Investment-blog.net: Stocks, Emerging markets, Bonds, Currencies and Commodities

FOCUS INVESTING: THE BIG PICTURE

Aug 27, 2008 Investment Opinions

Reduced to its essence, focus investing means this: Choose a few stocks that are likely to produce above-average returns over the long term haul, concentrate the bulk of your investments in those stocks, and have the fortitude to hold steady during any short-term market gyrations.

“Find Outstanding Companies”

Over the years, Warren Buffett has developed a way of determining which companies are worthy places to put his money; it rests on a notion of great common sense: If the company is doing well and is managed by smart people, eventually its stock price will reflect its inherent value. Buffett thus devotes most of his attention not to tracking share price but to analyzing the economics of the underlying business and assessing its management.

The FOCUS INVESTOR’s GOLDEN RULES

1. Concentrate your investments in outstanding companies run by strong management.
2. Limit yourself to the number of companies you can truly understand. Ten to twenty is good, more than twenty is asking for trouble.
3. Pick the very best of your good companies, and put then bulk of your investment there.
4. Think long-term: five to ten years, minimum.
5. Volatility happens. Carry on

Did you like this? If so, please bookmark it, about it, and subscribe to the blog RSS feed.

Possibly Related Posts:

• In recession or depression, people only consume food, go short Retail stocks
• The news from Fed and Treasury only signal the situation is already out of control
• Everyone has been far to optimistic about the economy. Year of 2009 will be uglier than 2008
• Perspective on “Apple getting into the chip business”
• Merrill’s Bernstein: Stay Out of Stock Market; Related: MER, XLF, ^GSPC, ^DJI

Did you like this? If so, please bookmark it, about it, and subscribe to the blog RSS feed.

Technorati Tags: Big Picture, Common Sense, Economics, Essence, Focus, Fortitude, Inherent Value, Investing, Investments, Investor, Market Gyrations, Money, Notion, Share Price, Stock Price, stocks, Strong Management, Volatility, Warren Buffett

Tags: Big Picture, Common Sense, Economics, Essence, Focus, Fortitude, Inherent Value, Investing, Investments, Investor, Market Gyrations, Money, Notion, Share Price, Stock Price, stocks, Strong Management, Volatility, Warren Buffett