5. Warren Buffett Stock Basics
Download Preston's 1 page checklist for finding great stock picks: http://buffettsbooks.com/checklist
Preston Pysh is the #1 selling Amazon author of two books on Warren Buffett. The books can be found at the following location:
http://www.amazon.com/gp/product/0982967624/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0982967624&linkCode=as2&tag=pypull-20&linkId=EOHYVY7DPUCW3WD4
http://www.amazon.com/gp/product/1939370159/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=1939370159&linkCode=as2&tag=pypull-20&linkId=XRE5CA2QJ3I2OWSW
In lesson five, we learned that Warren Buffett has four rules that he uses for investing in stocks. All the rules must be met in order for him to purchase shares of a company. Those four rules are the following:
Rule 1: A stock must be stable and understandable
Rule 2: A Stock must have long term prospects
Rule 3: A Stock must be managed by vigilant leaders
Rule 4: A Stock must be undervalued
We also learned a very basic valuation technique that Warren Buffett used when he worked for Benjamin Graham. The technique multiplies the P/E ratio by the P/BV ratio and the result needs to be lower than 22.5.
A key fundamental of Warren Buffett stock basics is the idea that the stock market is nothing more than a location where he can buy or sell his shares. The market only provides a platform for him to purchase undervalued companies. He always buys on the assumption that they stock market could close tomorrow and not open for five years ñ and it would have no impact on his decision to buy a particular company.
Finally, we learned that Warren Buffett possess great patience. He never tries to make enormous gains, but instead consistent gains at reasonable levels. He always thinks for himself and always determines the value of a stock based on what HE thinks a company is worth - not the market.
Download Preston’s 1 page checklist for finding great stock picks: http://buffettsbooks.com/checklist
Preston Pysh is the #1 selling Amazon author of two books on Warren Buffett. The books can be found at the following location:
http://www.amazon.com/gp/product/0982967624/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0982967624&linkCode=as2&tag=pypull-20&linkId=EOHYVY7DPUCW3WD4
http://www.amazon.com/gp/product/1939370159/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=1939370159&linkCode=as2&tag=pypull-20&linkId=XRE5CA2QJ3I2OWSW
In lesson five, we learned that Warren Buffett has four rules that he uses for investing in stocks. All the rules must be met in order for him to purchase shares of a company. Those four rules are the following:
Rule 1: A stock must be stable and understandable
Rule 2: A Stock must have long term prospects
Rule 3: A Stock must be managed by vigilant leaders
Rule 4: A Stock must be undervalued
We also learned a very basic valuation technique that Warren Buffett used when he worked for Benjamin Graham. The technique multiplies the P/E ratio by the P/BV ratio and the result needs to be lower than 22.5.
A key fundamental of Warren Buffett stock basics is the idea that the stock market is nothing more than a location where he can buy or sell his shares. The market only provides a platform for him to purchase undervalued companies. He always buys on the assumption that they stock market could close tomorrow and not open for five years ñ and it would have no impact on his decision to buy a particular company.
Finally, we learned that Warren Buffett possess great patience. He never tries to make enormous gains, but instead consistent gains at reasonable levels. He always thinks for himself and always determines the value of a stock based on what HE thinks a company is worth – not the market.
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Where is the best place to get good data from companies?
How do you value a company without looking at the price, as it was said how Warren Buffet does, when the market price is necessary when calculating P/E ratios
The Warren Buffett rules may not apply to many people. If you only have 2000 dollars, these rules may take you years, and only earn a few hundred bucks. I think time is my more important asset. On the other hand, they are right if you have millions of dollars to invest, and these rules may maximize your profits and at the same time lower your risks.
If Buffet buys stocks he plans to hold forever, how does he make money that he can use or spend that way? Wouldn't he have to sell the stock to put money into his bank account?
When you say "just like the P/E, the lower the number the better because you have more safety on your investment" is confusing me, because you also said in an earlier video that a lower P/E means a worse margin of safety as the risk ((market price) – (equity)) goes higher…
can you please explain where I'm not getting it? or was it just a slip of the tongue?
thanks in advance, great videos btw!
thankyou for sharing,
Finally, someone that could explain the Graham approach without having to read the tome of information Intelligent Investor.
I love you sir.Amazing !! I really couldn't understand The intelligent investor.Then i found this course. Love from India.:D
Dude i just wanna say thank you for this video. You helped me understand a lot more with investing and picking stocks. After i saw your video, i went through the whole top 300 australian stock exchange list and found some undervalued stocks to further investigate. Yesterday i bought an undervalued stock that no one wanted and that everyone was dumping due to a single negative report by a financial firm. It turned out that it wasn't true at all, so that's when i went in and buy. With your vid, i feel more confident with stock picking because it's all about the fundamentals. One question though, when you say 10-15% return, is that annual? Thanks.
Hi Preston, I am on course 2 and am doing intrinsic valuation on companies I think of that have long term prospects such as Home Depot. I have done this for 4 companies so far and they are all WAY overpriced. Sometimes by dozens to hundreds of dollars. Is this common? How do I screen for stocks?
Your videos are awesome, this change my view towards investing..
I don't understand what that 5 is for. I know how is comes but what is it. I know the 10which is the market price and I know the 2which is the earnings but what is the 5
I don't understand what that 5 is for. I know how is comes but what is it. I know the 10which is the market price and I know the 2which is the earnings but what is the 5
Thank you so much for this information!
Does this apply to evaluating real estate as well? What is a good source for real estate knowledge?
Preston thank you, Sir, for this invaluable information. I started 2 weeks ago on Audible listening to Tony Robins Unshakable and it has opened my eyes to the industry and brought me here. I am very grateful for what you have done.
Best Regards
amazing content
thanks for the share!
id rather just buy buffets stock and let him do the homework
What if P/BV is negative ?
If only I studied this in high school.