In
investment world, there are investors that we like to follow. However I
wouldn't copy them everything that they invested. This is how I would do if I
worked for bank.
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1. Investors are used to bench marking with S&P 500 or compared with other
investors for their performance.
* I would ignore that concept, but focus on good investment.
* Some years, my investment would lag S&P 500 by 5% - 10%, but other years
would beat S&P 500 by 50% to 60%.
* Of course, I would look into the portfolio of S&P 500, and other top
investors such as BRK to get ideas about which one is the best. Buy them at any
cost is another question.
* Comparing to an index or a firm would tie your hands in some fields, i.e. you
may try to mimics their portfolio.
2. BRK is a good investor, but I wouldn't buy any stock that they purchased at
any price.
* WFC is a good bank for its loan portfolio, but it's expensive as compared to
BAC.
* I recalled that BRK paid a large amount of money to buy WFC at $26/share
during crisis. I followed them, too. But I sold my shares later. What would be
the chance that WFC doubled again at the current price?
* BAC is traded at 0.62 of its book value. If BAC improved its loan portfolio,
BAC would double its share prices.
* I would pay attention to any stocks that BRK purchased for free research by
BRK as BRK is very good. If I could pay lower prices or a little bit higher
than what BRK paid, I would be in.
* Personally I don't agree with all investment by BRK, btw. BRK bought shares
of both IBM and Apple.
-> I would pick IBM for its super computer that others didn't have.
-> I would pick Microsoft instead of Apple. Microsoft has 80% of market
shares and a reliable products portfolio. Apple is a fashion company, which
could be obsolete at any time.
-> In computer world, they always said Windows with useful tools such as
Microsoft Office for work. If we used the same products at home such as laptop,
tablet, and phone, we would be able to transfer files between those easily,
i.e. convenient.
-> Windows also offers computer programming languages to develop software.
Their stuff are easy to learn and use. I didn't like their documentation, btw.
Btw, these companies are in order of couple hundreds billions of dollars, thus
I'm not interested. Trillions of US dollars are considerable numbers, i.e. it's
not likely that they would double its value.
3. I like strategies by both Warren Buffet and Peter Lynch.
a. Buying good stocks where others are panic, i.e. stocks at huge discounts.
b. I would consider cases that investors dumped stocks due to temporary
problems at a company. This is betting on turn around.
c. Buying unrecognized good stocks or company, which haven't recognized by Wall
Streets, i.e. hidden gems at huge discount?
d. "Paying good company at fair price" is also a good strategy, but
this would provide around 10% - 20% return a year. However this is a stable
return.
* The strategies in a to c would provide 50% - 100% in a short period of time.
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