生活和风格巴菲特方式论

1、生活和风格巴菲特方式论AgendaBackgroundQualitative AnalysisQuantitative AnalysisMcDonalds AnalysisConclusionAn Exceptional ChildSold 6-packs of Coke for a profitBought his first shares at age elevenGraduated from college in 3 years while working full timeOnly student at Columbia to receive an A+ in one of Benja

2、min Grahams classesA Great BusinessmanThe second richest man in the world with $ 20 billionTurned $105,000 into $300,000 in one year and returned 1,156% on the same portfolio after 10 yearsDirector of Berkshire Hathaway which has had stock highs of $80,000A Great Businessman (cont.)Was named CEO of

3、Salomon Brothers in one day to solve bond debaclePersonal investment moves are mimicked by the marketTenets of the Oracle of OmahaMarginal gains are a stupid reason to hold stock“Lethargy, bordering on sloth, should remain the cornerstone of an investment style“Never invest in a business you cannot

4、understandInvesting is Business-LikeDoes not believe in the Efficient Markets HypothesisBelieves diversification is for idiotsDoes not care about market fluctuationsThinks investing is only correct when it is business-likeQualitative AnalysisInvesting From a Business PerspectiveLook at the economic

5、ownership of businesses the common stock representsNot a horse race with numbers found every morning on the Wall Street JournalWarren Looks atThe annual EPS figureIts predictabilityThe market priceWall Street Looks at They work for a commissionInterested in selling the priciest security they can fin

6、d Do not care about the price at which they sell you the stock, so NO bargainsEarningsGive back in form of dividends(-) Subject to capital gains tax (-) Cannot reinvest as wellRetain Earnings(+) Can reinvest better(+) Increases value of stock priceThe Compounding Rate of ReturnWarrens real trick is

7、to get a high annual compounding rate of return5%10%15%20%10 yrs $ 162,889 $ 259,374$ 404,555$ 619,17320 yrs $ 265,329 $ 672,749$ 1,636,653$ 3,833,75930 yrs $ 432,194 $ 1,744,940$ 6,621,177$ 23,737,631PhilosophiesWarren adopted Fisher and Mungers philosophiesSuperior economics working in their favor

8、Selling at the “right priceWarren did NOT adopt Grahams philosophySelling at a “bargain priceWarrens Investing BeliefsConsumer monopoly, with exceptional business economics, and shareholder-oriented managementBases investment decisions on 8 key questions8 Key Questions to InvestingDoes the business

9、have an identifiable consumer monopoly?Are the earnings of the company strong and showing an upward trend?Is the company conservatively financed?Does the business consistently earn a high rate of return on shareholders equity?(cont.)Does the business retain its earnings?How much money does the busin

10、ess have to spend on maintaining the current operations?How good is the management at reinvesting retained earnings, earnings in business opportunities and expansion of operations?Is the company free to adjust prices to inflation?When To BuyBusinesses at their worstBusinesses with excellent manageme

11、nt will survive recessions and likely come out of it in a better positionStock market can create situations that whipsaw security prices regardless of the underlying economics of the business.When to SellGrahams ApproachSell when security reaches intrinsic valueWarrens ApproachHold on to stock as lo

12、ng as possiblePossible only when investing in excellent business. Quantitative AnalysisThree Initial TestsTest #1: Predictability of EarningsIs the company strong?Does the companys EPS have an upward trend?Test #2: Initial Rate of ReturnInitial Rate of Return = EPS / share priceTest #3: Per Share Gr

13、owth RateUse PV/FV FormulaFV = PV (1 + r)TGrowth of Retained Earnings EPS Stock PriceEarnings are either retained or paid as dividendsRetained Earnings grow at the same rate as ROECompounding effects takes place when the years of holding increaseInitial Rate of Return =Annual Compounding Rate of Ret

14、urnProject Future EPSPV formulaProject the Market PriceMarket Price = P/E Ratio * EPSProject the Annual Compounding Rate of ReturnPV / FV FormulaIncreasing Shareholder ValueStock RepurchasesDecreases # of shares outstandingIncreases EPSIncrease in share priceInvestor receives high returnHigh Rates o

15、f Return on EquityBuffett views some stocks as equity/bond because of variable rates of returnHigh ROE EPS will increase faster and at a higher rate Rates of return compete with the rate of return paid on government bondsValuing Relative to Government Bonds Current per share earnings Rate of return

16、for government bondsDetermines the intrinsic value of the companyCompare this price with the market pricePrice =Short-Term Arbitrage OpportunitiesOpportunities that arise upon the mergers or acquisitions of firmsProfit is determined by the price spreadAnnual Return = CG L (100% - C)/YPC = expected c

17、hance of success (%)G = expected gain in the event of successL = expected loss in the event of failureY = expected time of holding (years)P = current price of the security Lets begin the Buffet Analysis!Do research and gather annual report on McDonalds CorporationDoes McDonalds have any identifiable

18、 consumer monopoly or do they sell a commodity-type product?Is the company conservatively financed? Long Term Debt Total Liabilities + Shareholders Equity= 37%BuffettologyAre the earnings of the company strong, and do they show an upward trend?How does McDonalds allocate capital?Does McDonalds make

19、buybacks?YearEarnings1986$0.621987$0.721988$0.861989$0.981990$1.101991$1.181992$1.301993$1.451994$1.681995$1.971996$2.21More BuffettologyDoes McDonalds increase shareholder earnings?13.8% rate of return$10.00 1986 share price $47.00 in 1996How is the companys return on equity?Is the company free to

20、adjust prices to inflation?YearROE198619.1%198718.8%198818.9%198920.5%199019.2%199117.8%199216.0%199317.3%199417.8%199518.2%199618.0%Price AnalysisInitial Rate of Return and Relative Value to Government BondsGovernment bond w/static rate of return: 7%McDonalds equity w/initial rate of return: 5.2% i

21、ncreasing at an annual rate of 13.5%McDonalds Stock as an Equity/BondAnnual compounding rate of return: 14.6%Project Annual Compounding Rate of Return Using Historical Annual EPS Growth FigureAnnual compounding rate of return: 12.6%An Eccentric ManEats the same meal everydayDrives a VW BeetleHas a l

22、ive-in girlfriend who was introduced to Warren by his wifeQuestions?Some examplesThe Washington Post is a good example of this. Warren bought 1,727,765 shares in 1973 for $9,731,000 and still has it with him. Today it is worth $600 million, giving him a compounding return of about 18.7%. GEICO is an

23、other example of this. He bought $45,713,000 worth of shares in 1972. In 1995, it was worth $1,759,594,000 giving him a compounding rate of 17.2%.What does it meanWarren said that if Graham believed the share was worth $62.50 but was selling at $50 then the stock was undervalued by $12.50. If Graham

24、 invested in the company at $50 and the stock rose to $62.50 then he would make 25% return on his investment on the first year. But if it dropped then he would lose money. Thus if it keeps dropping, then he loses money and has no returns. This is the realization of the value problem that Warren saw and decided to adopt the principles of Philip Fisher and Charles Munger. Warren felt that the methods of Graham lacked uncertainty and he held holdings that never