No doubt, everyone calls Warren Buffet the, “Sage of Omaha.” Now, let’s talk about Warren Buffet’s investing style. Warren Buffet read the famous seminal treatise on investing, “The Intelligent Investor” by Benjamin Graham while still in his teens. He was already investing in stocks at that age. He became a perfect disciple of the Ben Graham. Initially he worked with him and learned a lot from him.
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In 1950s, the idea of a stock having an intrinsic value was new and novel. The stock market had started to recover after the close of the Second World War. Warren Buffet practically applied the idea of intrinsic value of a stock in his investing decisions. The problem was there was no set formula for calculating the intrinsic value. Warren Buffet developed his own formula for intrinsic value calculation and applied it before making his stock investing decisions.
Warren Buffet would not touch those stocks that had an intrinsic value more than the market price. He would go after those blue chip stocks that had an intrinsic value less than the market price. He knew, this stock would be a bargain stock that would eventually attain its true value.
By investing only in long term, you can help the company achieve its true potential. Once the company achieves its true potential, you also get the reward in the shape of capital appreciation. These days, day trading has become a fad. Day traders just buy and sell stocks thinking of making quick profits in the market. What the market needs is long term investment, so the companies can grow and invest in products that would ultimately create value for the customers. This is what Warren Buffet thinks.
