7 secrets-that-we-learnt-from-warren-buffett

“7 Investment Secrets I Learned From Warren Buffet!”
That Made Me $75,983 In Less Than 36 Months… Passively!

By Clive Tan and Ken Chee

7 Investment Secrets I Learned From Warren Buffett

“7 Investment Secrets I Learned From Warren Buffett!” is a
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From: Clive Tan & Ken Chee

Re: 7 Investment Secrets I Learned From Warren Buffet

Hi there!
Thank you for downloading this FREE report on the investment secrets that we
learned from the world’s most successful investor, Warren Buffett and his
sidekick, Charlie Munger when we were among the shareholders who attended
his Annual General Meeting at Omaha, USA in May 2009.

Before we dwell into the details of what went on during that meeting, allow me
(Clive) to give a brief introduction about myself and my partner, Ken.

Ken (left) and I at Invest Fair 2010 and on the cover of Shares Investment magazine.

My name is Clive Tan, an ordinary Singaporean man who used to be a High
school Teacher. During my days of training to be a teacher, I came into the
concept of value investing and was intrigued by it to want to research and read
more into value investing. I seek out mentors on investing and in that process, I
began to invest my savings from my teaching job into stocks.

Over a span of 5 years, I was diligently doing teaching by day and studying
investing by night. During that span of time, I achieved a return of
compounded 25% per year, which enabled me to start my first business in
childcare. Soon after starting my business, I quit my teaching job and went into
the business full time.

After a couple of years in the childcare business, I met Ken Chee during a
program called the Entrepreneur Action Program. We became friends, and at one
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of our coffee shop meetings, we realized that we have a common interest in
investing, more specifically, value investing. We decided to grow our interest
further by setting up a mastermind group.

What a mastermind group is basically a coming together of people with a
common purpose. In this case, the purpose is to understand and apply value
investing principles in our investments.

The financial crisis in 2008 happened and we knew that we can do something
about it to take advantage and take charge of the opportunities arising. That’s
why we came together to create an experiential yet intellectual value
investing program in Singapore, marketed as the Millionaire Investor
Program.

Successful graduates of the Millionaire Investor Program.

It has become very popular and that’s when we realized that more people would
like to learn about value investing.

Since we cannot reach everyone using a program, we decided that a free report
will get people started, and that’s why we are writing this for you now. As you
read this report, we hope that it will inspire you to learn even more about
investing and get started on your Financial Freedom and Abundance!

Happy Reading!

Clive Tan & Ken Chee
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Meeting Warren Buffett in Person!
Everything happens for a reason.

We arrived a day before the event actually started to collect our international
passes. My partner, Ken was so affected by jet lag (after all, we were in the air
for over 20 hrs with at least 4 flights between Singapore & Omaha) that we woke
up late to go to collect our meeting credentials and because of that, we ran into
Warren Buffett himself!

We met the man (with his bodyguards) at a parking lot. Even though we couldn’t
take a shot together with him, he told us it was fine to snap a picture of him.

So without further ado…

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The 7 Investment Secrets I learned from Warren Buffett

Secret #1: One bird in hand is worth two
birds in the bush?
This popular saying basically means that it is better to stick with something
you already have, rather than pursuing something you may never get.

Charlie commented that this saying is not exactly true; one must consider the
context surrounding it. What if there are more than two birds in the bush? How
about if the birds are injured? Investment is really about laying out cash, and how
much cash one can get back.

If a person cannot assess with much certainty the future value of what one can
get back, he/she is actually speculating. The more we know about the birds in
the bushes, the more certain we are of our Return on Investment.

Coming down to a more practical level, one must ask ourselves how certain we
are about the returns and whether they are sustainable. Obviously, the more
predictable the returns are, the more an investor will be willing to put his cash in,
both in terms of amount and duration.

The reason why this saying makes sense is when there is a high level of
uncertainty in the returns expected. Many a times, quotes not contextualized
properly can often lead to mistaken understanding.

#2 Value shouts at you!
According to Warren, when one sees value, it should shout/scream at you.
It is widely circulated that Charlie (or any other persons) have never seen Warren
take out a calculator/computer to assess whether a company is undervalued or
not.

Obviously, Warren probably has more processing power in his brain than most
people when it comes to investing. It is also a result of him reaching a level of
unconscious competence over the years after looking at plenty of businesses and
investing opportunities.

As I have observed around me, I notice that the people who achieved mastery
in their areas are those who keep doing it better and repeatedly. Many world
class athletes are a case in point. For that period of exertion that they have

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(example: less than 10 seconds for 100 meters run), the athletes have clocked in
much more hours of intense training.

Another simple analogy will be: shopping for a product that you are familiar with.
If you are very aware of what the prices are for the product is, you will be very
likely to see a great bargain when the price is lower than usual or when it is on
sale. Basically, the bargain will shout at you!

