111
votes
Accepted
Why does Warren Buffett consider real estate as productive asset?
Real estate can be rented out (or otherwise "used"), so it "produces" income. He's not solely investing in real estate in the hopes the value increases, he's saying it's a better investment because ...
- 35.7k
69
votes
Accepted
What does "gold reserves" on a gold mining company's balance sheet mean?
For gold mining companies, the amount of gold that the company has access to but has not yet been mined is accounted for in "reserves". The company can claim a percentage of those reserves as assets, ...
- 129k
46
votes
Why does Warren Buffett say his fund performance, relatively, is likely to be better in a bear market than in a bull market?
Buffett is a value investor. His goal is to buy good companies when the market is overly worried and prices them below intrinsic value. When the market is highly priced it is much more difficult for ...
- 3,997
41
votes
Accepted
Why do we ONLY care about the future of companies like Netflix? It was very profitable in the past
Imagine three companies you might buy shares in. Remember - shares represent a % of ownership of the company, and the net profits it will produce in the future.
Company A is just a closet full of cash ...
- 41.5k
29
votes
Why do we ONLY care about the future of companies like Netflix? It was very profitable in the past
If you're buying in today, you don't gain anything from past profits. You only stand to gain from future profits. Therefore past performance should have no effect on the price you're willing to buy ...
- 961
20
votes
Why does Warren Buffett say his fund performance, relatively, is likely to be better in a bear market than in a bull market?
From the letter you link:
Our performance, relatively, is likely to be better in a bear market than in a bull market so that
deductions made from the above results should be tempered by the fact ...
- 129k
14
votes
Why does Warren Buffett say his fund performance, relatively, is likely to be better in a bear market than in a bull market?
Warren Buffet and Berkshire Hathaway took a 50% loss in each of the last two bear markets. His stock even lost 10% in 2015 when the S&P lost 8%.
He doesn't have a track record to support the ...
- 32.7k
14
votes
Accepted
As a young kid should I spend my time learning value investing or should I just chuck all my money into IVW/VOO
"Value investing" is essentially looking for stocks that are cheaper than they "should be" by some measure. That ETF tracks an index of large cap value stocks,
which may skew the ...
- 129k
13
votes
Why is there a distinction between growth and value investing, when growth is part of value?
The term "value" has multiple meanings in the stock markets. If we are talking about growth vs value we are talking about either paying for future growth defined by high price/earnings or ...
- 7,422
11
votes
Why does Warren Buffett consider real estate as productive asset?
Gold is a commodity. If I have some gold, my gold is exactly the same as someone else’s gold. I have absolutely no control over the value, and when I go to sell it, my price is completely dependent on ...
- 115k
11
votes
Why would any owner sell their company to Warren Buffett / Berkshire Hathaway?
Let's say you are offered ten million dollars.
You have the choice between taking ten million dollars, and spend the rest of your life on some lovely beach.
Or you can keep working hard until your ...
- 22.3k
11
votes
Why do value investors ignore technical analysis?
Why do value investors ignore technical analysis?
Technical analysis tries to predict future behavior from past behavior purely by looking at prices (and possibly other stats like volume traded). ...
- 129k
10
votes
Accepted
Take out a loan to invest
This is certainly possible. There are lots of strategies that involve taking out loans to invest. However, they are all high risk strategies.
There's a school district for a major US city that was ...
- 10.3k
9
votes
Why would any owner sell their company to Warren Buffett / Berkshire Hathaway?
You are assuming too many things.
Quite a few well run companies due to various factors are in liquidity crisis. If not resolved, they would go bankrupt. So they approach Warren and quite a few ...
- 57k
8
votes
Can Warren Buffett's method be distilled into basic steps?
Warren Buffett isn't using any special sauce. He looks for value and ignores hype, greed, and fear. He buys what he knows and looks for companies that generate cash and/or are available for a discount ...
- 23.9k
7
votes
Do Fundamentals Matter Anymore in Stock Markets?
All you have to do is ask Warren Buffet that question and you'll have your answer! (grin) He is the very definition of someone who relies on the fundamentals as a major part of his investment ...
- 10.1k
7
votes
High frequency trading
HFT trade under a maker-taker fee structure. They receive payment for having their posting quotations hit (or taken) by the market place. They pay access fees when they hit (or take) other lit ...
- 111
7
votes
What does "gold reserves" on a gold mining company's balance sheet mean?
Gold reserves refers to gold in the ground that a mining company has an option to retrieve.
68 million ounces is a lot! And yes, a mining company's value is partially dependent on the size of their ...
- 357
7
votes
How did Theranos have any value at all?
Something to add, as some have already briefly mentioned, Theranos was able to perform blood tests with some of their stated features (though not reliably enough). The biggest issue was their ...
- 568
7
votes
Need help understanding a quote from The Intelligent Investor
When people use non-standard terms to refer to pretty standard concepts, they are likely looking to appear as the sole authority on the topic, rather than one of many sources you could be learning ...
- 41.5k
7
votes
Accepted
Is "don't catch the falling knife" a good strategy for an everyday investor?
Interesting idea. Don't catch the falling knife strategy sounds like you're buying while the stocks are appreciating (e.g. they are trending up) - which seems like the opposite to the Warren Buffett ...
7
votes
Accepted
What is meant by "price" and "earnings" here?
Normally, to calculate the price to earnings ratio (PE ratio), you'd divide the share price by the earnings per share. There are different ways to do this but the most common is to take the trailing ...
- 25.7k
6
votes
When and where did Warren Buffett say: “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1”?
Here's a video, from Adam Smith’s Money World: How to Pick Stocks & Get Rich, PBS (1985): https://www.youtube.com/watch?v=vCpT-UmVf3g&ab_channel=SerenityStocks
The first rule of an investment ...
- 1,688
6
votes
Why does Warren Buffett consider real estate as productive asset?
Isn't real estate's price increase only driven by other people's demand
Yes, that's what makes it productive. Productive assets, in general, have prices that are largely based on their ability to ...
- 9,765
6
votes
How did Theranos have any value at all?
What I took away from reading Bad Blood was that if the technology ended up working, the value potential was HUGE. For the most part, investors and joint ventures who got burned were suffering from ...
- 79
6
votes
Why do we ONLY care about the future of companies like Netflix? It was very profitable in the past
If a company no longer makes any money then it could close down and return the money to shareholders but if it doesn't and keeps running then it will eventually run out of money as it pays employees ...
- 5,095
5
votes
Should one only pursue a growth investing approach for Roth IRAs
If you are inside of a ROTH IRA you are not getting taxed on any gain. Dividends, distributions, interest payment, or capital gains are never taxed. This, of course, assumes you wait until age 59.5 ...
- 75.7k
5
votes
Why is it a bad idea to combine both active and passive investing strategies?
Common advice given is that if you decide to become an active or passive investor, you should stick with the choice you've made.
No you shouldn't. It is perfectly fine to supplement an active ...
- 6,723
5
votes
Why is it a bad idea to combine both active and passive investing strategies?
Common advice given is that if you decide to become an active or passive investor, you should stick with the choice you've made. That you're less likely to be successful if you try to pursue both ...
- 75.7k
Only top scored, non community-wiki answers of a minimum length are eligible