13. FOCUSED on SMALL Things, not BIG Things
Buffet said that Big things outside business is not important, but small things that have chain reaction with business is the most important. To invest like Buffet, you have to ignore the events of the macro and focus on companies that its stocks you select. Events of macro like unemployment, economic growth, inflation, and political events appear very important for investors. You have to closed your ear from outsider, do not hear any rumors or about economic condition.
14. Watch carefully The Manegement
Who control The Company? Six factor to watch are:
1. Whether the management team is always working for the shareholders? Or enrich Their self with the cost of the company. For example, with the excess of salary, bonus or other luxurious facilities.
2. Whether management sparingly, or as extravagant excess burden?
3. Whether management is dedicated to increase shareholder value?
4. Are management stock purchase back (buy back) for the interests of shareholders, also avoid issuing new shares which will reduce the share of ownership of the shareholders
5. Does the company report does not contain fair and cheating? Or financial engineering.
6. Is management accounting system using a seemingly honest and not hide the correct information?
Investors need to suspect that the company projected SWEET long-term, sweet-like, projection of growth or profit projections.
15. THE KING NEVER WEARS SUIT IN STOCK MARKET
Do not hear any analysis from internet or website. Not technical analysis or Fundamental analysis. Do not used Robot trading or something else. The King never wears suit in stock market like volume, graph, technical analysis or fundamental analysis. JUST FOCUSED ON THE VALUE OF BUSINESS!!!
16. Think THE INDEPENDENT
Independent thinking is one of the biggest strengths that Buffett had. He said that "You are not right or wrong because people agree or not with you. You are right because the facts and reasons that you have is correct. "
This examplizeing in a few years ago, Internet stocks and high tech fly like meteoric, it defeated The fortune 500 who have long standing in stock market. Everyone buy that stocks but Buffet do not buy that. Investors that buy Hi-Tech and Internet stocks enjoy outstanding profit, and they said that Buffet is STUPID, because He did not buy any sheet like that kinds of company. He did not understand the way the Internet company's business. Therefore He stay away from it.
This was in the end when the Nasdaq index to fall 75% due to fell like high-tech stocks, and hundreds of billion Dollar was evaporate. Lessons that can be drawn here is Buffett on facts and reason in making DECISION investment. So do not make DECISION as it is popular or because of fear of the opposite flow.
Continue to 5th edition ... ....
Read More....