The Oracle of Omaha. Warren Baffett

Warren Baffett usually referred to as the "Oracle of Omaha" because he hails from Nebraska, Warren Baffett universally recognized as the most prominent investor in undervalued assets. Due to its ability to identify undervalued companies and buy them on the cheap, Baffett during its fiftieth career made many people very rich. Its share in the company "Berkshire Hathaway" is 38%, giving him a net worth more than $ 32 billion, and makes one of the richest people in the world (the second after Bill Geytsa). He is also one of the few who have earned such an impressive state solely through investment in the stock market.

Baffett realized the error of investing in the University of Nebraska, where he read the book, Benjamin Grehama "The Intelligent Investor." Book Grehama advised investors to look for stocks that are trading significantly below their actual value, which provides a margin of safety.

Baffett fully explores the business and buys it only depreciated prices. This practice, which was essentially invented and defined Grehamom, gives him the so-called "margin of safety to all its investments. This margin is the difference between the true value of the business and the price of his shares.

Baffett invests in companies with superior economic characteristics, which are managed success, qualified team of managers. He also looks for companies with long histories of above-average income growth. And unlike many other investors, Baffett does not pay attention to the fluctuations in the stock market, macroeconomic and market predictions. Instead, he simply maintains its long-term investment plan. While the company's fundamentals do not change, Baffett will not sell it - even in times of economic crisis.

Here are some other characteristics that Baffett consider when evaluating investment opportunities.

Easy to understand the types of business
One of the principles of Warren Baffetta is not much different from the principles of Peter Lynch - works so that you understand and choose investments with which you feel comfortable. Baffett perhaps one of the greatest and most respected investors of all time, carefully selecting the option shares, said investors should not complicate things, looking for challenging us.

Following this strategy, the safest an investor holding a "Berkshire Hathaway" from the fast-growing high-tech shares. Baffett admits that he did not understand quite well the high tech business. Also, it avoids the industry as a whole. Before investing in any business, Baffett trying to predict that the company will present itself in the future, after 10 years. The high-tech markets change too quickly to deal with them so far with some confidence.

High return on assets
Baffett stresses that the return on assets is a key measure of profitability of the company. He prefers to invest in a company where he could confidently predict the future earnings of at least 10 years. He particularly likes companies that do not require large capital investments, because they tend to produce much higher return on assets. Constant flow of cash Baffett also looking for companies with substantial free cash flow. Always mindful of the risks associated with investing, he ensures that his company is enough money to invest in their growth after they have paid on the accounts.

Limitation of indebtedness
In the 1990's Baffett bought the insurance company "Geico" and "General Re", because he liked both companies to limit and manage their debt.

Baffettu also liked "floating money", which involve the insurance business. Policyholder to pay premiums in advance, and payments for claims occurring later, thus, the insurance companies is a steady flow of cheap money that can be used. And who better than itself Baffett will be able to invest the money?

Quality Management
Among the most notable aspects of the selection of shares Baffettom is that he is looking for a quality company with quality management team. When Baffett buys a business he bought with his management. Baffett looking for people who are just as enthusiastic of their business, as he is investing.

* During 2002, we entered the market of foreign currency for the first time in my life. In 2003, we increased our position, because I am becoming more and more are set to bear against the dollar, "said Baffett. He made it clear that he does not quite feel comfortable, personally or professionally, while working in the foreign exchange market. He explained that the trade deficit scared him. He noted that "Berkshire Hathaway" holds approximately $ 12 billion in foreign exchange contracts in five unspecified currencies. He also said that "Berkshire Hathaway" has a high yield bonds denominated in Euro of approximately $ 1 billion.

Forex Magazine
based on streetauthority.com