Warren Buffett 's Investment Philosophy

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Warren Buffett’s investment philosophy Warren Buffett, Berkshire Hathaway Company 's chief executive, one of the most successful investors in the world, is a world-famous Finance Expert. He conducted numerous investment with great success. Many people think he is the myth of the investment community. They want to know Buffett 's investment philosophy. “Over the years, Buffett had expounded his philosophy of investing in his chairperson 's letter to the shareholders in Berkshire Hathaway 's annual report”1 (Case1 Warren E. Buffett, 2005). In these letters, he clarified the core of his investment philosophy which is how to get the high return through low risk. This essay will analyse the Buffett 's investment philosophy from these letters…show more content…
4. Limit the autonomy of enterprises and the use of capital functions. In short, debt financing will increase the risk of debt. Therefore, to avoid the use of debt financing, debt risk can be controlled at a relatively low level, is conducive to the finally financial sustainability. In this way, an investment may be in a controlled range of operations, rather than being forced by the debt. This investment philosophy can also be wielded in life. That suggests people should buy things within their own ability. Buffett’s personal life also illustrates this investment philosophy: no loans. As his advice: Stay away from credit cards (bank loans) and invest in yourself.6 (Elyssa Kirkham, 2017) He “has never borrowed a significant amount — not to invest, not for a mortgage”7. He said: Negotiate with creditors to pay what you can. Then, when you’re debt-free, work on saving some money that you can use to invest.8 Secondly, investors should have correct investing behaviour. That means people should gather enough information and analyse them before making a correct investment decision. Buffett never makes stock recommendations to others. “Investing behavior should be driven by information, analysis, and self-discipline, not by emotion or "hunch." 9 Wrote in his chairperson 's letter to the shareholders. This investment philosophy means an investor should understand the investment environment and make the decision by themselves. In modern society, people are used to
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