How does Mr. Buffett Consistently Pick Winners??

by astanhaus

“To invest successfully over a lifetime…what’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.”

Warren Buffett,  Preface to The Intelligent Investor.

(click on the bold-faced vocab words:))

Warren’s favorite framework is value investing. Benjamin Graham wrote the definitive book, The Intelligent Investor.

Here are the book’s highlights:

Speculators and Investors are NOT the same!

“The speculator’s primary interest lies in anticipating and profiting from market fluctuations. The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices.”

Diversification and Margin of Safety are best friends. Both make investing comfy.

Diversification is an established tenet of conservative investment. By accepting it so universally, investors are really demonstrating their acceptance of the margin-of-safety principle, to which diversification is the companion…And a  true margin of safety is one that can be demonstrated by figures, by persuasive reasoning, and by reference to a body of actual experience.”

Buy at the right price (time) will cause you to laugh (cry) to the bank.

Regardless of market swings, the way to profit from pricing is, “to buy stocks when they are quoted below their fair value and to sell them when they rise above such value.”

Want the most money? Be Brilliant.

“The maximum return would be realized by the alert and enterprising investor who exercises maximum intelligence and skill.”

Interest piqued?  Here is the copy I read.

(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)