Prime Buffett
; - ) Buffett has been very menial capacity in the management of assets, but doing my part,
Buy Lacoste, many times since that is the genius, To prove it, the better approach is to learn the management of hedge fund of his early vocation, that from 1956 to 1969 of the bar Buffett partnership status of the Fund, in particular investment objectives and methods.
we may Buffett from 1959 to 1969 to find the partner's little prospect of a letter.
to speak about investment objectives it.
most people (including me) and most of the investment fund manager or the so-called specialists will have to think so (we do not say so), we meet a major bull market to make money as many for feasible, until the bear market, it is best to complete repose, as mini as feasible to lose money. Investment Well, relying on weather, mushroom.
In truth, it would be a The problem is, we can not predict a large cattle and Bear, not to say the transition of CBBC. We are constantly not sure that he is in big cow (bear) at some stage, only hindsight, the outcome, also many to make himself a good bull or bear market early in the large actors stock, or mid-large buy stocks in a bear market.
Buffett's investment objectives and most of us fair the inverse.
first define more precisely the lose, and lose a considerable degree. we lose, but lose fewer. (July 12, 1966)
amount, Buffett's investment objective is to:
achieved excellence in the performance of a bear market, the average performance achieved in a bull market. (February 20, 1960)
In other words, the extravaganza of the benchmark Dow Jones concordance (in the 1970s apt Berkshire later the S & P 500), whether the mart fell 35 percent to 40 %, Buffett Partnership Fund ambition ebb approximately 15% to 20%; if the market was essentially smooth, Buffett's performance at around 10%; if the market increased by 20% or more, Buffett ambition try to accomplish this level.
Buffett assume in the long sprint, if the Dow Jones index of annual compound rate of return of 5% to 7%, his partner, fund performance of 15% to 17%.
Buffett has never been reveling in a bull market for those investors who differ, then they more than make bare ass nude swimmers, the tide receded, will be humiliated. His early years of will return to that zone. I think the duck ought only be praised for their behavior or reprove, but the creek is rising or falling beyond the control of a duck ... ... the river at a altitude of Buffett partnership fund's performance is also very essential, however, occasionally we are the ducks themselves will spanking wings. (July 8, 1964)
Unfortunately, the vast bulk of things managers (including fund managers) are not flapping its wings, sitting in the duck tarn, according to Buffett's view, They did not enable for other people of money, because they do not invest in capability, rely on the rising water level in the pond and make money. Buffett own requirements:
our investment tactics is whether high tide low tide, we should strive to shake forward travel. If the partnership can only get like backstroke fund can achieve results, then we have no longer needful. (January 18, 1965)
way, investors in common, do not duck a corresponding ascend in the bad, the so-called long-term holdings (investment) or purchase and prop what it manner. But we do not need the money to take the initiative to invest in those types of ducks, they receive management fares for a living, but also results into the merciless, then what? 2008, Buffett still administered to argue you to buy low-cost, up-type duck - index funds, is based on the truth.
understand? When those fund managers to moving, persuasion historical data to prove long-term investment returns, you have to query them: well, you inquire them:
So, Buffett is flapping its wings to transform the especial duck, and eventually became a swan it?
1962 January, Buffett began to systematically introduce their partner's investment approach, it is divided into three categories:
first type of investment:
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such investments are those that are undervalued securities in the partnership during the period, it is basically the largest proportion of investment funds. Buffett usually 5-6 of these securities to build a large location (about partnership fund assets 5% to 10%), 10-15 in the other securities on the establishment of relatively small positions.
underestimated mainly from the quantitative indicators for the. Lack of market entreat of such investments, little interest, often do not factor in that its stock price will instantly rise, their main vantage is cheap, that is, its price is far lower than the company of a private equity investor value (intrinsic value).
Buffett added:
Although the quantitative index is very important, but equally important qualitative arrows. We like good management, good industry and the last strict point in the management or shareholders 'uproar', however, the most valued and value. (January 18, 1964)
because these securities must be flawed,
Lacoste R75 P2 Trainers, is also attractive due to lack of market prices rise or the factors that could cause the tarry does not arise, in order to Buffett respective to its intrinsic value at a lower price to buy.
to invest in such securities, the most important margin of safety. In layman's terms, the alternative of point of purchase is far stronger than the selling point for the choice, at all times it is a good price to buy, sell is not a good price is not important, having been held to
second type of investment:
supply and demand, that is, Buffett tin reasonably predict the period of such investment acquisitions, value and impediments. Prices influence investment behavior of companies, including combination, liquidation, reorganization and disjunction, etc., Buffett generally do not borrow (in 1967, he quoted a associate comments: is very long. Excluding the benefits of leverage such investments at one annualized rate of return is generally 10% to 20%.
