A letter a day
Day 1:
The first letter is from the year 1957. My key learnings from the same:
- Firstly Buffett talks about market valuations and their approach to the same. Each stock is classified by them into 2 categories
- Undervalued situation.
- Workout portfolio (which means special situations)
When according to him the markets are Undervalued, he chose exclusive capital deployment including the use of borrowed money in the Undervalued situations.
In case of higher market valuations, he would choose to park more funds in special situations stocks.
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He explains the importance of the role of luck in the short term and also the availability of funds to park at the right time.
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He states that his performance is mostly better in the bear markets than in the bull markets.
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The largest position in the portfolio comprises 10-20% allocation and he takes time to allocate 20% to a stock. This is a matter of patience.
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His expectation from a stock at an early stage is to decline or do nothing rather than advance. This indicates most of his bets are with a long-term view and no overnight returns are expected.
I have attached a highlighted copy of the first letter. Please feel free to share your learnings too.
A letter a day(WB1957)_Aashka Trivedi.pdf (16.7 KB)
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