Here is the recent news where he made a wrong bet and may even get Nothing back from his $2 Billion investment! - http://business.financialpost.com/2012/02/27/even-buffett-is-hurting-from-low-natural-gas-prices/?__lsa=c5983af1
Read about that article and the lesson you can learn from this is to understand the underlying business fundamentals of your investments.
What Buffett has done correctly in his most profitable investments e.g. Coca-cola, P&G, Washington Post etc.. is that these are consumer durables products... easy to understand, you just need to wait for the time to purchase them at Cheap Prices [undervalued]!
What Buffett has done wrong is that for his two mistakes:
1) buying ConocoPhillips stock near the peak of an energy boom
Lesson learnt: you need to know how Energy prices move and how they affect the exploration or pricing of the oil -> basic product the company is selling!
2) bought about US$2-billion in bonds of power company Energy Future Holdings Corp., said the investment is at risk of losing all its value after natural gas prices fell.
Lesson learnt: you need to know how Natural prices move and how they affect the exploration or pricing of the natural gas -> basic product the company is selling!
Thus, a wise thing to do is still to invest in what you are familiar with. If you look at hindsight, you will always say "Aiya, why i didn't buy this stock and now it has risen by so much." Instead, buy something safe & profit with ease, all with a simple understanding of what you are familiar/knowledgeable about :)
Nevertheless, Warren Buffett is still my idol as he built his entire BILLIONAIRE [$_$] wealth through frugality and investing it for compounding returns. Everyone make mistakes through the path of investing and so does people at the top. Most importantly, learn from your mistakes and improve every-time; sooner or later, you will reach the top :)
No comments:
Post a Comment