5 Tips On Investing For Beginners By Warren Buffett - Warren Buffett Investment Strategy

[Music] not only speaking investing in yourself is the best thing you can do anything that improves your own talents like nobody can take that away from me they can run up huge deficits and the dollar can become worth far less you can have all kinds of things happen but if you've got talents yourself and you maximize your talent you've got a terrific asset and that doesn't mean everybody should go to college but it it doesn't mean that any way you find to improve communication skills are enormous ly important I mean I took the Dale Carnegie course that I paid $100 for and it was worth a college degree well cash is always a bad investment but when people said cash is king a year ago I mean that's crazy I mean cash wasn't producing anything and it was sure to go down in value over time I know that you always want to sure you have enough I mean like oxygen you want your shirts around you know but you don't even have you don't have excess of a possible route and cash we will always have enough cash around but anytime we have surplus cash around I'm unhappy I mean I would much rather have good businesses than cash and we found a chance in the last year there abouts to deploy we came in with something over 40 billion a campaign we've got about 20 billion now and we've had some earnings so we put a lot of cash to work and I like that no I much further on a good business than have cash and it is a hedge against the dollar well you can say all assets are a hedge against a dollar I mean that all you know is that the dollar is going to be worth less 10 20 30 years from now I say worth less not worthless it will be you know that's true of almost every currency that like a big of the question is how much it depreciates in value the real test of whether you would like it as an investment is whether you would be happy if it never got quoted again and just in terms of what the asset did for you ah but that doesn't I would say this about gold if you took all the gold in the world it would it would roughly make a cube 67 feet on a side so if you took all the gold in the world we could have a cubit went down there 67 feet 67 feet high and that would be the whole thing now for that same cube of gold it would be worth at today's market prices about seven trillion dollars that's probably about a third of the value of all the stocks in the United States so you have a choice of owning a third of all the stocks in the United States or you can have a choice of owning a little block of gold which can't do anything but kind of shine there and make you feel like my desert creases or something of the sort now for seven trillion dollars there are roughly a billion farm acres of farmland in the United States they're valued at about two and a half trillion dollars it's about half the continental United States as farmland you could have all the farm line in the United States you could have about seven Exxon Mobil's and you could have a trillion dollars of walking-around money and if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day you know amendment testament font fondling it occasionally you know and then saying you know do something for me and it says I don't do anything I just stand here look pretty and and the alternative to that was to have all the farmland in the country everything cotton corn soybeans seven Exxon Mobil's just like that and a trillion dollars of walking-around money I you know maybe call me crazy but haha I'll take the farmland of the Exxon Mobil's oh did it come to your attention how do you find a stuff like PetroChina I sit there in my office and I read an annual report which fortunately was in English and it described a very good company and told about the oil reserves about refining told about the chemicals everything else and I sat there and read it and I thought to myself this company is worth about a hundred billion now I didn't look at the price first I look at the business first and try and figure out what it's worth because if I look at the price first I'll get influenced by that so I look at that look at the company first I try to value it then I look at the price and if the price is way less than what I've just valued that I'm going to buy it important thing is to decide is to be able to define which ones you can come to an intelligent decision on and which ones are beyond your capacity to evaluate you don't have to be right about thousands and thousands of thousands of companies you only have to be right about a company couple I met Bill Gates on July 5th 1991 we arrived Seattle and Bill said you've got to have a computer and I said why and he said well he said you can do your income tax on it I said I don't have any income Berkshire doesn't pay a dividend yeah he said well you can keep track of your portfolio I said I only have one stock I said I did I mean he says it's going to change everything and I said well will it change whether people chew gum and he said well probably not and I said well we'll change what kind of gum they'd show and I said well then I'll stick to chewing gum and you study computers okay I don't have to understand all kinds of but there's all kinds of business I don't understand but there's thousands of opportunities there I don't worry too much about the things I don't understand it if you understand some of these businesses that are coming along and can spot things on if you can spot on Amazon for example I mean it's a tremendous accomplishment what Jeff Bezos has done and I tip my hat to me so wonderful businessman he's a good guy too but could I have anticipated that he would be the success and ten others wouldn't be I'm not good enough to do that but I'd unfortunately I don't have to you know I don't have to form an opinion on on Amazon and I did I did form an opinion on the Bank of America and I form of opinion on coca-cola I mean coca-cola has been around since 1886 there's 1.8 billion 1.8 billion 8 ounce servings of coca-cola products sold every day now if you take one penny and get one penny extra that's 18 million dollars a day and 18 million times 365 is 7 billion 3 less 730 billion or 6 billion 570 million dollars so annually 6 billion 570 million dollars from one penny do you think coca-cola is worth a penny more than you know Joe's Cola I think so so I you know and I've got about 127 years of history would indicate it so those are the kind of decisions I like to make and you may have an entirely different field of expertise than I would have and probably much more up to date in terms of the kind of businesses that we're seeing about and you can get very rich if you just understand the feel of them and understand their future [Music] you

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Id: s37djGuL9g8

Length: 7min 20sec (440 seconds)

Published: Sun Jan 08 2017