The Weekly Nibble: Warren Buffett’s Stock Picking Ways
Here are some of the most interesting articles that have appeared on the Motley Fool Singapore’s website this week.
The FTSE Straits Times Real Estate Investment Trusts Index (SGX: FSTAS8670) reached a peak of some 859 points on Thursday, a level not touched since end-May 2013. However, before you jump onto the real estate investment trusts (REITs) bandwagon, do keep in mind these three points as mentioned by Jeremy Chia in his article.
Warren Buffett is the world’s third wealthiest man. With a net worth of around US$86 billion, most of his wealth was created by investing in wonderful companies. In doing so, Berkshire Hathaway Inc (NYSE: BRK.A), the conglomerate that he runs with his partner, Charlie Munger, has amassed an annualised return of 20.8% per year for its shareholders.
How does Buffett do it? What are the criteria he looks out for before buying businesses?
In his 1989 letter to his shareholders, Buffett revealed to the world six things to consider when evaluating a firm as an acquisition opportunity. My Foolish colleague, Esjay, analyses the sixth requirement in the last of his six-parter.
(Bonus: The checklist can be used to pick stocks too.)
Using many data points, Chong Ser Jing shows why it pays to be patient when it comes to investing. An excerpt from his article is presented below:
“The CGM Focus Fund, run by Ken Heebner, is a documented case of the Lynchian tragedy I described earlier. In the decade ended 30 November 2009, the CGM Focus Fund generated an incredible annual gain of 18%. The average CGM Focus Fund investor however, had shockingly lost 11% per year over the same period.
It seems that investors are always losing out, no matter how great the underlying investment vehicle is. A huge part of the problem stems from many investors’ horrible investing behaviour…”