Business
One-Time Solvable Problems
By A Journey Towards Financial Freedom  •  April 20, 2013
PROBLEM SOLVING When an outstanding business is affected by a temporary one-time solvable problem, it can be a huge opportunity to invest in the company and get great gains in the process. “A great investment opportunity occurs when a marvellous business encounters a one-time huge, but solvable, problem.” – Warren Buffett. The following is an example of how Warren Buffett practiced what he preached. In 1963, a “salad oil” scandal occurred when American Express found that $60 million lent against collateral were mostly sea water instead of salad oil. The borrower was bankrupt and American Express had to take a loss of $60 million. Buffett analysed the situation and found that the trust in American Express travellers’ check and charge cards were unaffected. The company’s intrinsic value was also higher than the share price then. He saw virtually no downside and maximum upside. He invested 40% of the net worth of ......
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By A Journey Towards Financial Freedom
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