Tuesday, March 1, 2011

Warren Buffett's Secret to Making 100% a Year

I love the Berkshire Hathaway annual report!

Especially Warren Buffett’s letter to shareholders. The report gives us a great view of the overall economy from a man who has his finger in every pot, and his letter to investors gives us a very good insight as to how things are going in the various sectors his operations cover. Most importantly, what I have learned in my own 40 years of reading Mr. Buffett’s reports (my grandfather was a shareholder) is what should shape any long-term investing strategy: patience and performance.

I often preach to members the joys of letting gains compound, and our $25,000-$100,000 Portfolio, which is currently at $27,531 (up 10%) after 4 weeks, is an exercise in how to quickly compound small gains over the course of a year. Primarily, we try to follow Warren Buffett’s Number One Rule of Investing, which is: Don’t Lose Money. Buffett’s Rule #2 is: See Rule #1 – and like us, it’s not that nothing Warren Buffett ever buys loses money, it’s just that he doesn’t ever buy things he isn’t willing to stick with UNTIL they make money. Sure we take a few losses along the road but, by being selective in our entries, we don’t discard stocks that we carefully selected just because the market temporarily disagrees with our valuations.

Detail Source: http://seekingalpha.com/article/255198-warren-buffett-s-secret-to-making-100-a-year?source=article_sb_popular_4_old

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