Serious Money: The page on Buffett -- Part I: your understanding


Volumes have been written about Warren Buffett's investment approach and I was thinking that although he tends to share his methodology, he sometimes is not as straightforward as he could be. This is the first in a series discussing my view of Buffett's approach, an interpretation in the simplest terms so that the information is immediately usable.

Although you can make money investing in the stock market many different ways, the person who has made the most money by far is Warren Buffett. Therefore, it seems to follow that every time you deviate from this path, you are reducing your chances of ultimate success.

Consider the following: If Tiger Woods wanted to help you with your golf swing or putting stance, would you say, "no thanks, I know what I'm doing?" If Carlos Santana wanted to show you a few moves on the guitar or Steven Spielberg offered to help you edit a movie, would you tell them to get lost? Not if you were truly interested in improving. For some reason, though, through the years Mr. Buffett has periodically been relegated to the sidelines of the investing world while a multitude of prognosticators claim to have a better way, even here on BloggingStocks. Over the last ten years I have found that the more I learn and the more I align my stock investment strategy with Buffett's approach, the better I do.

Recently I posted Chasing down 007 picks: Index beats Cramer - value trumps growth and for the moment, my stock picks are beating James Cramer and all the major indices. I think that this will remain the case every month going forward for as long as I monitor it, which I will do at least through the end of the year.

So here is the first part to investing like Warren Buffett:

  1. Do not invest in things that are overly complicated or that you do not understand. This seems like a simple enough concept but there are many ways to stray off course. An example of something simple to understand, selling shoes, or bricks or donuts. Something complicated would be highly leveraged energy trading schemes involving complex algorithms devised by Ph.D mathematicians, integrating off-shore transactions, accounted for and presented by the guys who did Enron's bookkeeping. If you do not easily understand the business or business model, find something else to invest in.

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.

Reader Comments (Page 1 of 1)

Symbol Lookup
IndexesChangePrice
DJIA-134.1512,756.31
NASDAQ-24.852,902.38
S&P 500-12.111,339.84

Last updated: February 10, 2012: 02:29 PM

Hot Stocks

General Electric

18.825-0.305(-1.59)

Alcoa

10.26-0.38(-3.57)

Apple Inc

494.62+1.45(+0.29)

Google Inc 'A'

605.60-5.86(-0.96)

Bank of America

8.065-0.115(-1.41)

Wal-Mart Stores

61.50-0.46(-0.74)

Exxon Mobil Corp

83.50-1.38(-1.63)

Ford

12.415-0.275(-2.17)

Citigroup

32.88-0.78(-2.32)

IBM

191.57-1.56(-0.81)

Yahoo

16.185+0.185(+1.16)

Starbucks

48.60-0.60(-1.22)

Microsoft

30.51-0.26(-0.84)

Home Depot

45.05-0.22(-0.49)

DailyFinance Headlines

Benzinga Headlines

TheFlyOnTheWall.com Headlines

BioHealth Investor Headlines

WalletPop Headlines

DailyFinance BlackBerry App

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance

BioHealth Investor Headlines

Page Loaded in 1328902198436 ms.