A letter a day.
Letter#6 1961
Key learnings
1.Buffett’s partnership firm has completed 5 years. Buffett has shown the performance of his fund with other mutual funds, investment trusts and dow jones industrial averages.
2.Just because something is cheap, it doesn’t mean it’s not going to go down.
3.Division of available stock opportunities into 3 types:
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Undervalued securities.( Largest position in this category, this category has made more money than any other category)
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Workouts. (Securities that can be predicted with time, can be identified what can go wrong. The high degree of safety in this section).
3.Control. ( Control the company by taking large positions and influencing the policies of the company) .
- You will not be right because many people agree with you. You will not be right simply because important people agree with you. You will be right, over the course of many transactions, if your hypotheses are correct, your facts are correct, and your reasoning is correct. True conservatism is only possible through knowledge and reason.
This letter is a very detailed one to understand Buffett’s style of investment how he classifies his stock under different heads and why is one sure thing to read and easy to implement too.
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