#3 Don’t be a smart alec!
In the academic world and life in general, it is often preached or assumed that
high intelligence is a prerequisite to in life. While that may apply to certain
contexts, there are increasing research reports that showed that it may not be the
case.

In fact, Charlie went on to say that a person could have an IQ of 150 and still
be a disaster in investing. Another person with IQ of 120 and operates within
his circle of competence, will be able to do much better!

Having said that, I think to be a good investor (or a great human being!) requires
a certain level of intellect. Once past a certain point, the extra intellectual ability
will contribute a lesser role to the overall success of the person. Instead, the next
point will become more important.

#4 Investing is simple but not easy because
of emotional instability
Instead of intellect, the key to investment success is emotional stability.
Investing is simple but not easy because of emotional stability. What is emotional
stability about? In simple terms with regard to this, it refers to the way a person
handles his/her emotions when the investments make or lose money.

Fear and greed are two emotions that the investor can never run away from. How
he/she handle those, in spite of all the knowledge that he/she has is crucial to
investment success.

When the stock market drops like a rock, say down 50% or even more,
many people will intellectually know that it is the time to buy. However, they
will hesitate (and hesitate) due to their fear of being wrong and also fear of going
against the crowd.

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On the other hand, when the market is bullish, and many people around him/her
seems to be making money so easily, it is hard for the person not to also join in
the herd to buy stocks when it seems so easy to make money.

How one keeps one’s sanity in the face of market fluctuations is the key to
true investment success.

#5 Leverage is what causes trouble for you.
Leverage has been instrumental in making a lot of people wealthy and also
a lot of people broke. It is a double-edged sword. Because of leverage, gains
and losses can be magnified many times, making it the ultimate tool for the
speculator.

In Warren’s opinion, leverage is what causes trouble for you. After all, when
everyone is rushing for the exit door at the same time, there will be many
casualties.

Think about this, people who did not leverage on borrowed money, the most they
could lose is what they have in the market. However, for those who have
leveraged heavily, the money lost could be more than what they even own in
total, making them the candidates for bankruptcy.

In addition to the famous quote referring to derivatives as “financial weapons of
mass destruction”, Warren also stressed that derivatives pose great risk to
financial well being because many people think they are safe from over-
leveraging.

#6 Two ways to protect yourself from
inflation
With increasing inflationary worries and concern, it was inevitable that there were
questions ask about inflation and how to combat it. According to Buffett, the best
protection against inflation is your own earning power. After all, if you are
the best doctor, lawyer, teacher, or whatever, you will get your share of the
national economic pie, regardless of the value of the currency.

The second way to protect you against inflation is to invest in a great
company. People will give up their own earnings to enjoy whatever products
your company is making.

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His sidekick, Charlie Munger, suggest becoming a brain surgeon and investing in
Coca Cola. I would say that it is a more specific way to combat inflation. After all,
very few patients will be arguing with the brain surgeon on the price of
his/her services at that critical stage in life.

#7 Warren will teach 2 courses on investing
Warren was asked to explain his investment strategies and how to teach that to
the next generation. He explained that he will teach 2 courses on the following:

1) How to value a business
2) How to think about markets

Being able to value a business is essential to be an investor. Warren mentioned
that one should start with his circle of competence, that is, invest in companies or
assets that one understands. Knowing where that edge of the boundary is
important. There are a lot of people who do not realize that there is a
fundamental difference between price and value, causing many to overpay
for their stocks (or other assets).

For a business, valuing it basically take three approaches: dividends, income and
assets. To be able to value a company is not just an exercise in the analysis of
the numbers in the company; it is also being able to assess the future viability of
a business. Most importantly is the ability to assess the intrinsic value of a
business to be able to pay a low or at most fair price with an adequate margin of
safety for the investment.

Warren likes to use Benjamin Graham (Warren’s teacher & mentor) analogy of a
character called Mr. Market to illustrate the behavior of the markets.

Imagine that there is this fictional character whose mood swings from being
extremely optimistic to being extremely pessimistic. The prices that Mr. Market
will quote will swing in accordance to his mood. If he is very optimistic, the prices
in which he will quote will be high. If pessimistic, the prices in which he will quote
will be low. There are some people who think that value investors like pessimism.
Actually, that’s not quite accurate. Value investors are not necessarily
optimistic or pessimistic. Value investors just like the low prices that
pessimism brings.

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Are You Ready To Be A Value Investor?
Warren Buffett and his company, Berkshire Hathaway, have seen many crises
throughout their many years of investing. The success that Warren Buffett and
Charlie Munger have brought to their investment results bear testimony to
their sound investment principles.

Their nuggets of advice are derived from their experiences and learning from
them will bring you (and many others who are reading this report) to the next
level of applying the principles and secrets that work for this legend.

With this report, we hope that it has served its purpose of “enlightening” you to
the merits and principles of value investing. Putting these secrets to work is
the next stage that you will need to do in order to achieve the kind of
financial abundance that you deserve.

For more information on how you can become an even better value investor, just
click on the link below and I’ll tell you more:


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