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MrPawter308

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Hi, I was wondering what your opinion on Warren Buffett is?

Does Warren Buffett follow the "CENTS" framework in amassing his fortune?

Or was he at the right place, at the right time & doing the right things?

- Control lies solely on the due diligence of his investment strategies..
- Barriers of Entry for his investment activities seems low, anyone could do the same..
- Need was non-existent, companies only needed to borrow money from Buffet to generate more income.
- Time could not be leveraged in the stock markets. You had to wait!
- Scale. Unless you had a magnitude of Cash to begin with, you would not have scale.

Would appreciate if someone would guide me along!
 

mikey3times

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Or was he at the right place, at the right time & doing the right things?

You say this as if it is a bad thing. I see this as a good thing.

What about John D. Rockefeller, Andrew Carnegie, JP Morgan, Bill Gates, Jeff Bezos, Mark Zuckerberg? They were all doing the right thing, at the right time, in the right place. Were they lucky (as I assume you are suggesting) or would they have been successful in any time or place because of how they identify a market, problem, solution and then go big at it?

Granted, there is some luck that these guys were all born in a free society where they could take part. However, I still think they would have figured it out wherever they were.

I think you are looking too hard for a reason that CENTS doesn’t apply. Flip it on its head and try to figure out how CENTS applies to Warren Buffett. I bet you will find that it does.
 

Ninjakid

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- Barriers of Entry for his investment activities seems low, anyone could do the same..
No, not anyone could do the same. When Buffett started his first company, he had saved up the equivalent of $1.6M, after working for Benjamin Graham for two years. He basically devoted his life to being an OG at investing.

- Time could not be leveraged in the stock markets. You had to wait!
Buffett made his wealth in partnerships, not the stock market. His initial partnerships made him a millionaire. His firm acquired a textile company and became Berkshire Hathaway. Taking Berkshire Hathaway public made him a billionaire.
Did it take time? Yes. But Warren Buffett is an investor at heart. Investing is a game to him, he doesn't care as much about living lavishly.

- Scale. Unless you had a magnitude of Cash to begin with, you would not have scale.
He did have a magnitude of cash before hand which he saved by working for Graham, and other projects.
 

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- Barriers of Entry for his investment activities seems low, anyone could do the same..
Buffet is an insanely skilled investor. He's probably read more annual reports than anyone else alive. Sure, technically anyone is allowed a seat at the table, but the same is true for poker.
 

Kevin88660

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Hi, I was wondering what your opinion on Warren Buffett is?

Does Warren Buffett follow the "CENTS" framework in amassing his fortune?

Or was he at the right place, at the right time & doing the right things?

- Control lies solely on the due diligence of his investment strategies..
- Barriers of Entry for his investment activities seems low, anyone could do the same..
- Need was non-existent, companies only needed to borrow money from Buffet to generate more income.
- Time could not be leveraged in the stock markets. You had to wait!
- Scale. Unless you had a magnitude of Cash to begin with, you would not have scale.

Would appreciate if someone would guide me along!
I worked for a financial market trading firm before.

Warren buffett has accumulated enormous saving in a slow lane job.

Warren buffet then expanded his net worth through a scalable business- an investment partnership where he get paid investing other people’s money. There is so much regulation and competition now that it is impossible for a young man to replicate that.

No doubt that Warren became a centi-millionaire through his own talent and hardword. But his rise to the top few richest person in the world is largely due to luck. He invested heaving in U.S. equities with a large stake and benefited greatly from the stock market boom.

He got one billionare net worth in 1990 and after that he hardly beat S&P returns. But the magic of compound interest simply lifted him to up in the Forbes Ranking.

In the 80s many high ranking forbes lists business people are Japanese property developers. They all went broke.

Warren Buffet is a great investor. But he is also a very overrated investor.

He and his best buddy Munger like to preach “value investing” and mock all investing strategies . Charlie munger is another overrated and incredible arrogant
Old man.
 

Kevin88660

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Warren buffett also chosed a very unpopular field at that time. Finance was not sexy then. People still remember the traumau of the great depression. Stock market was viewed as a casino, not an investment.

If you tell someone in the 50s and 60s that invest in the stock market in the long run tk make a 8 percent return you will be seen as crazy.

Warren started his business at a time when it is easier to spot undervalued companies using common sense.

Today if you want to work in a reputable investment firm you need a PHD in maths/computing. So much has changed.
 

