How Warren Buffett Invests

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Warren Buffett is the chairman of one of the most successful stocks in history, Berkshire Hathaway Inc. (NYSE BKR.A BKR.B).  Warren believes in the investment philosophy of value investing. In fact, Buffett is a disciple of the father of value investing, Benjamin Graham. Warren doesn't completely follow Benjamin's value investing today, but it is the basis of his investing style.  Warren's folksy attitude kind-of reminds me of someone's grandfather.  A harmless old fuddy-duddy, but don't let his appearance fool you. Warren is a number crunching machine, and what makes him so great as an investor is finding value where others see none.

Warren Buffett's Office

Warren Buffett's Desk

This is what I find so fascinating about Warren. What would you expect on his desk? After all, he's one of the richest people in the world and made most of his money by investing. Take a close look at that picture. It looks pretty nondescript, and could be anyone's desk. Notice there's no Bloomberg terminal. There's also no desktop computer. It's been reported he doesn't own a computer or a cell phone.  You do see a traditional phone on his desk, so he can call his broker to make trades. When researching, it has been reported Buffett does use Value Line reports (see Value Line Review), reads company reports, and uses other not so high tech methods. So for those who think you need a slew of computers close to the exchanges to beat the S&P 500, you are mistaken.  I've included some video from CNBC when Becky Quick interviewed him in his office in 2007.

Videos from CNBC have been removed because they are no longer active

Recommended Reading

There have been a number of books about him, and about his style of investing.  Here are some I recommend:

Larry Ludwig

Larry Ludwig was the founder and editor in chief of Investor Junkie. He graduated from Clemson University with a bachelor of science in computers and a minor in business. Back in the ’90s, I helped create some of the first financial websites for firms like Chase, T. Rowe Price, and ING Bank, and later went on to work for Nomura Securities. He’s had a passion for investing since he was 20 years old and has owned multiple businesses for over 20 years. He currently resides in Long Island, New York, with his wife and three children.

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  1. Buffett is the king of investing, I’m surprised he’s never written an investing book like other great investors have done, such as George Soros. However, his letters to investors(Berkshire Hathaway) are always informational and good sources.

  2. Buffett understands information and how it affects investments and in my opinion it is the key to his success and why he recommends that individuals as well as institutions are better off investing in low cost indexed funds.
    Buffets buys companies and puts people on the board and in upper management to ensure that the companies are managed in the way he and Munger believe they should be managed. For those who can do that more power to them.
    Another point – Buffett started with a black box model – he said give me your money and trust me, very similar to Madoff. Madoff turned out to be a psycho crook and Buffett the most honest person in the financial services world. People who went with Buffett are extremely wealthy and those who went with Madoff are broke.
    IMHO the best book written about Buffett is “The Snowball Warren Buffett and the Business of Life” by Schroeder.

  3. I just finished listening to the audiobook about Warren Buffett called “The Snowball”. The book has more details, but this is pretty good too. In it it states that he only used a computer to play online bridge.

    I can’t imagine not having a computer to invest. amazing!

    I think he’s so big at this point that he creates demand for stock just by investing in them.

    Great article and videos!

  4. Warren Buffett is an amazing individual. He proves that high-tech is not always the best way in business. He studies numbers, but he also looks at the core of the business. If he doesn’t trust those that are in charge, he won’t touch that company.

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