buff

1. BuffettologyBuffettology
How $105,000 Turned into $30How $105,000 Turned into $30
BillionBillion

2. AgendaAgenda
 Why Warren Does Not play the stock Market.Why Warren Does Not play the stock Market.
 How Warren Makes Good Profit out of BadHow Warren Makes Good Profit out of Bad
News About a CompanyNews About a Company
 How Warren Exploits the Market’sHow Warren Exploits the Market’s
ShortsightednessShortsightedness
 How Companies make investors rich, theHow Companies make investors rich, the
interplay between ROE and Inventory Turnoverinterplay between ROE and Inventory Turnover
 The Type of Businesses Warren Fears andThe Type of Businesses Warren Fears and
Avoids.Avoids.
 The Kinds of businesses Warren LovesThe Kinds of businesses Warren Loves

3.  Using Warren’s Investment Methods to avoid the next highUsing Warren’s Investment Methods to avoid the next high
tech Massacretech Massacre
 Interest Rate and Stock PricesInterest Rate and Stock Prices
 Solving the Puzzle of the Bear/Bull Market and howSolving the Puzzle of the Bear/Bull Market and how
Warren uses it to his advantage.Warren uses it to his advantage.
 How Warren Discerns Buying opportunities others MissHow Warren Discerns Buying opportunities others Miss
 Where Warren Discovers Companies with Hidden WealthWhere Warren Discovers Companies with Hidden Wealth
 Financial Information: Warren’s Secrets for Using theFinancial Information: Warren’s Secrets for Using the
internet to Beat the Wall Street.internet to Beat the Wall Street.
 Warren’s Checklist for Potential Investments. The 10Warren’s Checklist for Potential Investments. The 10
Points of lightPoints of light
 How to Determine when a Privately Held Business can beHow to Determine when a Privately Held Business can be
a bonanza.a bonanza.
 Warren’s Secret Formula for Getting out at the MarketWarren’s Secret Formula for Getting out at the Market
Top.Top.

4.  Where is Warren Investing NowWhere is Warren Investing Now
 Stock Arbitrage: Warren’s Best kept secretStock Arbitrage: Warren’s Best kept secret
for Wealth Building.for Wealth Building.
 Warren Buffet’s Mathematical EquationsWarren Buffet’s Mathematical Equations
for Uncovering Great Businessesfor Uncovering Great Businesses
 Thinking the Way Warren Does: The CaseThinking the Way Warren Does: The Case
Studies of his most recent InvestmentsStudies of his most recent Investments
 Putting Buffettology to work for youPutting Buffettology to work for you

5. Why Warren Does Not play theWhy Warren Does Not play the
stock Market.stock Market.
 Warren Does not play the stock market.Warren Does not play the stock market.
 He is not interested in Current Trends.He is not interested in Current Trends.
 Does not chart stock prices.Does not chart stock prices.
 Does not participate in Momentum trading.Does not participate in Momentum trading.
 Warren got super rich not by playing the stockWarren got super rich not by playing the stock
market but by playing the people and institutionsmarket but by playing the people and institutions
who play the stock market.who play the stock market.
 95% of market participants are short sighted.95% of market participants are short sighted.
 Short Sighted mentality undervalues the longShort Sighted mentality undervalues the long
term prospects of a great business.term prospects of a great business.
 Warren Buys on Bad NewsWarren Buys on Bad News

6. How Warren Makes Good Profit outHow Warren Makes Good Profit out
of Bad News About a Companyof Bad News About a Company
 Selective Contrarian Investment StrategySelective Contrarian Investment Strategy
 Short sightedness of the Mutual FundShort sightedness of the Mutual Fund
beast.beast.
 How Mr Market Helped Buffet to Get Rich.How Mr Market Helped Buffet to Get Rich.
 Companies that have durable competitiveCompanies that have durable competitive
advantage have the economic power toadvantage have the economic power to
pull through out of most bad situations.pull through out of most bad situations.

7. How Warren Exploits the Market’sHow Warren Exploits the Market’s
ShortsightednessShortsightedness
 Sports Technique of Baseball Great TedSports Technique of Baseball Great Ted
WilliamsWilliams
 Warren looks at businesses into twoWarren looks at businesses into two
categories: Durable competitivecategories: Durable competitive
advantage and price competitiveadvantage and price competitive
commodity businesses.commodity businesses.