MJ DeMarco

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Wonder what @Kak thinks? ;)
 

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I don't think Warren Buffett invests the way the main stream media thinks he does. He obviously does more than "value invest".

But to take a stab at it, I think warren does meet the CENTS model.

Control: He doesn't buy just any Joe Schmo class shares, he buys controlling right shares with special privileges and options. He gets to chose how, when and where to invest the stock pile of cash his firm has.

Entry: Not everyone has tons of money to invest. Not everyone has the connection warren had back in the day. Investing like Buffett is not something you learn overnight.

Need: His investments have grown because obviously people bought, paid for or paid interest for the services or products he directly or indirectly invested in. Someones spending is another's income.

Time: His investments either pay him a dividend or appreciate in value. He doesn't have to trade his time for money. He just makes investment decisions.

Scale: Investing is something scalable in the multi-billions probably trillions.
 

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Control: He doesn't buy just any Joe Schmo class shares, he buys controlling right shares with special privileges and options. He gets to chose how, when and where to invest the stock pile of cash his firm has.

Entry: Not everyone has tons of money to invest. Not everyone has the connection warren had back in the day. Investing like Buffett is not something you learn overnight.

Need: His investments have grown because obviously people bought, paid for or paid interest for the services or products he directly or indirectly invested in. Someones spending is another's income.

Time: His investments either pay him a dividend or appreciate in value. He doesn't have to trade his time for money. He just makes investment decisions.

Scale: Investing is something scalable in the multi-billions probably trillions.
I'm inclined to agree with socialdude and will add some to his CENTS. WB usually has a significant if not out right controlling interest in companies he invests in. This gives even greater control overall AND adds to his Scale. He takes advantage of the float afforded insurance companies to put huge sums of money to work. This is a major big E. He sees the need in what he invests in and understands the companies. He spends his time studying the next investment and monitoring his current holdings. He has a lot of people working to keep the companies moving forward. He doesn't run his railroad company, he has very good people running it for him. Same with Coke.
 

Ninjakid

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Buffet is an insanely skilled investor. He's probably read more annual reports than anyone else alive. Sure, technically anyone is allowed a seat at the table, but the same is true for poker.
This cannot be stressed enough. Warren Buffett is the OG of investing. He's a Michael Jordan or Wayne Gretsky in his field. He probably loves the game of investing more than he likes being rich; he's always been incredibly frugal and lives in the same house he bought in his 20's.
You gotta be a Warren Buffett to get Warren Buffett results.
 

Kevin88660

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A much more power Cents model in investing is in the field of quantative trading. Google names like James Simons.

Immense control because quan trading is market neutral. It makes money in bull and near market. Value investors like buffet has bigger draw down than index when market is bearish.

Renaissance Technology Product : Medallion Fund

Incredible high barrier to entry. Renaissance technology do not hire none-PHD.

Need- They make insane amount of money for investors

Time- Time is not scalable here. But since they focus on short term trading they can turn a profit quickly and compound on it quickly. Because they do thousands of trades daily they are highly unlikely to lose money in any week, therefore they can afford to use a high leverage.

Scalability- Once the reputation is established their AUM grows. They also uses high leverage because they rarely has a month of negative return.
 

Kak

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Wonder what @Kak thinks? ;)

My issue isn't his investing methods. I have a lot of respect for what he has built and what he has been highly effective at for more than 50 years.

I also like his simple, frugal ways. He clearly gets his joy from the business and the journey not from the stuff.

I also enjoyed his book Snowball.

However... He uses his status as a billionaire to pontificate and enlighten us plebes about his PERSONAL socialist political beliefs... I abhor that. Basically intending to destroy the capitalist system that he already got to use.

Remember the "1 percent" is $400k a year. The 1% already pays for 39% of all tax collected by the way. Yes... 39 percent of our government revenue comes from the evil 1%.

Don't use your status as a billionaire to think you can talk for ALL of the "rich." He is worth thousands of times more than the average "1 percenter."

He is also dishonest. You know the whole "I paid a lower tax rate than my secretary" thing? His secretary is a multi-millionaire "1 percenter" on a W-2. In contrast, most of his tax burden comes from capital gains which are more taxes on already once taxed money.

Overall. He's an effective a**hole. An interesting lesson to me in what not to become.
 

ryanbleau

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Before I moved to AZ last year I started noticing something quietly happening in the little cities with dirt cheap housing. Berkshire Hathaway signs going up on little duplexes and threeplexes. Never seen it before but what they were doing is buying up the crappy houses and updating them and then selling them. I never knew they were that involved in rental properties.
 

