Buffett series

Discussion in 'Share Investing Strategies, Theories & Education' started by Mark Laszczuk, 12th Jul, 2006.

Join Australia's most dynamic and respected property investment community
  1. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    602
    Location:
    Brisbane
    The Charlie Rose Show on PBS is doing a three-part series on Warren Buffett, which began last night and continues tonight and tomorrow night. Last night’s show was great and you can watch it FOR FREE until the end of today (sorry for the late notice!) at: http://video.google.com/videoplay?docid=6701318343299922276&q=Warren+Buffett



    Every day after a show airs, it will be available for free ONLY for the next day -- the link is at www.charlierose.com. After one day, it will cost 99 cents.
     
    Mark Laszczuk, 12th Jul, 2006
    #1
  2. -T-

    -T- Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    174
    Thanks for the link; very interesting. I watched Part 2 last night when I couldn't sleep; also great.

    I like his comments about focussing. Also about valuing a company for what it is, not what the market (or price action) tells you. I know that goes against TA (which I've been getting into lately), but you can't deny that it seems more logical.
     
    -T-, 13th Jul, 2006
    #2
  3. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    602
    Location:
    Brisbane
    lol, 'seems' more logical. It IS more logical! Don't know of any TA people that even come close to having been able to achieve what Buffett's been able to achieve. If you of any, point 'em out to me.

    Mark
     
    Mark Laszczuk, 13th Jul, 2006
    #3
  4. -T-

    -T- Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    174
    A 'buy and hold' shares strategy certainly didn't solely get him to where he is today. It attributed to it, but I think buying businesses, operating funds, etc had much more to do with it. Opposed to just owning a share, he took on much greater risk by buying whole companies, or at least a controlling share. Risk = reward :D

    Same with P Spann I believe... and B Gates, and most people with any real fortune. I think business is where it's really at, investing (in std asset classes) is for the lazy, introverted people :D
     
    -T-, 13th Jul, 2006
    #4
  5. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,414
    Location:
    Sydney
    Actually, one might argue that he actually lowered his risk by buying the whole company - he could then exert much more control over it through his team of experts, which removes a lot of the risk involved in business investing ... lack of control!

    As a minority shareholder, you are completely at the whims of the directors and the majority shareholders (which may be the "market" - the worst shareholder of all!).

    As a majority shareholder, you get to exert influence on the directors, but not on the entire market (or other significant shareholders).

    As the sole shareholder, you not only control the directors, you also remove market influences on the management of the company - allows the company up to focus on making money and maximising returns, rather than maximising share price or "pleasing" all the shareholders. Decisions become much more strategic - and long term planning can take place without external pressures for short term returns.

    At least that's how I see it.
     
    Simon Hampel, 13th Jul, 2006
    #5
  6. -T-

    -T- Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    174
    As a minor shareholder, your maximum downside is your investment. As a business owner, your maximum downside is a prison sentence and debt many times your investment. If you think about the average person, owning a business would be much higher risk than owning a share. It's the market (rather than the skill of the investor) that determines the risk:reward.

    A good options trader may make above average returns. But that doesn't mean he is taking on any less risk, he is just better at capitalising on the risk. It is the increased risk that gives him exposure to the greater (than say ordinary share) returns. Same with Buffett, sure he is good at what he does, but he doesn't receive a lower return because he's good. The market rewards his skill in dealing with the higher risk with higher reward.

    But as you mentioned, Buffett probably sees it as lower risk. I'm sure he thinks most businesses are amateur-night and that he could sort them out. Low risk for him maybe, but the market can't do it as easily, it is high risk for the market, so it rewards Buffett's uniqueness.
     
    -T-, 13th Jul, 2006
    #6
  7. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,414
    Location:
    Sydney
    I agree.

    The key point to remember (and this is one of the things that annoys me about Buffett "evangelists"), is that you need to be able to exert control over those businesses to protect your investment and minimise the risks. That's relatively easy to do if you are Buffett and have money and an expert team behind you - but it's a lot more difficult (and often impossible) for the average investor to do - unless they have great skills in that area, or are partnered with people who do.

    And risk isn't a one-dimensional variable - there are many different facets to risk. So "lowering risk" depends largely on your point of view - what one person may see as a lower risk, may actually be higher for someone else with a differing perspective.

    I suspect what Buffett excels at is managing the risks - not necessarily lowering them (although I believe he can do that in some areas as well), but mostly by reducing any potential impact of those risks.

    Risk is a very misunderstood concept - and indeed it is a complete field of study in its own right.

    Risk isn't necessarily bad - and aiming to lower risks isn't necessarily the best approach - risks only become a problem if things go bad ... so you minimise the chance of things going bad, and you effectively neutralise the risks - you haven't removed them, you've avoided them. Similarly, by minimising the potential downside should things go wrong, you haven't removed the risk - you've simply "insured" against them. That's like what you said about the option traders - they don't take on less risk, they manage it.
     
    Simon Hampel, 13th Jul, 2006
    #7
  8. Tropo

    Tropo Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    2,303
    Location:
    NSW
    Mark,

    Do not forget that Buffett, as he said was very lucky being in the right place at the right time (same with B.Gates)
    I very much doubt if started today he could achieve what he achieved up to date.

