Dalal & Broacha Stock Broking Private Limited Investment Fundamentals WARREN BUFFETS’ CLASS The man needs no introduction. He is a living legend from Omaha .He is the only billionaire who has made it to the Forbes list of the 400 richest Americans solely by investing in the stock market. Warren began his path to riches in 1957 with an initial investment of $105,000 and today the investment is worth more than $32000000000 ($32 bn.) Folly and Discipline are the key elements of Warren Buffets’ Investment Philosophy – other people’s follies and Warren’s discipline. Over the last 32 years of investmenting, his portfolio has produced an average annual compounding rate of return of 23.8%. Even in today’s dynamic times, his fundamentals stand like a rock. What could be more adoring than to know that in this “tech euphoria” he never invested a penny in tech shares. He once said “Bill Gates is one of the worlds’ best wealth creators but I will not invest in his company because I do not understand the business.” And in subsequent year of tech boom when the whole globe lost trillions of money he came out with a whooping 114% profits for his investors. Such is the commitment of this man that even today at the age of 75 years he keeps looking for good investment opportunities. We, in Dear Investor, will make an effort to get more familiar and understand his philosophy of investing with a “ Business Perspective”. Investing with a “Business Perspective”. “ Investment is most intelligent when it is most business like”. This is a key pillar to his structure of investments. The whole idea is to begin thinking about the economics of ownership of those businesses that common stock represent. A common stock is a partial ownership interest in a business enterprise. Yes, have you ever thought of it seriously? When you buy a certain stock, you become the owner of the company obviously, only to the extent of percentage that the stock represents. Hence you should always do some serious thinking before buying any stock (or business, as you can say). One should be very much convinced with the business idea, their product, their management and their vision. However, there are many more macro & micro factors that Mr. Buffet takes into consideration. We will discuss each one of them in depth in the coming issues.