique to him and its hard to recreate the education that he got to do his specific investing style. So take his advice and mold it with the way you view stocks.
I agree 90% with him on is the quote above, This is the usual simplistic view that Warren had of the market and all of the advanced techniques and such that some analysts use to check out stocks. Sometimes after all of the bars and graphs we forget that we are investing in a company with brick and mortar locations. We get so caught up in EBITDA or PEG that we do not loo at the company from an average joes perspective. Peter Lynch was another investor who frequently said things of this manner, he ran Fidelity investments and is one of the best mutual fund investors of our times.
I champion this with the idea that people should try and look at the math and the graphs, but understand that the business fundamentals can always overrule some advanced math formula or some economic model that makes the ridiculous claim that it takes into account everything that the human world can throw at it. Well we are not there in technology yet and we may never be.
So what does Warren and Lynch mean when telling people to look more simply at a company, well look at it from a housewives perspective in the 1950's. Woman do the majority of shopping and can tell you some good brands, or which advertising campaign is doing its job by sticking in the consumers mind. If you want to know what toy stocks to buy then you need to consult a little kid. One famous investor that did this would take his kids to the local toys R us and let his kids go wild and pick whatever toys they wanted. I wish I was rich enough as a kid to do this! Well he would invest in the companies that the kids bought and he had top of the line research in my opinion.
If you read a lot of my blogs, you know I like to bash the intellectual and the know it alls The "experts" and the "masters" of the stock market are usually called that amongst other grand and sophisticated investors. Its all a bunch of men jerking each other off and flattering each other. I think they are not that much different than us and most will not be considered an expert when there portfolio drops the next year. There is a lot of money in advising clients and a hell of an incentive to dish out any plate of stock analysis, whether a steak, or rotten eggs. Many people get to much financial advice and not enough common advice. Not all advice that affects or helps you pick the best stocks is going to be labeled "financial advice" in a nice old book with some grand Yale professors that have never even invested in the market.
The intellectual and the elitists cannot view a stock in the right sense anyway, the majority of the country does not think as they do. one reason why we value intellectuals is their unique and rare viewpoints. this is where their value is worth 10 fold what they will make in the markets. They are there to release new ideas for us to think about and to ratify. The intellectual; is blessed with a different brain structure than us and is responsible for the hard task of jump starting a new idea or theory of thinking of things. They are not that well to tell us in the common mans view whether Wal Mart or Tj Maxx is better for a recessionary environment.
Every investor is different and comes up with different ways to view a stock, myself, I am partial to dividend and high EPS growth. This style is liked by a lot of investors and its priced into the market very fast because of that. I do not get to much into the math and the details, because its time consuming and because most investors will not peer deep enough into these reports. If the people buying and selling stocks do not look at the information you look at they cannot buy the stock to drive the price up. so therefore uncommon knowledge that nobody else knows is usually overrated,. I want to know what the market is thinking instead and the mood of the investors. I want to know where the mutual funds money is flowing and whether they are going cash or buying bonds or gold.
Whatever your way of viewing stocks (whether your an adviser or not) is unique to you, but I highly recommend that you take the simplistic view that Warren Buffet has used. A good company cannot hide good performance. A janitor once told me that it is hard to hide hard work, I think he should be teaching philosophy at some of these grand schools.
Thanks for your time- Michael G. Morrison
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"If a business does well, the stock eventually follows" Warren Buffett. Probably one of the greatest investors in the history of modern capitalism is Warren Buffet. There are very few people who can beat the market consistently and they deserve amazing praise because the humbling market