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Monday, April 20, 2009

Warren Buffet Strategy I

By Mara Hernandez-Capili

Warren Buffet is Americas most famous investor. Any investor, especially those who are looking to be experts into trading stocks are looking up to him as a role model. He was idolized by many because of his investing strategies that people tend to emulate. He was the godfather of investing. He was also famous for his frugal living despite the fact that his company is worth to $69 billion dollars.

This article is written to provide you with some insights on the famous investors strategy. The methods are actually simple questions that you need to ask yourself before plunging into a stock trading. First question is: Is this business simple and understandable? As a responsible investor you should exercise due diligence over the company you are planning to invest on. You should be able to understand the products/ services that company offers so you could be in the position to predict and see problems or growth in case they arise.

Second is to ask Does the company have a consistent operations history? A wise investor should research on the history of the company since the time it was conceived if it thrives on consistent operations in order to foresee future trends. Third question is to ask Does the company have favorable long term prospects? this implies if the company has very good long term plans for growth as the future plans contains the true value of investment.

Fourth is to ask the question Is the management rational? This delves deeper into the values of the company, its mission, vision, etc. It is also advisable to look on some operations procedure especially that which relates to money like where do the company allocate excess profits, etc.

The fifth question is this: Is the company candid with its shareholders? It is important to have a good working relationship and open communication for your partners. - 23211

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