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By: Adrian Mastracci
North Shore News
Business Section, “Loose Change”
Sunday, October 20, 2002
Warren Buffett is one of the most recognized investment
personalities in North America.
From his start nearly four decades ago in Omaha Nebraska,
Warren Buffett has become well known as the outspoken
cheerleader of the “buy and hold” school
of investing.
He is also referred to as “the oracle of Omaha”.
CNBC recently aired a three part interview with Warren
Buffett who is, of course, the chairman of Berkshire
Hathaway Inc. The little company of humble beginnings
recently traded at US$74,400 for one Class A share.
It has ranged from US$59,000 to US$78,500 in the past
year.
By comparison, its book value in 1964 was less than
$20 per share. Clearly, a long run investment success
by any standard of measure.
I find it informative to peek at the Berkshire Hathaway
web site at www.berkshirehathaway.com.
The site is not in any danger of being the front runner
for the web site of the year award, however, some important
lessons can be learned from digging through its content.
Visit Berkshire's home page where you will find the
‘Owner's Manual’ link. It is a list of the
13 owner related business principles that Warren Buffett
articulated in 1983 and lives by to this day.
Warren Buffett has shown remarkable investment insight.
Moreover, he has held his beliefs through the many market
swings of the past four decades. And we’ve had
a wide variety of swings.
So, what has the “buy and hold” marathoner
from Omaha been buying up through the years? The Berkshire
Hathaway portfolio reveals positions in American Express,
Coca-Cola, Disney, Gillette, Wells Fargo, The Washington
Post and a number of others.
He’s also purchased a reinsurance company called
General Re, a building materials company called USG,
a carpet maker called Shaw Industries, the paint people
at Benjamin Moore, and building products manufacturer
Johns Manville. He’s even dabbled in a little
junk bond investment.
Warren Buffett's fame is the relentless buy and hold
strategy. He has followed that philosophy year in and
year out.
Clearly, he gives no hint of being in a 100-yard dash.
And, that is why I refer to him as the champion marathon
investor.
Warren Buffett has not always been right. However,
he has enjoyed a high degree of success by staying the
course in the long run.
Like every investor, he has had dry investment spells.
In the late 1990’s he was virtually written off
by many experts. His first year was no picnic either.
However, he stuck by his principles with determination.
We can learn valuable lessons from the philosophy and
approach followed by Warren Buffett. He ‘walks
his talk’ when it comes to investments.
Warren Buffett had a clear vision from the outset and
he set out to accomplish the principles articulated
in his owner's manual. That insight has earned him plenty
of respect and success.
First, he decided on his investment game plan. Then,
he built his financial house on solid foundations that
have withstood the tests of time.
His secret is very simple indeed. He buys businesses
that he wants to hold for a long time. A very long time.
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