8. How Companies make investorsHow Companies make investors
rich, the interplay between ROErich, the interplay between ROE
and Inventory Turnoverand Inventory Turnover
 Best kind of business to own is one withBest kind of business to own is one with
high ROE and high Inventory Turnoverhigh ROE and high Inventory Turnover
Ratio.Ratio.
 Second best is a business with either oneSecond best is a business with either one
of the two above.of the two above.
 Avoid if both are low.Avoid if both are low.

9. The Type of Businesses WarrenThe Type of Businesses Warren
Fears and Avoids.Fears and Avoids.
 Internet PortalInternet Portal
 Internet Service ProvidersInternet Service Providers
 Memory Chip ManufacturersMemory Chip Manufacturers
 AirlinesAirlines
 Producers of raw food stuff like rice and cornProducers of raw food stuff like rice and corn
 Steel ProducersSteel Producers
 Gas and oil companiesGas and oil companies
 Lumber IndustryLumber Industry
 Paper ManufacturersPaper Manufacturers
 Automobile Manufacturers.Automobile Manufacturers.

10. AVOIDAVOID
 Price competative businesses regardlessPrice competative businesses regardless
of how great the buying opportunity looks.of how great the buying opportunity looks.
 They lack the economic might that willThey lack the economic might that will
ensure that they survive downturns.ensure that they survive downturns.
 They carry the additional burden of debtThey carry the additional burden of debt
because they can only remain in businessbecause they can only remain in business
by continuously upgrading their PP&Eby continuously upgrading their PP&E

11. The Kinds of businesses WarrenThe Kinds of businesses Warren
LovesLoves
 Determine the competitive advantage of theDetermine the competitive advantage of the
company and the durability of the competitivecompany and the durability of the competitive
advantage.advantage.
 Producing a unique product or providing aProducing a unique product or providing a
unique service.unique service.
 That product or service must have durability.That product or service must have durability.
 Companies like Intel mat have competitiveCompanies like Intel mat have competitive
advantage but they lack durable competitiveadvantage but they lack durable competitive
advantage.advantage.

12. Using Warren’s InvestmentUsing Warren’s Investment
Methods to avoid the next high techMethods to avoid the next high tech
MassacreMassacre
 Lack of historical durable competativeLack of historical durable competative
advantage keeps Warren from investing inadvantage keeps Warren from investing in
emerging industries.emerging industries.
 Is it wise to buy the company as a whole?Is it wise to buy the company as a whole?
 If the entire company is not worthIf the entire company is not worth
investing then it is not worth even to buy ainvesting then it is not worth even to buy a
single share.single share.

13. Interest Rate and Stock PricesInterest Rate and Stock Prices
 Will I get a better rate of return if I investedWill I get a better rate of return if I invested
in bonds than in the stock of thisin bonds than in the stock of this
company?company?
 Interest rate goes down stock prices goInterest rate goes down stock prices go
up.up.

14. Solving the Puzzle of the Bear/BullSolving the Puzzle of the Bear/Bull
Market and how Warren uses it toMarket and how Warren uses it to
his advantage.his advantage.
 Identify the buying opportunity: A goodIdentify the buying opportunity: A good
company makes a bad investment if youcompany makes a bad investment if you
paid too much.paid too much.
 Bull/Bear Market cycles, IndustryBull/Bear Market cycles, Industry
recessions, Individual calamities,recessions, Individual calamities,
Structural changes and WarStructural changes and War

15. How Warren Discerns BuyingHow Warren Discerns Buying
opportunities others Missopportunities others Miss
 Industry recessions hurts everyone theIndustry recessions hurts everyone the
weak perish but the strong survive.weak perish but the strong survive.
 Individual Calamities: When greatIndividual Calamities: When great
companies do something stupid.companies do something stupid.
 Structural ChangesStructural Changes
 WarWar

16. Where Warren DiscoversWhere Warren Discovers
Companies with Hidden WealthCompanies with Hidden Wealth
 Durable advantage is created throughDurable advantage is created through
competitive struggle.competitive struggle.
 Brand name fast foodBrand name fast food
 Patented Prescription drugs.Patented Prescription drugs.
 Branded food items.Branded food items.
 Branded BeveragesBranded Beverages
 Branded Toiletries/Home Products.Branded Toiletries/Home Products.