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Before I moved to AZ last year I started noticing something quietly happening in the little cities with dirt cheap housing. Berkshire Hathaway signs going up on little duplexes and threeplexes. Never seen it before but what they were doing is buying up the crappy houses and updating them and then selling them. I never knew they were that involved in rental properties.

Berkshire owns a lot of smaller companies, one being Fox & Roach. Is that the same name you’ve been finding?

Berkshire operates these companies in many ways, usually keeping the original name or trying to use the Berkshire brand for status. It doesn’t necessarily mean he’s running an evil empire*.

You may not know that he also owns Dairy Queen and Fruit of the Loom. It doesn’t mean you’re going to start seeing them called Berkshire Blizzards or Berkshire underwear.

* not saying you’re calling it that, but just making a point.
 

Kevin88660

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My issue isn't his investing methods. I have a lot of respect for what he has built and what he has been highly effective at for more than 50 years.

I also like his simple, frugal ways. He clearly gets his joy from the business and the journey not from the stuff.

I also enjoyed his book Snowball.

However... He uses his status as a billionaire to pontificate and enlighten us plebes about his PERSONAL socialist political beliefs... I abhor that. Basically intending to destroy the capitalist system that he already got to use.

Remember the "1 percent" is $400k a year. The 1% already pays for 39% of all tax collected by the way. Yes... 39 percent of our government revenue comes from the evil 1%.

Don't use your status as a billionaire to think you can talk for ALL of the "rich." He is worth thousands of times more than the average "1 percenter."

He is also dishonest. You know the whole "I paid a lower tax rate than my secretary" thing? His secretary is a multi-millionaire "1 percenter" on a W-2. In contrast, most of his
My issue isn't his investing methods. I have a lot of respect for what he has built and what he has been highly effective at for more than 50 years.

I also like his simple, frugal ways. He clearly gets his joy from the business and the journey not from the stuff.

I also enjoyed his book Snowball.

However... He uses his status as a billionaire to pontificate and enlighten us plebes about his PERSONAL socialist political beliefs... I abhor that. Basically intending to destroy the capitalist system that he already got to use.

Remember the "1 percent" is $400k a year. The 1% already pays for 39% of all tax collected by the way. Yes... 39 percent of our government revenue comes from the evil 1%.

Don't use your status as a billionaire to think you can talk for ALL of the "rich." He is worth thousands of times more than the average "1 percenter."

He is also dishonest. You know the whole "I paid a lower tax rate than my secretary" thing? His secretary is a multi-millionaire "1 percenter" on a W-2. In contrast, most of his tax burden comes from capital gains which are more taxes on already once taxed money.

Overall. He's an effective a**hole. An interesting lesson to me in what not to become.
Warren’s dad is a respectable libertarian. But Warren has degenerated into a pimp for the washington and wall street elite circle.

I remembered he appeared in TV to bash gold as an investment. Totally political.
 

minivanman

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Berkshire owns a lot of smaller companies, one being Fox & Roach. Is that the same name you’ve been finding?

Berkshire operates these companies in many ways, usually keeping the original name or trying to use the Berkshire brand for status. It doesn’t necessarily mean he’s running an evil empire*.

You may not know that he also owns Dairy Queen and Fruit of the Loom. It doesn’t mean you’re going to start seeing them called Berkshire Blizzards or Berkshire underwear.

* not saying you’re calling it that, but just making a point.

No, I think it is called Berkshire Hathaway Home Services. The signs I think just say Berkshire Hathaway.
 

socaldude

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I think its also helpful to remember and also my opinion that there are a lot of things about his investing style and strategy that I think he prefer be kept secret.

Due to his fame and success , i dont think he wants others to know his next move. Cause after all he is a capitalist and he is competing.

I think thats one of the reasons he always brushes off interview questions about investing with “just go all in with the sp500 index fund”. Yet he has never gone all in an index fund. or reply with a truism like “just buy good cheap companies at a discount”.
 
D

Deleted50669

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My issue isn't his investing methods. I have a lot of respect for what he has built and what he has been highly effective at for more than 50 years.

I also like his simple, frugal ways. He clearly gets his joy from the business and the journey not from the stuff.

I also enjoyed his book Snowball.

However... He uses his status as a billionaire to pontificate and enlighten us plebes about his PERSONAL socialist political beliefs... I abhor that. Basically intending to destroy the capitalist system that he already got to use.