Buffett rumors or insider information is not based above operation, has to wait until the newspaper namely such public information before taking operation. The chief risk of such investments is not the market trend (nevertheless to a decisive amplitude, likewise associated with), merely preferably may inspire corporate behavior and make it impossible accidents, such events including with lethal anti-trust or other administration actions shareholders opposition the tariff restrictions. The profitability of such investments is generally very low, a friend narrated it is favor something took 95%, and we elect up the remaining 5%. However, the higher the return predictability and the holding period is shorter, and therefore, the annual rate of return is relatively actual. (January 18, 1964)
1963 年 1 18, Buffett's report to the partners:
from the audit report can be found, immediately changing hands final annual amounted to $ 340,000 of stock, This is primarily we approach the end of the year some of the workout transactions. Such transactions is nearly no rivalry, can be created among a short time locked 10% (trading profit margin rather than the annual yield) of the profits,
Lacoste Tennis Trainers, but also dwindle the fund's market risk.
The third type of investment:
The management policy. In general, it is by Generals from, that is, if a long period of time, Generals type of investment stock price has not reflected its value, Buffett will buy a large proportion of the final part of the shares may be controlled even always the shares.
Buffett's mind is remove, the state's investment in the Generals, he was take the company's management, But in the Controls, Buffett January 18, 1965 would mean:
because we do not ambition to take the initiative and vigorous, if the same results, I'd rather let other people go. However, if the active management to optimize the use of chief, we will not stand by stand.
Generals and Controls on the relationship among the Buffett said some very sobering words:
Generals cost if we buy long-term hovering in the low, we will consider purchasing more shares This type of investment Generals Controls may evolve into type of investment. But if the Generals in the purchase amount of the fast rise within a few years, we usually consider tall profits, to complete a beautiful Generals type of investment. (January 24,
Lacoste, 1962)
profit is used to buy stocks, especially from the face of rapid profits, no need to sentiment (lust Another explanation). 2006 to 2007 the bull market, people from hurrahing
Buffett on July 9, 1965 also stressed Ge-nerals and the assorted basis of valuation of investments Controls only a minority of the Generals have investments, even whereas the value of assets and profitability is also very important, but they can only indirectly affect the company's stock price in the short term they may or may not stock the company's impact on supply and demand , changes in supply and demand was a straight result of changes in stock prices once made a control, we have a business rather than a stock, therefore, from a business point of view of appraisal is more appropriate. does not change Buffett will profit. Buffett's investment company
Dempster is a good example.
Dempster is a main agricultural equipment, irrigation systems, water supply systems and water pipeline companies. In 1956, Buffett started to invest in it as a Generals, when the company's share price to $ 18 per share, its book value per share of $ 72 of which liquid assets (money, receivables and catalogue) minus total liabilities to net worth $ 50 a share. Dempster quondam performance is very good, but only in recent years to approach breakeven. From the qualitative indicators, our industry competitive, quality management, in general, but quantitative indicators, the company's price far below its value. Buffett believes that seven or 8 percent of such investment may be in one to three years to be significant benefits.
However, Buffett's expectations did not materialize. Following 5 years, Buffett continued to buy small batches, and he entered the company's embark, management can not reverse the price far beneath its intrinsic value of the location. To August 1961, Buffett's holding company to obtain this right, the average purchase price of $ 28 a share. Buffett first upgrade to the company's president, vice president, is still useless, but fortunately Munger introduced in April 1962 of a vocational manager Harry Bottle as chairman, since 1963, Buffett Dempster per net book value of $ 80 shares sold to new employers. Like a general matter, but the cheaper purchase price, Buffett's earnings is not bad.
on January 18, 1965 letter to partners, Buffett again species is
the latter method is called the fourth type of investment, large) to private investors meaningful. Munger and after by the Fisher efficacy, Buffett has stressed the need to invest in a good company mark and trench, they are not as cozy as Dempster long been underestimated, overestimated the possibility touches. Sometimes these stocks just As Buffett pointed out, not the intrinsic merit of such companies and private equity investments,
Buy Lacoste Trainers, namely, how much premium they truly? Buffett was also wondering: and Generals-Private Owner or Workouts type of investment compared to such investments more easily caught in the abyss. I believe that once this variety of lessen the risk of such investment in the future will be very bright. (January 18, 1965)
from Buffett was the train of such investments is very successful, such as American Express, Coca-Cola and the Washington Post, etc., but the Buffett, who seems to put the first three categories based investment approximate, the so-called proficient are striking bar.
I have mentioned many times, bought the enterprise a good price to use the opportunity to do much, should aspire. In particular, we can not think that is a good company will not at anyone price to buy. Buffett's warning in mind it: those who hope eventually to buy bad investments is surely term investment (in Wall Street, which is called the Fools). The so-called good investment is to buy low price, so even if not for marketing at rational prices, can obtain a good profit (January 18, 1965).
