WARREN BUFFETT

1268 WordsOct 21, 20146 Pages
CASE 1: WARREN BUFFETT a) From Warren Buffett’s perspective, what is the intrinsic value? From Warren Buffett’s perspective, intrinsic value is the value will affect the future value performance of investment and business. It is defined as “the discounted value of the cash that can be taken out of a business during its remaining life” (Bruner, 2010). Why is it accorded such importance? In view of the fact that the intrinsic value is the “only logical way” (Bruner, 2010) which help investor to identify whether the investments and businesses are worth to do. How is it estimated? It is estimated by the calculation of discounted cash flows and it will be affected by change of interest rate during business life. What are the…show more content…
How do you measure investment performance? I measure investment performance in two ways. One is whether I can get a stable and good profit or not. The other one is the investment will have a lower risk than others. What does good performance mean to you? The investment has a good performance means I will have a substantial return in the investment and undertake lower risks than others. b) What might explain the fund’s performance? There are two frequently ways to measure the fund’s performance according to Bill Miller and Value Trust (Bruner, 2010): 1) The percentage of annual growth rate of NAV assuming reinvestment (the total return on investment.) 2) The absolute dollar value today of an investment made at some time in the past. To what extent do you believe an investment strategy, such as Miller’s, explains performance? The investment strategies include many aspects. It should consider different factors to provide extensive perspective for investors to estimate the performance of investment. “Buy low-price, high intrinsic-value stocks” (Bruner 2010) is the first investment strategy. It reveals the higher investment returns the better. c) Consider the mutual fund industry. What roles do portfolio managers play? Portfolio managers’ role is to create as much profit as possible through manages the fund’s asset virtue of specialized knowledge and experience. What are the differences between fundamental and

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