Those who have heard or read about the huge investment success of Warren Buffett or Benjamin Graham, might have thought about the magic they have done for such or their secrets behind. Yes, there is a secret that I have identified and tested years back to get success with 10 times of profit on capital I have invested. Today, I though I will share this secret with you. I am not a perfect writer. Even though, I feel I have succeeded passing my ideas to our readers through articles in this blog.
We are starting with two most common thoughts or questions. "What is the secret of Buffett or Graham for such terrific investing success?" and "Did they know any magic?"
There is a secret behind their huge success, that not required more brilliancy to understand and practice. Here are those secrets:
1. Best Business
Best business doesn't mean any well known company that have more than fifty thousand employees and branches all over the world. But, a best company, whether it is micro, small, medium or large, can be identified by following corrector:
- Any company running by capable management who respect investors money.
- A company with a product that public not able to avoid or not able to survive without it.
- It should register consistent sales growth, net profit, per share earning and less cost to sales. I will post another article soon on the major 'look' areas of a company.
All from above, right investor should know what businesses are commodity businesses to be avoided and know the types businesses to be avoided by value investor.
2. Best Time to Invest
Best time means nothing but the time to buy the stocks. It has ultimate importance than what we really think. Initial rate of return can be calculated and adjusted to decide when to buy and in what price. Remember, some time the best buying time may reach when the index is top. It means, to workout properly to identify a company when it come to right price. Confirm you have read and understood the 'Margin of Safety Formula" from great investor Benjamin Graham.
Another point, when an index down to maximum doesn't mean it is a great buying opportunity. Yes, prices of most shares will come down but, one should expect the prices of some companies may still be at the top.
It is a right idea to read the previous article on investing books to know more about selection and valuation process.
Should have knowledge to avoid some reasons that generally force people to invest.
3. Best Investing Amount
Best amount mean the capital one planning to invest. One of Warren's success secret is his investment size. When he find a best company and best time to buy, he will invest considerable amount to it. Investing large to few best companies always better than investing few amount each with number of companies.
4. Best Investing Term or Period
Best term mean the investing focus or goals. One of next secret of Warren is his long investing period. Once he said, buying a company means forever to hold. Long term focus directly associated to the investing success.
As I said previously, the 'magic' of Warren Buffett and Benjamin Graham is nothing but, they have used 'common sense' in the right proportion and time.
How do you feel the best ideas passing by this article?