(two)
Buffett's investment is not listed in the three way that the diversification of proceeds, but in order to hedge against market risk.
in three categories, Workouts (arc type of investment), Controls (Control class) and the basic performance of the Dow Jones index has nought to do. On the inverse, if the holders of Workouts as a larger proportion of asset in a bear market Buffett's performance will be very good, but the ox market's performance will be very wrong.
and the overall market trend of mighty linkage, with the Dow Jones index of investment performance is the basic synchronization Generals (underestimate the type of investment). Buffett reminds Partner Note: someone inexpensive does not mean that its price will not fall further if the market suddenly dropped, and such investments will usually fall in line with the Dow Jones index. In a alike 1961 bull market, these stocks is the best investment performance. Similarly, when the market fell, the type of stock is the most vulnerable. (January 24, 1962)
growth stock theory of the translator, the age Fisher's son, Kenneth Fisher is also a very well-known asset managers, who in the 1980s had made In 2007, tipping the snow in his new book that the real impact of long-term stock trend is supply and demand.
tip snow in decades of asset management and, afterward, around a big surround behind to a relatively uncomplicated We may be smiling, but the tip blunt sleet or inherited his father's side, to say the truth about the manufacture in malignity of beach-goers.
course, if the tip snow recognized Buffett in the 1960s reasoned by a partner's letter, he should watch the veteran Generals had repeatedly asserted that such determinants of the price of the stock investment is supply and demand.
Read this point, the discussion may come, at fewest as a value investor, long-term factors that determine stock prices should be the company's fundamentals backward it, for, we have since said that if the stock index is up a long, long-term investment fundamentals of good companies have to be profitable. The key is whether you select to go beyond the stock index and index of performance or at least mate. If the bull market for 7 years or even 10 years, you became a big star in the hands of the stock, up several times, throwing not discard? Thrown, you have to buy? Bull market in stock prices generally are not cheap ah. Then the big bear market or bear market, your stock portfolio's star fell more than 50%, dart or not throw? You buy the so-called undervalued stocks do not rise but fell, so what?
It is also critical, here we are arguing to work beyond the stock, condensed ownership is a magnificent way. The problem is that condensed ownership, price volatility, but does not rule out the big capital losses.
tip snow is not a cheat, he uttered the investment class and control class of non-arbitrage stocks appearance the market predicament, especially if you are asset managers, a great many customers are unable to approve the performance jumped the results as we inspected, the vast majority of asset managers invariably become the duck pond.
Buffett also apparently conscious of the speculative tide, under the impact of market ups and downs by supply and demand alone can not do anything Generals:
my director, Ben Graham in the past often said: is not moral, of course, not enough to get rich. If the prescription last year, presumption had been eating, you can easily gain weight, so we continue to dine our oatmeal. But if people in general indigestion, you can not anticipate us absolutely no embarrassment. (January 24, 1968)
have little correlation with the stock market's Workouts and Controls, by the time the asset spume is not too serious, the Fund's performance will be more settled situation.
1965 年 1 18, Buffett compared to the partner from 1962 to 1964 Generals and Workouts performance (see Table 1)
table 1:1962-1964 years of Generals and Warkouts Performance comparison
Year GeneralsWorkoutsDow (Dow Jones) 1962-1.0% +14.6% -8.6% 1963 +20.5 +30.6 +18.41964 +27.8 +10.3 +16.7
table 1 at a peep, 1962 Workouts corner the tide, a partnership fund endowed most of the gains. In 1963, two types of investment performance are eminent, but Workouts for the partnership fund significantly outperformed the index, laid the victory. And in 1964, Workouts type of investment has a substantial drag on the performance of the Partnership Fund.
In short, if the bear is 100% of the Workout, the bull market is 100% of the Generals, a partnership fund performance will be good to be outrageous. However, due to unpredictable market, Buffett only access to combine several types of reciprocal investment hedge.
I think that our portfolio is more conservative than the mean market portfolio,
Lacoste Arixia FD Trainers, especially in a rising market. I tried to hold part of the changes in the market Of course, the insulation and the market is double-edged sword, especially in peppery markets when the big furnace. Look around, we will detect that even an non-professional cook can burn out the delicious cuisine, and our own stock but did not most of the furnace. (July 22, 1961)
amazing is that Buffett has long recognized the asset management business as well as the ecology of investment, see January 20, 1966 views:
Investment Management, a major disadvantage is that it does not exist inertia, simply put, if General Motors accounted for 54% of the domestic new motorcar market share, due to customer loyalty, seller network, creation capacity, the terminal picture and other reasons, in 1966 its market share almost the same figure estimated. But Buffett investment partnership fund management industry and is not so, each year we are afresh starting from scratch. All investments are weighed at market prices, therefore, a partner in 1966, both the old and the new partner or partners are very complicated for us in 1964 or 1965 years of hard work profitable.
corridor of the stock market began going to the novices, probably thought it was Buffett's modesty or cliches, but the more we linger in the capital market too long, the more are saying that Buffett's realization and statement. This is the asset manager and investor nervousness lies day and night.
Buffett luck early certify ( ashore )
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