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Buffett's field of study is the finance and economic system. It should be easy to see that one of the things that separates Warren Buffett from the rest of us

by espeed 8y ago

Buffett's field of study is the finance and economic system. It should be easy to see that one of the things that separates Warren Buffett from the rest of us is that he has a unique perspective of the financial world – he sees all of the dynamics and intricacies of the financial world in a way that few others do. It took years for him to build the mental framework that led to his deep understanding and unique view of the world. And as a result of his devotion to this pursuit and his willingness to immerse himself in it, he developed the structural underpinning for the mental vista that yields the rare and valuable perspective that enables him to see the financial world with the clarity of a composer likely unattained by anyone in history. This is why Goldman Sachs calls him when they need help, like they did in the financial crisis.

AznHisoka 8y ago
I kinda think Buffett's way of investing is obsolete these days. Every single analyst is studying the fundamentals and financials of companies now. Every single analyst has access to the same information he had. It was different decades ago when we didn't have BloomBerg, Thomson Reuters, FactSet, etc. Now everyone does. His advantage now is just that he has boatloads of money to buy companies and turn them around.
- triviatise 8y ago
  you dont understand his strategy if you think it is out of date. 1) he buys equity in the private markets not in the public markets 2) he has capital to buy entire companies 3) he can evaluate a company based on the people, not based on financials 4) he commits to not meddling in operations. Today's tax structure forces entrepreneurs to sell because of huge tax implications of passing down a privately held company. 5) emotionally he is very strong and he is willing to wait on the sideline for years if necessary. He holds on to huge amounts of cash. Meanwhile shareholders are getting mad that he is not getting the returns and start talking about how he should just pay out the dividends, people start talking about how he has lost his touch or his method is out of date. The market is skyrocketing. Then the crash happens and he buys tons of distressed assets at a discount and he is brilliant again.
  - joosters 8y ago
    People are forced to avoid tax on their profits? Oh the humanity!
    - mlindner 8y ago
      If the sudden taxes kill the company, then certainly. It's in the US's best interest for them to avoid those taxes because if they don't then the US loses out on taxing future profits of that company.
      - FridgeSeal 8y ago
        Whelp, better just never tax anyone just in case they make some money in the future that we can continue to not tax, because then they'll threaten to fire all their workers and take their money overseas!
scarface74 8y ago
It should be easy to see that one of the things that separates Warren Buffett from the rest of us is that he has a unique perspective of the financial world – he sees all of the dynamics and intricacies of the financial world in a way that few others do. And it doesn't hurt that he can get special deals that most people can't. http://www.slate.com/articles/business/moneybox/2011/08/no_you_cant_invest_like_warren_buffett.html http://www.slate.com/articles/business/moneybox/2011/08/no_y... On the Bank Of America deal. This isn't an ordinary investment, in which an investor buys common stock. Buffett's $5 billion is buying him 50,000 shares of a special class of so-called "preferred stock," which will pay him a 6 percent dividend, or $300 million a year. Just for the sake of comparison, BofA's common shareholders get a quarterly dividend of one penny a share. That means that if you owned $5 billion of ordinary BofA common stock at its current price of about $8 a share, you'd be getting a paltry $25 million a year in dividends—less than one-tenth of what Buffett will get. (Earlier this year, BofA tried and failed to get permission from the Federal Reserve to increase the dividend.) BofA can buy back Buffett's investment at any time for a 5 percent premium.
- espeed 8y ago
  He didn't start out getting special deals. This is an example of the Pareto Principle [1] / Matthew Principle [2], which appears to be a natural law, an organizing principle like gravity. [1] https://en.wikipedia.org/wiki/Pareto_distribution https://en.wikipedia.org/wiki/Pareto_distribution [2] https://en.wikipedia.org/wiki/Matthew_effect https://en.wikipedia.org/wiki/Matthew_effect

by espeed 8y ago

AznHisoka 8y ago

I kinda think Buffett's way of investing is obsolete these days. Every single analyst is studying the fundamentals and financials of companies now. Every single analyst has access to the same information he had. It was different decades ago when we didn't have BloomBerg, Thomson Reuters, FactSet, etc. Now everyone does. His advantage now is just that he has boatloads of money to buy companies and turn them around.

triviatise 8y ago
you dont understand his strategy if you think it is out of date. 1) he buys equity in the private markets not in the public markets 2) he has capital to buy entire companies 3) he can evaluate a company based on the people, not based on financials 4) he commits to not meddling in operations. Today's tax structure forces entrepreneurs to sell because of huge tax implications of passing down a privately held company. 5) emotionally he is very strong and he is willing to wait on the sideline for years if necessary. He holds on to huge amounts of cash. Meanwhile shareholders are getting mad that he is not getting the returns and start talking about how he should just pay out the dividends, people start talking about how he has lost his touch or his method is out of date. The market is skyrocketing. Then the crash happens and he buys tons of distressed assets at a discount and he is brilliant again.
- joosters 8y ago
  People are forced to avoid tax on their profits? Oh the humanity!
  - mlindner 8y ago
    If the sudden taxes kill the company, then certainly. It's in the US's best interest for them to avoid those taxes because if they don't then the US loses out on taxing future profits of that company.
    - FridgeSeal 8y ago
      Whelp, better just never tax anyone just in case they make some money in the future that we can continue to not tax, because then they'll threaten to fire all their workers and take their money overseas!

scarface74 8y ago

It should be easy to see that one of the things that separates Warren Buffett from the rest of us is that he has a unique perspective of the financial world – he sees all of the dynamics and intricacies of the financial world in a way that few others do. And it doesn't hurt that he can get special deals that most people can't. http://www.slate.com/articles/business/moneybox/2011/08/no_you_cant_invest_like_warren_buffett.html http://www.slate.com/articles/business/moneybox/2011/08/no_y... On the Bank Of America deal. This isn't an ordinary investment, in which an investor buys common stock. Buffett's $5 billion is buying him 50,000 shares of a special class of so-called "preferred stock," which will pay him a 6 percent dividend, or $300 million a year. Just for the sake of comparison, BofA's common shareholders get a quarterly dividend of one penny a share. That means that if you owned $5 billion of ordinary BofA common stock at its current price of about $8 a share, you'd be getting a paltry $25 million a year in dividends—less than one-tenth of what Buffett will get. (Earlier this year, BofA tried and failed to get permission from the Federal Reserve to increase the dividend.) BofA can buy back Buffett's investment at any time for a 5 percent premium.

espeed 8y ago
He didn't start out getting special deals. This is an example of the Pareto Principle [1] / Matthew Principle [2], which appears to be a natural law, an organizing principle like gravity. [1] https://en.wikipedia.org/wiki/Pareto_distribution https://en.wikipedia.org/wiki/Pareto_distribution [2] https://en.wikipedia.org/wiki/Matthew_effect https://en.wikipedia.org/wiki/Matthew_effect