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BOOK REVIEW ON
WARREN BUFFETT
WEALTH
BOOK REVIEW ON
WARREN BUFFETT
WEALTH
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PENNED BYPENNED BYPENNED BYPENNED BY
Robert P Miles is an investment advisor,International speaker,author andacclaimed Warren Buffet expert.
He is a graduate of the University of MichiganBusiness school.
Miles is also the author of Warren BuffettsBerkshire Hathaway, The Warren Buffet CEO .
www.robertpmiles.com
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THE SECRET OF WEALTHTHE SECRET OF WEALTH
This book is all about a man who,without any inheritance,without taking over a family business created abundant
wealth and plans to give it back to society.
Forbes Richest Man of the year 2008(U.S.$62.0 billion). Who Forbes readers think should be the next U.S.
President.
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An Australian writer and businessman from Hong Kong
Founder of the investment news letter World Money
Analyst
The nature of market cycles..
How to get a second passport.
He also coaches investors who want to
transform their Investment results.
Mark Tier.
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Deadly investment sin.
# Believing that you have to take big
risk to make big profits
But remember Risk is contextual
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The sage of Omaha
Warren Edward Buffet
Born : 1930,Omaha.
Occupation : CEO, Berkshire Hathaway
Salary : US$ 100,000
Net Worth : US $ 62.0 billion
A 20% return at the age of 6
A new business venture at the age of 20
Early career as a stock broker
Berkshire Hathaway
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Turn off the stock market.
Dont worry about the economy.
Avoid risk.
Manage a portfolio of business.
Maintain a circle of wealth.
Buffets key tenets
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THE NINE
SECRETS
OF
BUFFET
THE NINE
SECRETS
OF
BUFFET
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Secret # 1: Invest in quality businesses,not stock symbols
Playing bridge without looking at the cards.
Buffet says: when I buy a stock, I think of it in terms ofbuying a whole company
Just as if I were buying a store down the street.
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Secret # 2 : Dont invest for ten minutes
if you are not ready for ten years
He stresses the importance of long term investing.
As investors, we focus on the medium to longbusiness features of companies.
Be a cautious investor.
Like stress on growth rate and stability of growth.
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If (the investment) doesntIf (the investment) doesnt
scream at you,its too closescream at you,its too close
Secret #3:Secret #3: Scan thousands of stocksScan thousands of stockslooking for screaming bargainslooking for screaming bargains
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Secret #4: Calculate how wellSecret #4: Calculate how well
management is using the money theymanagement is using the money they
havehave
Good returns on equity while employingGood returns on equity while employinglittle or no debt.little or no debt.
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Secret #5: Stayaway from glitterSecret #5: Stayaway from glitter
stocksstocks
Most people get interested in stocks whenMost people get interested in stocks when
everyone else is. The time to get interested iseveryone else is. The time to get interested is
when no one else is. You cant buy what iswhen no one else is. You cant buy what is
popular and do well.popular and do well.
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Secret #6: Know whata fat pitch is andSecret #6: Know whata fat pitch is and
what to do with itwhat to do with it
Home run stockHome run stock
Small no. of companies in portfolioSmall no. of companies in portfolio
Knowledge and ConfidenceKnowledge and Confidence
Risk comes from not knowing what you areRisk comes from not knowing what you are
doingdoing
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Secret #7: Calculate how much moneySecret #7: Calculate how much money
you will make, not whether the stock isyou will make, not whether the stock is
underva
lued or ov
erva
lueda
ccording tounderva
lued or ov
erva
lueda
ccording tosome academic model.some academic model.
Think independently
Invest in high-return businesses that are run for
the shareholders
Pay only a reasonable price, even for anexcellent business
Invest for the long term
Do not diversify excessively
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Secret #8: Remove the weeds and waterSecret #8: Remove the weeds and water
the flowersthe flowers not the other wayaroundnot the other wayaround
Strategy 1: selling profitable stock and retainingStrategy 1: selling profitable stock and retaining
losing stock.losing stock.
Strategy 2: selling losing stock and retainingStrategy 2: selling losing stock and retainingprofitable stock.profitable stock.
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Secret #9: Become a conscious investorSecret #9: Become a conscious investor
Model Portfolio and Watch ListModel Portfolio and Watch List
Steps to be followedSteps to be followed
Selecting Great Companies in Minutes
Avoiding Wealth Destroying CompaniesBuy at Your Price
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CriticismCriticism
Berkshire net sinks; Buffett says economy in shamblesBerkshire net sinks; Buffett says economy in shambles
Quarterly net income for Omaha, NebraskaQuarterly net income for Omaha, Nebraska--basedbasedBerkshire sank 96 percent to $117 million, or $76 perBerkshire sank 96 percent to $117 million, or $76 per
Class A share, from $2.95 billion, or $1,904, a yearClass A share, from $2.95 billion, or $1,904, a yearearlier, based on company filings. Revenue fell 12earlier, based on company filings. Revenue fell 12percent to $24.59 billionpercent to $24.59 billion
Berkshire's net worth fell to $109.27 billion at year endBerkshire's net worth fell to $109.27 billion at year endfrom $120.16 billion at the end of September, andfrom $120.16 billion at the end of September, and
$120.73 billion at the end of 2007.$120.73 billion at the end of 2007.
Date: 28Date: 28--FebFeb--0909
Source: ReutersSource: Reuters
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ConclusionConclusion