The Warren Buffett Way
Investment Strategies of the World’s Greatest Investor
by Robert G. Hagstrom Jr. (13000)
Warren Buffett is one of the most successful stock market investors of the past 30 years.
His entire approach is to focus on the value of the business and its market price. The Buffett approaches to investment are:
1. Never follow the day-to-day fluctuations of the stock market.
The market only exists to make it easier to buy and sell, not to set values. Keep an eye on the market only for someone who is willing to sell a stock at a not-to-be-missed price.
2. Don’t try and analyze or worry about the general economy.
If you can’t predict what the stock market will do from day to day, how can you reliably predict the fate of the economy?
3. Buy a business, not its stock.
Treat a stock purchase as if you were buying the entire business, using the following tenets:
Business Tenets
1. is the business simple and understandable from your perspective as an investor?
2. Does the business have a consistent operating history?
3. Does the business have favorable long-term prospects?
Management Tenets
1. Is management rational?
2. Is management candid with its shareholders?
Financial Tenets
1. Focus on return on equity, not earnings per share
2. Calculate “Owner Earnings”
3. Search for companies with high profit margins
4. For every dollar of retained earnings, has the company created at least one dollar’s extra market value?
Market Tenets
1. What is the value of the business?
2. Can the business currently be purchased at a significant discount to its value?
4. Manage a portfolio of businesses
Intelligent investing means having the priorities of a business owner (focused on long-term value) rather than a stock trader (focused on short-term gains and losses).
The One Thing You Need to Know
December 19, 2007 by admin
Filed under Books, Management
About Great Managing, Great Leading and Sustained Individual Success
by Marcus Buckingham (12900)
It’s human nature to always want to get to the heart of any matter. This is especially true in an information age, where there is so much data available on each and every subject it becomes easy to get side tracked. So what, exactly, is the key organizing principle of great management, of effective leadership and of a successful career?
Managing
The key to being a great manager is never to forget that everyone who reports to you is a unique individual. Your job is to find practical way to capitalize on this rather than trying to eradicate those differences and get everyone to act in the same way. The more you can do this in practice, the better you’ll become as a manager.
Leading
To excel as a leader rather than as a manager requires the opposite skill set. Leaders transform the group’s fear of the unknown into confidence by providing clarity of purpose. Leaders create confidence by describing a better joint future vividly and precisely. As your skills grow in being able to do this, your effectiveness as a leader will grow and be enhanced.
Sustained Individual Success
To succeed in building your own career, find practical ways to eliminate from your working life those activities that detract from your personal strengths. Become highly skilled at making the small and subtle course corrections so you can sustain your highest and best contribution and the more valued, more fulfilled and more successful you will become.
The One Thing You Need to Know
The Irresistible Growth Enterprise
December 18, 2007 by admin
Filed under Books, Management
Breakthrough Gains From Unstoppable Change
Donald Mitchell and Carol Coles (12800)
From time to time, irresistible forces arise which permanently alter the general business climate. The usual corporate reaction to the arrival of these forces is to put everything into an effort to fight them and presesrve the status quo. In marked contrast, smart organizations change their business strategies to harness those external forces and generate quantum leaps in corporate performance — often in the magnitude of 20 times better results using the same or less resources.
Many times the main barrier to successfully exploiting external irresistible forces are fixed internal ideas about how the organization should respond to change. To overcome this barrier, a two stage process is required.
Stage 1: Understand why organizations resist irresistible forces rather than embrace them.
These ingrained habits and patterns of thinking are “stalls” to productivity. Often, organizations aren’t even aware their existing patterns of thinking and behavior hinder their ability to perform better.
Stage 2: Develop a new set of habits that continually realign the organization with irresistible forces to maximum advantage.
Realigning the organization to take advantage of irresistible forces is an ongoing process with eight steps. Effective organizations go through these steps again and again to generate growth on a regular basis.
Irresistible growth enterprises are those organizations that continually realign their business models and strategies to take full advantage of any and all irresistible forces in the marketplace. They are the rapid growth companies who not only outperform their competitors but leapfrog them.
The future belongs to any organization that can become an irresistible growth enterprise because, no matter how the future unfolds, they will be positioned to excel.
The Irresistible Growth Enterprise
Radical Collaboration
December 17, 2007 by admin
Filed under Books, Innovation
Five Essential Skills to Overcome Defensiveness and Build Successful Relationships
by James Tamm and Ronald Luyet (12700)
In today’s networked world, being able to add value by collaborating effectively with others has gone beyond being nice to have to become a new business imperative. The collaborative capital of a company is now of equal importance to its intellectual and financial capital.
Significantly, collaboration cannot genuinely be mandated from the top. Instead, it must begin within the mind-set of the individual and then work its way out into the organization as a whole. The five essential skills of collaboration are the personal skills around which sound productive collaborative relationships are built.
So what it is about this methodology that is radical? Radical collaboration works from the inside out rather than being imposed from on high. It requires that an individual have the right mind-set to begin with, then moves outwards into individual relationships and from that base this collaborative intent then moves into team and organizational settings. Unless you master and integrate the five skills of radical collaboration at a personal level first, you’ll be unable to use them in a group setting with any degree of success.
Bottom-Up Marketing
Building a Tactic Into a Powerful Strategy
by Al Ries and Jack Trout (12600)
Most traditional marketing is carried out top-down. That is, the senior management decide on a strategy the company will follow and the middle managers decide on the tactics to achieve that strategy.
However, history’s most successful companies have invariably developed strategy from the bottom up. In this method, the company first identifies a tactic that is delivering a sustainable competitive advantage in the minds of consumers. The company then focuses its resources on exploiting that tactic to the greatest possible degree by building the tactic into the company’s entire marketing strategy.
Bottom-up marketing suggests that the best and most effective way to become a marketing strategist is to put your mind into your marketplace and to find inspiration where customers come into contact with your product or service. By immersing yourself in the tactics of whatever works in reality, you can develop a highly effective marketing strategy.