Sunday, December 10, 2006

Warren Buffett's Shareholder Letters

If you've never read Warren Buffett's shareholder letters, I suggest you head over to this page ( and check them out.

Buffett is the 2nd richest man in the world (behind Bill Gates) and made his fortune primarily from investing in stocks. I first encountered him while doing an independent study in college and his investment philosophy has formed the basis for my own.

His basic philosophy is that businesses have an intrinsic value that an investor can compute. If the business fundamentals are right, the market is offering to sell you an ownership interest in the business (stock) for less than the intrinsic value and a margin of safety, and you have done your research, you should invest in the company.

I will cover some of Buffett's principles in some future posts, but for now I suggest you head over to the site above and poke around. Some people have said that a thorough reading and study of Buffett's letters is the equivalent of an MBA in investments. I wouldn't go that far, but I think it would definitely make for a fantastic self-study course.

If you have the time and the finance savvy, then you can take your chances picking stocks. If you work a day job, you will do much better putting your retirement fund into mutual funds... in particular, low fee index funds. That's where I keep the bulk of my retirement savings.

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