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It's more of a meditation than a specific instruction. This works for other kinds of advice: "Do the right thing?" doesn't help much, but saying "Am I doing the
by byrneseyeview 17y ago
It's more of a meditation than a specific instruction. This works for other kinds of advice: "Do the right thing?" doesn't help much, but saying "Am I doing the right thing?" at the right moment can save you a lot of grief.
- bumbledraven 17y agoActually, it is pretty specific. In essence, Buffett says you should first figure out what it would be worth to own the entire company (the "intrinsic value"; calculating this is something of a black art) then divide that by the number of shares the company has issued. Only if the current price per share is significantly lower than that (the "margin of safety") should you think about buying.
- byrneseyeview 17y agoWhich is about as specific as "First you should figure out what it is that cures cancer, and then you should have people with cancer do that thing." Calculating the intrinsic value of a business is very, very difficult -- which is why Buffett is so rich from being good at it.