There cannot be any stock market discussion complete with out the mention of name Warren Edward Buffett a Must Read  if you are very serious about investing in stock markets and want to be successfull at it, this article has been presented exclusively for our readers to enlighten them on successfull investment philosophies, with information gathered from very reliable sources.

American investor, businessman and philanthropist, and worlds second wealthiest man Waren Buffett has amassed an enormous fortune from astute investments, particularly through the company Berkshire Hathaway, of which he is the largest shareholder and CEO, with an estimated wealth of US$46 billion.

Despite his big wealth, Buffett is famous for his unpretentious and frugal lifestyle. He still lives in a house in central Dundee neighborhood of Omaha, Nebraska that he bought in 1958 for $31,500
Buffett was born in Omaha, Nebraska to Howard Buffett, a stock broker and Leila Buffett. He began working at his father's brokerage at the age of 11, and that same year made his first stock purchase, buying Cities Services shares for $37 each. He sold his shares when the price reached $40, only to see their price rocket to $200 a few years later. This taught him the importance holding investments in good companies for the long term.

Buffett attended the Wharton School at the University of Pennsylvania for three years, and then transferred to the University of Nebraska. He went to work at his father's brokerage as a salesman.

Buffett established Buffett Associates, Ltd., his first investment partnership, in 1956. It was financed by $100 from Buffett, the general partner, and $105,000 from seven limited partners consisting of Buffet’s family and friends.
He ran the partnerships out of his bedroom, strictly adhering to the investment principles Buffett employed a three-pronged approach:

1. Generals:Undervalued securities that possess margin of safety and meet expected return-to-risk characteristics

2. Arbitrages:Company events that are not related to broader market changes, such as mergers and acquisitions, liquidation, etc.

3. Controls: Build sizeable holdings, ally with other shareholders or employ proxies to effect changes in companies

Buffett's investment approach was that he began to focus on high-quality businesses with competitive advantages. He described such advantages as a "moat" that kept rivals at a safe distance.

He stayed away from commodity businesses, which sell undifferentiated products and face direct competition an example of this approach is his investment in Coca-Cola, because consumers are willing to pay more for a Coke than for a generic beverage with a similar taste Investments in such  businesses has become a hallmark of Berkshire Hathaway, particularly when buying whole companies rather than public stocks.

As a result, it now owns a large number of businesses which are dominant players in their respective industries, specialize in various niche markets, or possess other unique characteristics to separate them from their competitors.

Buffett's philosophy in buying into companies that were cheap compared to their intrinsic value. He was of the belief that as long as the market undervalued a company relative to its intrinsic value he was making a solid investment. He reasoned that the market will eventually realize it has undervalued the company and will correct its course regardless of what type of business the company was in. In addition he believed that the business has to have solid economics behind it.

According to Buffet the following are some questions to determine what business to buy, 

• Is the company in an industry of good economics, i.e., not an industry competing on price points.
• Does the company have a consumer monopoly or brand name that commands loyalty?
• Can any company with an abundance of resources compete successfully with the company? 
•  Are the Owner Earnings on an upward trend with good and consistent margins?
• Is the debt-to-equity ratio low or is the earnings-to-debt ratio high, i.e. can the company repay debt even in years when earnings are lower than average?
•  Does the company have high and consistent Returns on Invested Capital (his version differs from the popular definition)? 
•  Does the company retain earnings for growth?
• The business should not have high maintenance cost of operations, low capital expenditure or investment cash outflow. This is not the same as investing to expand capacity. 
•  Does the company reinvest earnings in good business opportunities?
•   Does management have a good track record of profiting from these investments? 
•  Is the company free to adjust prices for inflation?
  Buffett's next concern was when to buy. He does not hurry to invest in value. He will wait for market corrections or downturns to buy solid businesses at reasonable prices, since stock-market downturns present buying opportunities.
• Buffett's is known for being conservative when speculation is rampant in the market and being aggressive when others fear for their capital. This contrarian strategy is what led Buffett's company through the Internet boom and bust without significant damage, where many companies’ stock prices crashed or vanished.
  
• Then he asks at what price is the business a bargain, and his answer typically is when it provides a higher rate of compounded return relative to other available investment opportunities.

Warren Buffett's letters to shareholders are a valuable source in understanding his investment style and outlook.
Buffett has repeatedly criticized the financial industry for what he considers to be a proliferation of advisors who add no value but are compensated based on the volume of business transactions which they facilitate. He has pointed to the growing volume of stock trades as evidence that an ever-greater proportion of investors' gains are going to brokers and other middle-men.

Buffett emphasized the non-productive aspect of gold in 1998 at Harvard: He famous on Gold as investment in a form of wealth is "It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head”

Buffett believes that the U.S. dollar will lose value in the long run. He views the United States' expanding trade deficit as an alarming trend that will devalue the U.S. dollar and U.S. assets. As a result it is putting a larger portion of ownership of U.S. assets in the hands of foreigners
Buffett is quite  bearish on the dollar, and says he is looking to make acquisitions of companies which derive a substantial portion of their revenues from outside the United States.

Buffett's speeches are known for mixing serious business discussions with humor. Each year, Buffett presides over Berkshire Hathaway's annual shareholders' meeting in the Qwest Center in Omaha, Nebraska, an event drawing over 20,000 visitors from both United States and abroad, giving it the nickname "Woodstock of Capitalism". Some have bought one or a few shares in order to ask Buffett a question at the meeting.
Thanks for the patience to read this article and happy investing.
 

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