    You can not compare W.Buffett with TA people...
    After all W.B is not a trader (I read somewhere that he was insider trader in his very early days) but more businessman than even investor.
    No doubt that his ability to pick up right company to buy is almost legendary. But this gift has nothing to do with trading as such.

    On the other hand a few TA people in trading such as George Soros, Ed Seykota etc, are as big as W. Buffett in business/investing.
    They can not match personal wealth with Buffett's (me think) but in terms of ability to successfully trade they are equal with W.B ability to buy a right company.
    :cool:
     
    Tropo, 13th Jul, 2006
    #8
  9. -T-

    -T- Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    174
    So all we need to do is be able to view a business like he can, manage the risk, value assets and allocate capital and we're set?! :)

    He says he reads 8 hours a day on average. I'm assuming mostly about business, finance, current events, etc.

    I'm short about maybe 6.5 hours :D

    That reading must seriously count for something. Obviously it does, but I mean it must realllllyyyy count for a lot of what he has achieved. P Spann says he reads that much too, but I tend to take what he says with a molecule of NaCl.

    Sim': do you think the reading could be the missing link for many? Buffett seems to just know business, period. How much of this would you attribute to reading (to the nearest 2 decimal places :)).
     
    -T-, 13th Jul, 2006
    #9
  10. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,414
    Location:
    Sydney
    My guess (and it is only a guess) is that at least 80% of Buffett's success is in his intuition.

    What is intuition ? Gut feel and luck ! How do you get that gut feel and luck ? Hard work ! :D

    You don't get to pick the best performing companies and best new opportunties by reading the newspaper for 20 minutes over breakfast.
     
    Simon Hampel, 13th Jul, 2006
    #10
  11. Tropo

    Tropo Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    2,303
    Location:
    NSW
    "How much of this would you attribute to reading ....."

    T,

    It does not matter how many hours per day you are reading and what you are reading !!.
    What really matter is .... what you are going to do with all this info...
    :cool:
     
    Tropo, 13th Jul, 2006
    #11
  12. Barracuda

    Barracuda Member

    Joined:
    1st Jul, 2015
    Posts:
    21
    Location:
    Wahroonga, NSW
    Mark,

    This video series is great. What a top bloke he is; genuine, honest, down-to-earth and a real inspiration. A real wholesome bloke.

    Thanks for the link.

    Cheers,
     
    Barracuda, 13th Jul, 2006
    #12
  13. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    602
    Location:
    Brisbane
    No worries fella's. Knoew my quip about traders would get a few bites *wink wink*. I'm not for or against TA (although I don't for the life of me understand the reasoning behind looking at what a company did in the past to determine how it will do in the future - very basic analogy, I admit).

    It's pretty obvious to even those who don't know a lot about Buffett that his success comes not just from buy and hold shares, but also from owning businesses. The average investor may not be able to buy the businesses on the scale that Buffett did, but it's certainly not out of reach for someone to buy well performing businesses on a smaller scale.

    After all, Buffett didn't begin with mountains of cash either.

    Incidentally, for those that are interested, you can download the videos using this site: http://javimoya.com/blog/youtube_en.php. Dunno if it's legal or not, but that's what I'm using to get them. They also provide a link to get a program to convert the files to watch in Windows Media Player or Quicktime and whatnot.

    Mark
     
    Mark Laszczuk, 13th Jul, 2006
    #13
  14. Barracuda

    Barracuda Member

    Joined:
    1st Jul, 2015
    Posts:
    21
    Location:
    Wahroonga, NSW
    Is the 3rd installment available? Had a quick look but couldn't find it.

    Cheers,
     
    Barracuda, 14th Jul, 2006
    #14
  15. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    602
    Location:
    Brisbane
    I had a look on Charlie's site, but it's not available yet.

    Mark
     
    Mark Laszczuk, 14th Jul, 2006
    #15
  16. pthm

    pthm Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    121
    Thanks, Mark, for the link.

    However, am not sure if others have same problems I encountered. The videos seemed to jerk a lot - pictures froze and videos interrupted. I have Bigpond broadband cable - and it was supposed to be extreme fast.
     
    pthm, 14th Jul, 2006
    #16
  17. -T-

    -T- Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    174
    Hey pthm

    There were a couple of minutes around the 5-10 minute mark of the second video that did the same for me. Try to fast forward, it was all good after a little while. It has nothing to do with bandwidth I believe as I watched it on two separate days and it did the same thing in the same spot.

    I tried to download them from the link Mark gave, but I couldn't find them.

    -T-
     
    -T-, 14th Jul, 2006
    #17
  18. pthm

    pthm Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    121
    Thanks, T. Glad that it was not me that could not get the video working properlyl. Like you, I also tried the other link which Mark gave to save the video but could not get it either.
     
    pthm, 14th Jul, 2006
    #18
  19. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    602
    Location:
    Brisbane
    Hey guys, you need to read the instructions on the site!

    What you do is open up the page with the video on, copy the www link, go to the site where you d/l it and paste the link into the box, click download and follow the instructions from there.

    Mark
     
    Mark Laszczuk, 14th Jul, 2006
    #19