Thank you for taking the time to reply and thank you for being such a gracious host!

While it’s true that Buffett is the exception, as I’d also said in my previous comment that not everybody is Warren Buffett, he started off just like everyone else. H didn’t start off as Mr. World’s Greatest Investor. He was just a Nobody who kicked start his investment career with the US$100,000 he raised from various investors.

Although US$100,000 was considered big money back in the 50’s, it was still not an amount that allows you to take a controlling stake in any listed company. And he surely didn’t bank all that 100 grand in one single stock/company. So that makes all the more he couldn’t have taken a substantial stake in any company he invested in his earlier days.

My point here is that you don’t need to have a board-seat-qualified investment in a company to reap a healthy return on your investment. You don’t need to have a big say in the company you invest in to ensure your return.

In fact, Buffett does not interfere with the running of the companies he invests in! He invests only in companies run by great people. And since they’re already run by great people, he simply sit back and let them carry on doing their job without interfering.

You’re right in saying that Buffett doesn’t just invest in stocks, he invests in companies. That’s because when you invest in a stock, you’re in essence investing in a business behind the stock! When you buy a stock, you’re actually buying part ownership of the company that runs a real business!

This is a very fundamental principle that a lot of investors seem to be missing. I’ve written a post on this principle back in Oct 08. Feel free to take a quick read by clicking on the link below.

The Most Fundamental Principle of Stock Investment.

Hope you enjoy the read. I’d love to hear your feedback.

Cheers~

Mark

NO, go ahead and disagree with me! It adds to the discussion and I welcome it! If you read tomorrow’s post, you’ll better understand why I advocate investing in low cost broad based mutual funds as opposed to investing in individual stocks. Most people don’t have the time to do the proper amount of research and most people, including “experts” with decades of experience, get it wrong. Remember that we were being advised by almost every investment house to invest in Lehman, Wachovia, and AIG just before they collapsed…

Buffet is always brought up as the exception. But he is just that — the exception. He doesn’t just invest in stocks though, he invests in companies. That is, he actually goes in and runs them since he has such a huge stake. You and I don’t get to make a decision on who is the President of the company or what investments they make or what their minimum rate of return on different projects are.

Check out tomorrow’s post and also check out Dare To Be Dull when you get the chance. Maybe you can be the exception, but I’m relatively certain I’m not!

Thanks for commenting.

While I agree to 7 of the pirates you name here, I can’t agree with #6 – Investing in Individual Stocks.

It’d be OK if your intention is merely to tell us about the pirates that had been holding you hostage all this while. But if you’re giving a general advice, I’d have to dispute it.

Just to be upfront, this is not meant to be a personal attack. I’m just sharing my opinion here.

By naming #6 as one of the pirates, it gives me the impression that you’re telling people it’s a bad idea to invest in individual stocks.

I would say that it is a bad idea ONLY if you refuse to learn how to invest in stocks the right way. Every skill is learnable. Investing skill is no exception. No skill is ever too hard to learn or you’re never too old to learn a skill. It’s just a matter of whether you want to learn.

While there’d been many people who were burnt in the stock market, there’d also been many people who make a good fortune from it, and these are average people just like you and me. The only difference is they don’t follow other people’s opinions blindly, they bother to learn how to do it properly, and they were not defeated by their earlier losses.

To me, as long as there’s one person in this world who’d done it (it can be anything), it’s enough to tell me that it’s achievable. Moreover, there’d been a lot of people who’d made money from stocks, not by luck, but by sheer acumen.

Last of all, don’t forget that one of the richest men in the world – Warren Buffett – invests mainly in individual stocks. Of course, not everybody is Warren Buffett. But that doesn’t mean you can’t make some decent money from buying individual stocks. As long as you’re willing to learn, you can do it.

The two keys are get the facts right and education. And never learn from stock brokers or your money managers. They’re just sales people, not investors. Learn only from people who’ve been making money from individual stocks.

Just like if you want to learn how to play golf, you’d only learn from a golf coach, not from the person selling you golf equipments.

Please correct me if I got you wrong.

Cheers~

Mark

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