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Warren Buffett Explains Long Term Investing

Buffett warns against overvaluing shot-term profits as they tend to be predictable. He advises looking into businesses where you know predictability. For example, Wrigley’s Gum has been around for years. The company’s predictability comes clear: no matter what happens, people will always chew gum. Any given person’s personal preference to chew gum is unaffected by external circumstances. Therefore, there are no sharp spikes in returns, and they profitability remains consistent. As Buffett puts it, “Predictable products = predictable profits.”

Born August 30, 1930 to a former stockbroker, Warren has demonstrated a lifetime achievement of incredible success as an investor and a philanthropist. As a child, Warren displayed early entrepreneurism by buying and reselling Coca Cola bottles for a higher price. At age eleven he bought his first shares in the stock market and learned his first valuable lesson on patience when he sold his share too soon.

If you look at a company’s earnings and consistency, you can reasonably predict how they will be in the future. Mary Buffett describes Warren’s simple mathematical equation in which he predicts profits through present and future values. Money does not have to be spent on research and development because the data is already there. “Think beer, think gum, think Hershey’s,” Mary continues, “As long as people use these predictable products, there will be predictable profits.” Warren has shown a tendency to choose companies that he knows well and avoids initial public offerings. An initial public offering or “IPO” can be a risky investment considering the difficulty in predicting how a stock or share will do on its initial day of trading.

A lot can be learned from an American investor, industrialist, and philanthropist who even during a recession remains the third wealthiest person in the world as of 2010. Warren Buffett, often called the “legendary investor Warren Buffett,” holds onto value investing and finds “outstanding companies at a sensible price.” Author Mary Buffett discusses his strategy and emphasis on investing for the long term.

If you look at a company’s earnings and consistency, you can reasonably predict how they will be in the future. Mary Buffett describes Warren’s simple mathematical equation in which he predicts profits through present and future values. Money does not have to be spent on research and development because the data is already there. “Think beer, think gum, think Hershey’s,” Mary continues, “As long as people use these predictable products, there will be predictable profits.” Warren has shown a tendency to choose companies that he knows well and avoids initial public offerings. An initial public offering or “IPO” can be a risky investment considering the difficulty in predicting how a stock or share will do on its initial day of trading.

Throughout his years, Warren demonstrated legendary success in the stock market and also became the largest shareholder and CEO of Berkshire Hathaway. He continues to preach his philosophy of “value investing,” which he describes as buying companies that perform well and holding on to them long term.