Business & Finance

Articles Index

Warren Buffett's 20 Ticket Punch Card

Warren Buffett has often told students and investors that they should act as if they have a punch card with only twenty slots and those are the only allocation decisions they can make in their entire life. This punch card has been quoted by famed investor Lou Simpson in helping to account for his success at GEICO.

Patience is Not Only a Virtue ... It's Profitable

Buy and hold investing is incredibly important because it allows you to make money from the underlying business, not just trading pieces of paper in the stock market. Charlie Munger and Warren Buffett have both talked about the importance of buy and hold investing in their various speeches, letters, and talks.

Share Repurchase Plans Aren’t Enough

Sometimes, a share repurchase plan isn't enough. There are three tips to help you watch out for limitations on share repurchases.

Confusing Cash and Profits

Many investors make the mistake of confusing cash and profit. This can result in them focusing ont he wrong thing - higher sales - rather than that which can make a difference in their net worth - higher profits and return on investment.

Dow Jones Reaches 14,000 – Time to Buy, Sell, or Hold?

When should you sell stock? One historical investor suggested that the time to sell stock is when three conditions are met. To find out which of these three suggestions might help you discover when to sell stock and when to hold on or buy more.

If You Don't Know What You're Doing, Diversify!

In the words of famed economist John Maynard Keynes, diversification is insurance against ignorance. If you don't know what you are doing or have a limited financial background, you need to diversify your portfolio.

Real World Investing - Calculating a Stock's True P/E Ratio

How can you tell when a high price to earnings ratio isn't as high as it looks? The price to earnings ratio is important because it tells you how much you are paying for each dollar of earnings.

To Improve Your Chances of Beating the Market - Analyze it as a Stock

One way to beat the market is to view and analyze the S&P 500 and Dow Jones as individual stocks. This technique allows you to analyze the economics, valuation, and characteristics of each hopefully bettering your chance of beating the market.

If You Can't Beat 'Em, Join 'Em and Investing in an Index Fund

Don't know the difference between the Dow Jones and a doughnut? An index fund may be the best investment option for you. Discover the advantages of index funds and how they can make sense for your portfolio.

A Great Business Is Not Always a Great Investment

Although a great business is something every investor should want, it does not always make a great stock or investment for several reasons.

Always Reinvest Your Dividends!

Reinvested dividends can add up to enormous wealth when given enough time to compound. That's why an investor should almost always reinvest his dividends to buy more shares of excellent businesses.

Know Financial History - It Can Save You a Lot of Pain!

Financial history can save you a lot of pain when you are investing your portfolio. All bull markets may feel different at the time, but in retrospect it becomes clear that throughout financial history, bull markets are the same.

Stick to Stocks within Your “Circle of Competence”

In investing, as in life, success is just as much about avoiding mistakes as it is about making intelligent decisions. You must stick to your circle of competence.

Look for Shareholder Friendly Management

Investors should look for shareholder friendly management that treats their capital like their own. Shareholder friendly managements often exhibit certain behavior that shows they have the best interest of minority shareholders in mind.

Focus on Return on Inventories and the Plant Account - Not Just ROE

The return on average inventory and property plant and equipment is a good test of a company's return on capital.

Know Every Company - Or at Least, a Whole Lot of Them!

When asked what advice he would give a young investor trying to enter the business today, Warren Buffett (remember, this is the man that had you invested $10,000 in his partnership in 1956 you would now have around $259 million) said that he would systematically get to know as many businesses as he could because that bank of knowledge would serve as a tremendous asset and competitive advantage.

You Don't Need to Have an Opinion on Every Stock

Investors often mistakenly believe they need to have an opinion on every stock. Successful investors, on the other hand, know that it just simply isn't necessary to have an opinion on every stock because they are looking for what Warren Buffett calls fat pitches - perfect opportunities they understand and are priced attractively.