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WARREN EDWARD BUFFETT AND HIS INVESTMENT PHILOSOPHY
<ul><li>WHO IS WARREN </li></ul><ul><li>BUFFETT ? </li></ul>
WARREN EDWARD BUFFET <ul><li>Announced the second richest indivİdual in the world with his $62 billion in 2009 by the Forb...
<ul><li>The second largest </li></ul><ul><li>holding company  </li></ul><ul><li>of the world </li></ul><ul><li>BERKSHIRE  ...
BERKSHIRE HATHAWAY INC. <ul><li>Incorporated in 1889 Berkshire Cotton  Manufacturing. </li></ul><ul><li>Merged with Hathaw...
Berhshire’s portfolio of business <ul><li>Insurance </li></ul><ul><li>Apparel </li></ul><ul><li>Building product </li></ul...
<ul><li>Berkshire’s Portfolio of Business </li></ul><ul><li>Insurance; </li></ul><ul><li>The largest component of portfoli...
<ul><li>Berkshire’s Portfolio of Business </li></ul><ul><li>Finance and Financial Products ; </li></ul><ul><li>Proprietary...
Buffett’s Investment Philosophy <ul><li>1) Economic reality,not accounting reality </li></ul><ul><li>2) The cost of the lo...
 
Buffett’s Investment Philosophy <ul><li>1)  Economic reality ,not accounting reality; </li></ul><ul><li>Accounting reality...
Buffett’s Investment  Philosophy <ul><li>2)  The cost of the lost opportunity ; </li></ul><ul><li>An opportunity against t...
<ul><li>Buffett’s Investment Philosophy </li></ul><ul><li>3)Value Creation </li></ul><ul><li>Time is money. </li></ul><ul>...
Buffett’s Investment Philosophy <ul><li>4)Measure performance by gain in intrinsic value,not accounting profit   </li></ul...
Buffett’s Investment Philosophy <ul><li>5) Risk and discount rate </li></ul><ul><li>Risk is the possibility of loss or inj...
Buffett’s Investment Philosophy <ul><li>6) Diversification </li></ul><ul><li>Purchasing far too many stocks rather than wa...
Buffett’s Investment Philosophy <ul><li>7) Investing behavior should be driven by information analysis and self-discipline...
Buffett’s Investment Philosophy   <ul><li>8) Alignment of agents and owners </li></ul><ul><li>I am a better businessman be...
 
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Warren Edward Buffet (2)

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Warren Edward Buffet (2)

