Invest
Rethinking Warren Buffett
By Dr Wealth  •  September 19, 2010
[caption id="attachment_2965" align="alignright" width="150" caption="Photo by Anonymous9000"]Photo by Anonymous9000[/caption] I always think that Warren Buffett is an investor. To me investor means investing for capital gains – buy an asset at a lower price and sell at a higher price in the future. You may say Buffett adopts a buy-and-hold strategy and does not sell shares frequently. Then how does he make such a fortune? If he does not sell, how is he going to profit? I start to get some insights after I read “The Essays of Warren Buffett“, and realised I misunderstood Buffett totally. Firstly, Buffett buys business. He prefers to buy the entire company from a private owner. This means that the company is not listed and no shares are traded. The business of course must generate a healthy and steady profits. After acquiring this superb cash generating business, he holds on to it. Hence, he invests for cashflow! Find the golden goose and do not settle for lesser. Find enough golden geese and you will be rich! So, I will not really term Buffett as an investor. He is actually a businessman to me. If you accept this definition, take a look at the Forbes 500 billionaire list. The top 10 or even 20 of them are all businessmen and not investors. Of course, I am not asking you to quit your job and start a business, or give up investing. You must be thinking you do not need to be that rich. I agree, but my point is, the rich are rich because they focus on different things apart from the average. We invest for capital gains while they invest for cashflow. Sounds familiar? Read more...
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By Dr Wealth
Dr Wealth provides trusted financial education to individuals. We teach researched and actionable investment methods so that our graduates are successful in their investment journey and achieve market-beating returns.
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