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It’s Buffett Time! July 18, 2008

Posted by shaferfinancial in Uncategorized.
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Warren Buffett has shown an uncanny ability to find profitable companies, with good management, and increasing ability to create cash flow.  But perhaps his best quality is the patience to wait until these companies are undervalued.   Currently, he has plenty of cash to purchase companies as he finds them.  With the current situation, where many companies prices have been beaten down, I expect him to do some buying.  If history tells us one thing, it is he will find some gems that will create tremendous value going forward.  Its interesting how well he does when everyone else is holding on, or getting out.

I also found it interesting that Wells Fargo, a bank he recently made some big buys in, made a huge leap in value the other day.   Maybe he does know something  we don’t.  Or more likely he has a better handle on the fundamentals then the average investor.  I think he has proven investing for the long term is really easier, than trying to speculate on short term movements.  So the question is why don’t more people invest like Buffett, instead of speculate or accept marginal returns?

We won’t see the results of Buffett’s current handiwork until the next decade for Berkshire Hathaway.  But, I am sure the wonderful returns will continue.  Here is a section from “Rules of the Road,” written by Mr. Buffett about his investing philosophy. 

“The challenge for us is to generate ideas as rapidly as we generate cash. In this respect, a depressed stock market is likely to present us with significant advantages. For one thing, it tends to reduce the prices at which entire companies become available for purchase. Second, a depressed market makes it easier for our insurance companies to buy small pieces of wonderful businesses — including additional pieces of businesses we already own — at attractive prices. And third, some of those same wonderful businesses, such as Coca-Cola, are consistent buyers of their own shares, which means that they, and we, gain from the cheaper prices at which they can buy.”

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