Articles tagged with: Warren Buffett

Pilgrimage to Warren Buffett’s Omaha by Jeff Matthews

9 February 2009 Michael Szumielewski 92 Comments Books

Pilgrimage to Warren Buffett's Omaha by Jeff Matthews

The Pilgrimage to Warren Buffett’s Omaha by Jeff Matthews is an enjoyable read for everybody who is interested in the insights of the Berkshire Hathaway Annual Meeting in Omaha and who seeks answers to investment questions from Warren Buffett.

Every year, they come to Omaha. Far from the stock market in Wall Street, in a place more known for cattle and corn, investors from all over the world gather for one purpose: Warren Buffett and his annual Berkshire Hathaway meeting. For the uninitiated, it’s an event wrapped in mystique and mystery. It’s a chance to have Buffett himself, the Oracle of Omaha, answer their questions.
In Pilgrimage to Warren Buffett’s Omaha: A Hedge Fund Manager’s Dispatches from Inside the Berkshire Hathaway Annual Meeting the reader gets an in-depth look at this unusual experience. The book covers the 2007 and 2008 meetings, a time when Bear Sterns was collapsing and more than 31,000 people came to seek advice from the investment guru.

The book is written by Jeff Matthews, a hedge fund founder and financial blogger. He got his own highly-coveted ticket to the Berkshire Hathaway meeting held only for shareholders and proceeded to post reports on his blog, offering tempting glimpses into the much-discussed meeting. Offering a thoroughly entertaining first-hand account of Berkshire Hathaway’s meeting, he answers questions investor’s are asking.

Personally, I liked the book and found it to be an enjoyable read. Jeff Matthews takes the reader into the world of Warren Buffet and his shareholders. You get a different point of view than usual and get a look at Buffet’s investing methods along with the way he interacts with his shareholders.
All in all, I can recommend this book to anyone who is interested in investing. If you want to learn even more about Warren Buffett, and you probably will after this book, you might also check out The Snowball.

Buy “Pilgrimage to Warren Buffett’s Omaha” now at Amazon.com

Ben Graham’s Margin of safety

11 February 2008 Sören Zschoche 92 Comments Investing


The genius investor Warren Buffett once called it “buying one dollar for 70 cent”, the Margin of safety which was developed by the brilliant man Benjamin Graham in 1934. The precept of the margin of safety is very logic and works as follows.

Most people believe that the stock markets are rational, so that the stock-rate always reflects the actual value of a company. But that´s not true , you can prove that very easily. We you look back to the big ups and downs in times of a market crash. It´s definitely not logical that a company looses 60 % of its value and wins 120 % back in a short period of 2 years while the earnings constantly grow by 5 %. So we can conclude that the markets are irrational because sometimes the people become too afraid and sell very cheap stocks and sometimes they are just too optimistic and buy too expensive stocks. It´s not very intelligent but most people like to follow the herd.

But now, let´s get back to the margin of safety. If you know that the stock markets are irrational then why don´t make profit of it? First you look for very unpopular “cheap” stocks, the market capitalisation has to be far below the intrinsic value. That could be companies in trouble, after they reported bad news or complete industries with problems.

Now you calculate the value of the company in order to do that you can use different methods. 1. The Earning-capacity value 2. The Net asset value 3. The liquidation value. So for example, if you calculated that the intrinsic value of a company has the value of 100 Million USD, but the market capitalisation just lies at 70 Million USD, you get a margin of safety of 30% or 30 Million USD. You buy this stock and when the market capitalisation achieves the intrinsic value again you sell it.

Note: The margin of safety has not to be exactly 30 percent, but the higher it is the safer is the investment.