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Investing In Stock Using Warren Buffett’s Mindset: The Coca Cola Story

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Warren Buffett‘s Stock Market Investing Mindset is one we can learn so much from. I use Buffett’s Coca Cola story to give a few examples on investing patience and knowledge.

Transcript

Good day fellow investors. A few days ago we discussed compounding as one of the most powerful forces when it comes to investing as with Buffett say just let the earnings the interest dividends compound and you will do extremely well today. I want to continue on this Buffett mindset investing mentality. Buffett’s investing mindset by discussing patience and discipline and discussing the whole example of Buffett and his ventures with Coca-Cola in a future video I’ll discuss. I have already prepared 15 to 20 Buffett’s mistakes so be sure to subscribe to get the whole complete. Buffett’s investing mindset series. And what’s that. Because it’s all about mindset. It’s all about character right.

And what do you consider the most important quality for an investment manager. It’s a temperamental quality not an intellectual quality. You don’t need tons of IQ in this business.

I mean you have to have enough IQ to get from here to downtown Omaha. But what you do not have to be able to play three dimensional chess or be in the top leagues in terms of Bridgepoint or something of a sort. You need a stable personality you need a temperament that neither derives great pleasure from being with the crowd or against the crowd because this is not a business where you take polls it’s a business where you think. And Ben Graham would say that you’re not right or wrong because a thousand people agree with you and you’re not right or wrong because a thousand people disagree with you you’re right because your facts and your reasoning are right.

Now let’s talk about this character by discussing the story of Buffett and Coca-Cola. This story is very intriguing and interesting because the story of Buffett and Coca-Cola started when he was 7 years old. But why is unclear. Buffett told the story again. Picture Omaha in 1937 I was 7 years old and.

No air conditioning so the summers were hot and humid. People went out on their lawns at night just to try and cool off and I got the idea that maybe I could sell them what you would call soft drinks and we called Pop. So I went round to a bunch of gas stations and in those days every gas station had a cooler. With very soft drinks. And it had a little open around the side and something to catch all the bottle caps. So I went around and collected all the bottle caps for weeks these various gas stations I like to eight thousand of them. And then I sort of them all out. And I saw that there were Coca-Cola overwhelmed everybody else. So I decided to hook myself up to them. And. There were these little silver like ones that in those days and my grandfather at a grocery store so I went to my grandfather and I said. How about giving me a deal on coke so I can sell around the neighborhood. And he saw me at the rate of six bottles for a quarter and I went around and sold it for a nickel each and I sold out every time. And I had no inventory I had no receivables. I had the best business I ever had.

But I made one mistake and I didn’t put the money I saved in the Coca-Cola stock.

But I rectified that mistake some years later.

So that some years later is exactly 50 years later. Buffett waited for 50 years to buy a company. He always liked and why Buffett didn’t buy earlier is a very important question. But this the answer shows the discipline and the patience. Buffett had to watch something for 50 years and not watch it but then buy big. More about the story about Coca-Cola and everything else. Buffett has been doing. You can read in The Snowball, Warren Buffett’s biography out autobiography biography almost.

This article originally appeared on ValueWalk. Follow ValueWalk on Twitter, Instagram and Facebook.

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VIDEO: Here’s How You Know A Company Is F*****

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Well…not much to say here. The header sort of speaks for itself. As told by Investopedia‘s Microsoft Sam-sounding narrator. Check it out.

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Chart: All The AI Startup Exits That Made Over A Billion Dollars

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Artificial intelligence—AI—is getting those investor checks. In Q2 alone, AI startups raked in $7.4B in funding. And if you look at the exits, you can see why VCs are bullish. It’s a sector that’s delivering some very valuable exits.

Since 2013, seven AI companies have had billion-dollar exists—either through IPO or M&A—four of which have taken place in the last two years. Here’s a chart from CB Insights with all seven.

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10 Bizarre Things About The WeWork IPO Filing

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wework

As WeWork goes public in its recently announced IPO, professionals and entrepreneurs better take note. The sharing economy is spreading its wings beyond Uber and AirBnB.

Although less well known than those icons of the sharing economy, WeWork could change how we work in the years ahead.

That said, its IPO is a bit bizarre, as the media has been quick to point out. Here’s why.

1. We Work Is Running Spectacular Losses

In 2018, the company had a net loss of $1.9 billion. In the first 6 months of 2019 alone, it lost another $900 million.

2. Investors Worry The Company Will Run Out Of Cash

MKM Partners’ Rohit Kulkarni said the company faces a real prospect of running out of cash in a few months’ time.

3. WeWork Is Spending Money Like It’s 1999

via GIPHY

The startup has a burn rate of $150m-$200m a month.

4. Over $47 billion In Future Lease Obligations

WeWork will need to make a ton of money in the future to make it all work.

5. Its Contracts With Users Are Short Term

The startup keeps things flexible for users but is taking on more of the risk itself.

6. The Company Could Be On The Hook If Users Leave

If users defect, WeWork’s rent obligations remain. This should worry any investor.

7. WeWork’s Business Model Is Iffy At Best

The company has declining revenue per user, on top of its failure to be profitable. In other words, things could get worse for investors.

8. Conflicts Of Interest With The CEO  

WeWork leases some buildings owned in part by CEO Adam Neumann, paying millions in rents for it.

9. WeWork’s China Assets A Puzzle For Investors

The company’s assets in China are puzzling for investors, and they carry unique risks yet to be fully understood.

10. Despite All Its Troubles, WeWork Has A Staggering Valuation

via GIPHY

This unicorn has a valuation of $47 billion. Some in the business media say it’s based on smoke and mirrors. The IPO could be a good test of whether the valuation will hold.

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