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  • When you think about investing, the first thing that comes into your mind is this complicated

  • world of stock market where no one seems to clearly understand whats going on because

  • every time when things seem to go in the right direction, we end up facing a financial crisis.

  • But Unlike everyone else, one man seems to know a secret formula when it comes to investing.

  • Over his career, he continuously made successful investments and he is considered by many as

  • the greatest investor of all time.

  • But the question that interests me in the this video is, how warren buffet invests?

  • Why does he prefers one company over the other?

  • Which companies did he has invest in and why?

  • These are the questions we are going to answer!

  • If you take look at all the companies that warren buffet has invested, you will find

  • that they are connected one way or another even though they are in completely different

  • industries.

  • Since warren buffet is a long term investor, he looks for businesses that are simple and

  • direct so the he can actually predict the future of the bossiness.

  • This is the product, these are the customers and this is why they are going to buy it and

  • 10 years from now, they will keep buying it, thats the kind of business that warren buffet

  • loves.

  • The second trait is will the customer buy the product again and why?

  • And this is extremely important because you dont want to sell your product once, you want

  • your client to come back every day or every week and buy the product again.

  • And the 3rd component is the brand.

  • Because people will buy from the company that feel connected to and familiar.

  • Warren Buffet is one of the major investors in Coca Cola.

  • In fact, he started investing in Coca Cola back in 1988, and his investments since then

  • has grown by over 16 times.

  • The business model of Coca Cola is absolutely simple.

  • Their potential customers are almost anyone who is thirsty.

  • And every time they would get thirty, they would want to drink something, which means

  • they will keep coming back.

  • The Coca Cola brand name is so powerful that out of 20 or 30 soft drink options that you

  • find in the store, most people would probably pick Coca Cola without even thinking.

  • 1.8 billion cans are sold every single day.

  • If the company will earn a single penny out of every can, thats 18 million dollars a day,

  • or 6 570M a year.

  • But with such a powerful brand, they can charge more than a penny for every can.`

  • Lets take a look at another example.

  • In 1989, warren invested 600 Million dollars in Gillette.

  • The company that makes razors.

  • If you give it a closer look.

  • Gillette holds the exact same position in its industry as Coca Cola holds in beverages.

  • Regardless of what happens, people will still have to shave.

  • Even a little kid will understand their business model.

  • This is what the product does(razor) and this is why people will keep buying it.

  • And if you ask people to name a razor brand, 90% of people wont be able to mention any

  • other brand beside Gillette.

  • And 10 or 15 years from, people would still have to shave.

  • The exact same story repeats with See's Candy.

  • In fact, it has been one of his best investments ever.

  • Even though that the company wasn't super profitable, it had an extremely strong brand.

  • Buffet realised that people dont usually buy candy's for themselves but as gifts to others.

  • So people would keep coming back for Chrismas, valentine's day, birthdays whatever.So,

  • he acquired the company in 1972 for 25 Million dollars when it was making roughly 4 million

  • dollars in profit.

  • Since then, Company's profit increased 20 times over the next 35 years.

  • In 2007, it made a profit of 82 Million dollars.

  • And if you take a look at other businesses that Buffet has invested, you will find that

  • there are pretty similar to these ones.

  • I am sure that you are feeling inspired and energise to invest like Warrant buffet.

  • Who knows maybe you are going to be better than him, Never underestimated yourself.

  • But you have to start with learning the basics of stock market first because its pretty easy

  • to go out there and lose money.

  • That's why I have found for you a perfect course on stock market, which you can watch

  • for free if you use the link in the description.

When you think about investing, the first thing that comes into your mind is this complicated

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Warren Buffett - How To Pick A Stock

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    Summer posted on 2020/09/12
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