  1. 1. WARREN EDWARD BUFFETT AND HIS INVESTMENT PHILOSOPHY
  2. 2. <ul><li>WHO IS WARREN </li></ul><ul><li>BUFFETT ? </li></ul>
  3. 3. WARREN EDWARD BUFFET <ul><li>Announced the second richest indivİdual in the world with his $62 billion in 2009 by the Forbes magazine. </li></ul><ul><li>Donated the biggest amount money -$31 billion- to Bill and Melinda Gates Charitable Foundation . </li></ul><ul><li>Chairman and CEO of Berkshire Hathaway Inc. –the biggest holding company of the world- </li></ul>
  4. 4. <ul><li>The second largest </li></ul><ul><li>holding company </li></ul><ul><li>of the world </li></ul><ul><li>BERKSHIRE </li></ul><ul><li>HATHAWAY INC . </li></ul>
  5. 5. BERKSHIRE HATHAWAY INC. <ul><li>Incorporated in 1889 Berkshire Cotton Manufacturing. </li></ul><ul><li>Merged with Hathaway Manufacturing in 1955. </li></ul><ul><li>Textile producer. </li></ul><ul><li>Purchased two insurance company (National Indemnity Company and National Fire&Marine Insurance Company ). </li></ul>
  6. 6. Berhshire’s portfolio of business <ul><li>Insurance </li></ul><ul><li>Apparel </li></ul><ul><li>Building product </li></ul><ul><li>Finance and financial products. </li></ul><ul><li>Fight services </li></ul><ul><li>Retail </li></ul><ul><li>Grocery distribution </li></ul><ul><li>Carpet and floor coverings </li></ul>
  7. 7. <ul><li>Berkshire’s Portfolio of Business </li></ul><ul><li>Insurance; </li></ul><ul><li>The largest component of portfolio </li></ul><ul><li>Property,casualty </li></ul><ul><li>Apparel; </li></ul><ul><li>Manufacturing and Distribution of </li></ul><ul><li>footwear and clothing (uniforms active- wear children’clothes ) </li></ul><ul><li>Building Products; </li></ul><ul><li>Manufacturing and Distribution of building materials </li></ul>
  8. 8. <ul><li>Berkshire’s Portfolio of Business </li></ul><ul><li>Finance and Financial Products ; </li></ul><ul><li>Proprietary investing ,manufacturing housing </li></ul><ul><li>Fight services; </li></ul><ul><li>Aircraft,aviation </li></ul><ul><li>Retail; </li></ul><ul><li>Retail sales of electronics,appliances,fine jewelery. </li></ul><ul><li>Grocery Distribution; </li></ul><ul><li>Nonfood items,grocery items </li></ul><ul><li>Carpet and Floor Coverings ; </li></ul><ul><li>Carpet,floor </li></ul>
  9. 9. Buffett’s Investment Philosophy <ul><li>1) Economic reality,not accounting reality </li></ul><ul><li>2) The cost of the lost opportunitiy </li></ul><ul><li>3) Value creation </li></ul><ul><li>4) Measure performance by gain in intrinsic value not accounting profit </li></ul><ul><li>5) Risk and discount rate </li></ul><ul><li>6) Diversification </li></ul><ul><li>7) Investing behavior should be driven information analysis and self-discipline not by emotion </li></ul><ul><li>8) Alignment of agents and owners </li></ul>
  10. 11. Buffett’s Investment Philosophy <ul><li>1) Economic reality ,not accounting reality; </li></ul><ul><li>Accounting reality is conservative and governed by GAAP. </li></ul><ul><li>Investment decision should be based on economic reality of a business. </li></ul><ul><li>GAAP is based on net profit ; economic reality is based on flows of cash. </li></ul>
  11. 12. Buffett’s Investment Philosophy <ul><li>2) The cost of the lost opportunity ; </li></ul><ul><li>An opportunity against the next best alternative the ‘lost opportunity’. </li></ul><ul><li>Buffett frames his choices as either/or decisions rather than yes/no decisions. </li></ul>
  12. 13. <ul><li>Buffett’s Investment Philosophy </li></ul><ul><li>3)Value Creation </li></ul><ul><li>Time is money. </li></ul><ul><li>Buffett assesed intrinsic value as the present value of future expected performance. </li></ul><ul><li>Intrinsic value is the only logical way to evaluate the attractiveness of investments. </li></ul>
  13. 14. Buffett’s Investment Philosophy <ul><li>4)Measure performance by gain in intrinsic value,not accounting profit </li></ul><ul><li>The gain in intrinsic value was analogous to the economic profit and market value </li></ul>
  14. 15. Buffett’s Investment Philosophy <ul><li>5) Risk and discount rate </li></ul><ul><li>Risk is the possibility of loss or injury </li></ul><ul><li>The more risk one took,the more one should get paid </li></ul><ul><li>Discount rate determined by the risk of cash flows </li></ul><ul><li>Buffett says </li></ul><ul><li>‘ Risk comes from not knowing what you are doing.’ </li></ul>
  15. 16. Buffett’s Investment Philosophy <ul><li>6) Diversification </li></ul><ul><li>Purchasing far too many stocks rather than waiting for one exceptional company to shed risk. </li></ul>
  16. 17. Buffett’s Investment Philosophy <ul><li>7) Investing behavior should be driven by information analysis and self-discipline not by emotion </li></ul><ul><li>Emphasized awareness and information </li></ul><ul><li>Buffett says </li></ul><ul><li>‘ Anyone not aware of the fool in the market probably is the fool in the market.’ </li></ul>
  17. 18. Buffett’s Investment Philosophy <ul><li>8) Alignment of agents and owners </li></ul><ul><li>I am a better businessman because I am an investor and I am a better investor because I am a businessman. </li></ul>

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