Buffet disagrees with low taxes of very rich people, however he would not agree with the rise of taxes for middle class, according to his CNBC interview and he is a supporter of the current president policy. At present, he is thinking about hiring a new CEO of his company Berkshire Hathaway, and he has a few candidates. The future of his company is bright, according to him, as it is unlikely that there is going to be another recession. Buffet is still looking at corporate acquisitions and as a successful example of his past steps is the Bank of America purchase during the recession. The commodities are however not a preferred choice for Buffet.
He thinks that it is not a wise choice to buy commodities, as their price depends rather on mood of investors than intrinsic value of commodities. This also relates to gold. A similar opinion such as Warren Buffet has got Bill Gates, who is convinced on psychological character of gold as an investment asset. Another problem of gold, as pinpointed by Buffet, is that gold is not a productive asset, as the sheer fact of holding gold does not increase the production. According to Buffet, the productive land in few tens of years will actually become more expensive than gold. A similar view of Buffet is related to real estate. Paper money however, according to Buffet, is going to lose much value in the coming years and therefore gold purchase may be better than holding cash reserves.
Warren Buffet comments that with the turn of the century, many doubted its low returns but were the best choice, with the technological reality of the dotcom bubble. Warren Buffet however outgrew technological companies, but never invested too complex or difficult to understand products, which kept their businesses safe from stock market swings.
Warren Buffet has got a special investment philosophy. This philosophy can be described in the following works. Do not invest in businesses that you cannot understand. If you can’t see decline of 50% of the invested capital without panic, don’t take part in stock markets. Do not try to guess or do predictions of stock markets, economies, interest rates, but also of elections. Purchase corporations that have good track records of profitability as well as a strong market position. Fear others when they are greedy as well as vice versa. Optimism can be counted as one of the worst enemies of a rational buyers. The ability to say “no” is a huge advantage for an investor. Much success can be attributed to inactivity. The savage oscillations of prices can be related rather to behavior of investors than to results of business (Loewenstein, 1999).
An investor has to do just several important and selected things in a good way in order to avoid major mistakes, however there is no need to do extraordinary steps in order to get extraordinary results. No annual results taken seriously, but averages four or five years. Beware of the important of return on investment but not so much of the earnings per share. The level of debt as well as profit margins are essential. Invest for the long term always. Always remember that the stock market is manic-depressive. Search for corporations that have large market public, important brands as well as loyal consumers. Also attractive are some companies with well-established however got weakened through difficulties that may go away. To encounter opportunities, these should be found in bear markets. Search for corporations with important cash creative powers and which do not require large investments. The more absurd is the behavior of the market, the better the opportunity for methodical investor (Graham, 2003).
- Graham, B.. (2003) „The Superinvestors of Graham-and-Doddsville“, Harper & Row, Fourth Revised Edition.
- Lowenstein, R. (1999) „Buffett – The Making of an American Capitalist.“ Random House, New York