Remember the "1 percent" is $400k a year. The 1% already pays for 39% of all tax collected by the way. Yes... 39 percent of our government revenue comes from the evil 1%.

Don't use your status as a billionaire to think you can talk for ALL of the "rich." He is worth thousands of times more than the average "1 percenter."

He is also dishonest. You know the whole "I paid a lower tax rate than my secretary" thing? His secretary is a multi-millionaire "1 percenter" on a W-2. In contrast, most of his tax burden comes from capital gains which are more taxes on already once taxed money.

Overall. He's an effective a**hole. An interesting lesson to me in what not to become.
And that goes to show how easy it is to hide reality from most people with money. I had no idea about most of that.
 

Soder

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Warren multiplied his wealth with his partnership including his money and friends/ family money. He set a minimum annual return of 6% and if he did not get it he did not charge anything, but above this limit he got 1/4 of the profits (25%). In the years that this partnership lasted, it made net returns close to 30%, so imagine his personal earnings.

In my opinion he meets CENTS:
- Control: Although it does not control the stock market, it controls its investment system and its fees.
- Entry: Doing what he does requires a brilliant mind, a gigantic knowledge and hours and hours of reading.
- Need: There was a need to manage the savings. Few people have made more millionaires than Warren.
- Time: He reads all day because he is passionate but surely after creating his portfolio he could manage with less reading hours.
- Scale: Increase in managed capital increases his income, scalability is total.
 

No Excuses

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Before I moved to AZ last year I started noticing something quietly happening in the little cities with dirt cheap housing. Berkshire Hathaway signs going up on little duplexes and threeplexes. Never seen it before but what they were doing is buying up the crappy houses and updating them and then selling them. I never knew they were that involved in rental properties.

Yes, their "Home Services" is quite large. It's a real estate brokerage that has been franchised out across the nation.

Warren Buffett's Berkshire Hathaway Becomes Second Largest U.S. Real Estate Broker
 

WJK

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Hi, I was wondering what your opinion on Warren Buffett is?

Does Warren Buffett follow the "CENTS" framework in amassing his fortune?

Or was he at the right place, at the right time & doing the right things?

- Control lies solely on the due diligence of his investment strategies..
- Barriers of Entry for his investment activities seems low, anyone could do the same..
- Need was non-existent, companies only needed to borrow money from Buffet to generate more income.
- Time could not be leveraged in the stock markets. You had to wait!
- Scale. Unless you had a magnitude of Cash to begin with, you would not have scale.

Would appreciate if someone would guide me along!
I like the fact that he writes a yearly letter telling about his successes and failures during that period -- offering no stupid excuses. He owns his failures just like his successes. I love the fact that he spends several hours a day reading and studying. That's where he gets his information and a lot of ideas. I like the fact that he makes good substantial investments for the long haul -- not flash-in-the-pan investments that fizzle and fail. Yes, he has a big target on his back because of his success. And, he owns that too. No, everyone can't do his job because he out thinks and does more research than everyone around him. His race style is slow and steady -- totally deliberate. Yes, I admire his success. He's an excellent role model for all of us.
 
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MJ DeMarco

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Kak

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MJ DeMarco

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Yes. An elitist a**hole hypocrite. If you watch for it, you’ll find something like this several times a year.

But he's "folksy" and drives and older model Lincoln!
 

Tommo

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A much more power Cents model in investing is in the field of quantative trading. Google names like James Simons.

Immense control because quan trading is market neutral. It makes money in bull and near market. Value investors like buffet has bigger draw down than index when market is bearish.

Renaissance Technology Product : Medallion Fund

Incredible high barrier to entry. Renaissance technology do not hire none-PHD.

Need- They make insane amount of money for investors

Time- Time is not scalable here. But since they focus on short term trading they can turn a profit quickly and compound on it quickly. Because they do thousands of trades daily they are highly unlikely to lose money in any week, therefore they can afford to use a high leverage.

Scalability- Once the reputation is established their AUM grows. They also uses high leverage because they rarely has a month of negative return.
So the more they trade the more likely they win. Sounds absurd to me. Are you promoting this?
Sounds a bit sus to me and of no use on here but feel free to correct me buddy.
 

Tommo

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One more time from me and @mjdemarco go read Pragmatic Capitalism for the scoop/skinny on Mister Buffet.
It's only a few bucks on Kindle. I propose this as the next book club option.
 

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