BuffettologyBuffettology

How $105,000 Turned into $30 How $105,000 Turned into $30 BillionBillion

AgendaAgenda

Why Warren Does Not play the stock Market.Why Warren Does Not play the stock Market. How Warren Makes Good Profit out of Bad How Warren Makes Good Profit out of Bad

News About a CompanyNews About a Company How Warren Exploits the Market’s How Warren Exploits the Market’s

ShortsightednessShortsightedness How Companies make investors rich, the How Companies make investors rich, the

interplay between ROE and Inventory Turnoverinterplay between ROE and Inventory Turnover The Type of Businesses Warren Fears and The Type of Businesses Warren Fears and

Avoids.Avoids. The Kinds of businesses Warren LovesThe Kinds of businesses Warren Loves

Using Warren’s Investment Methods to avoid the next high Using 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 how Solving 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 the Financial 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 10 Warren’s Checklist for Potential Investments. The 10

Points of lightPoints of light How to Determine when a Privately Held Business can be How to Determine when a Privately Held Business can be

a bonanza.a bonanza. Warren’s Secret Formula for Getting out at the Market Warren’s Secret Formula for Getting out at the Market

Top.Top.

Where is Warren Investing NowWhere is Warren Investing Now Stock Arbitrage: Warren’s Best kept secret Stock Arbitrage: Warren’s Best kept secret

for Wealth Building.for Wealth Building. Warren Buffet’s Mathematical Equations Warren Buffet’s Mathematical Equations

for Uncovering Great Businessesfor Uncovering Great Businesses Thinking the Way Warren Does: The Case Thinking 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

Why Warren Does Not play the Why 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 stock Warren got super rich not by playing the stock

market but by playing the people and institutions market 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 long Short 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

How Warren Makes Good Profit out How 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 Fund Short 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 competitive Companies that have durable competitive

advantage have the economic power to advantage have the economic power to pull through out of most bad situations.pull through out of most bad situations.

How Warren Exploits the Market’s How Warren Exploits the Market’s ShortsightednessShortsightedness

Sports Technique of Baseball Great Ted Sports Technique of Baseball Great Ted WilliamsWilliams

Warren looks at businesses into two Warren looks at businesses into two categories: Durable competitive categories: Durable competitive advantage and price competitive advantage and price competitive commodity businesses.commodity businesses.

How Companies make investors How Companies make investors rich, the interplay between ROE rich, the interplay between ROE

and Inventory Turnoverand Inventory Turnover Best kind of business to own is one with Best kind of business to own is one with

high ROE and high Inventory Turnover high ROE and high Inventory Turnover Ratio.Ratio.

Second best is a business with either one Second 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.

The Type of Businesses Warren The 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.

AVOIDAVOID

Price competative businesses regardless Price competative businesses regardless of how great the buying opportunity looks.of how great the buying opportunity looks.

They lack the economic might that will They lack the economic might that will ensure that they survive downturns.ensure that they survive downturns.

They carry the additional burden of debt They carry the additional burden of debt because they can only remain in business because they can only remain in business by continuously upgrading their PP&Eby continuously upgrading their PP&E

The Kinds of businesses Warren The Kinds of businesses Warren LovesLoves

Determine the competitive advantage of the Determine the competitive advantage of the company and the durability of the competitive company and the durability of the competitive advantage.advantage.

Producing a unique product or providing a Producing 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 competitive Companies like Intel mat have competitive

advantage but they lack durable competitive advantage but they lack durable competitive advantage.advantage.

Using Warren’s Investment Using Warren’s Investment Methods to avoid the next high tech Methods to avoid the next high tech

MassacreMassacre

Lack of historical durable competative Lack of historical durable competative advantage keeps Warren from investing in advantage 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 worth If the entire company is not worth

investing then it is not worth even to buy a investing then it is not worth even to buy a single share.single share.

Interest Rate and Stock PricesInterest Rate and Stock Prices

Will I get a better rate of return if I invested Will I get a better rate of return if I invested in bonds than in the stock of this in bonds than in the stock of this company?company?

Interest rate goes down stock prices go Interest rate goes down stock prices go up.up.

Solving the Puzzle of the Bear/Bull Solving the Puzzle of the Bear/Bull Market and how Warren uses it to Market and how Warren uses it to

his advantage.his advantage. Identify the buying opportunity: A good Identify the buying opportunity: A good

company makes a bad investment if you company makes a bad investment if you paid too much.paid too much.

Bull/Bear Market cycles, Industry Bull/Bear Market cycles, Industry recessions, Individual calamities, recessions, Individual calamities, Structural changes and WarStructural changes and War

How Warren Discerns Buying How Warren Discerns Buying opportunities others Missopportunities others Miss

Industry recessions hurts everyone the Industry recessions hurts everyone the weak perish but the strong survive.weak perish but the strong survive.

Individual Calamities: When great Individual Calamities: When great companies do something stupid.companies do something stupid.

Structural ChangesStructural Changes WarWar

Where Warren Discovers Where Warren Discovers Companies with Hidden WealthCompanies with Hidden Wealth

Durable advantage is created through Durable 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.