Warren Buffet, CEO of Berkshire Hathaway Inc., has an estimated real-time net worth of about $120.3 billion as of January 19, 2024, according to Forbes. For most of us, this is an unfathomable amount of money.
He has been dubbed the “Oracle of Omaha” after his hometown, and for good reason. Investing can be tricky but Buffett uses three lesser-known techniques to invest which have yielded him some very impressive returns.
Buying stocks and holding is one method, but Buffett handles investing differently in some cases. In addition to Buffett’s commitment to blue-chip stock investing, he also uses derivatives such as put options. A put option is a contract that gives buyers the right to sell a security at a predetermined price in a specific time frame. He has used equity index put option contracts throughout his tenure at Berkshire Hathaway. He bet that the equity index investment values would increase over time, and he was right.
Buffett reportedly sold put options on equity stock indices, such as the S&P 500, with maturities of 15 to 20 years so that they would mature between 2019 and 2027. As indicated in Berkshire Hathaway’s 2007 letter to shareholders, Buffett garnered $4.5 billion in premiums when the options were first sold. Since the stock market always tends to trend up over the long term, this strategy may not be too risky. At the same time, there is always a level of risk involved with this type of investing. His company lost $276 million on its derivatives contracts in 2022.
2. See Who’s Behind The Investment Rather Than The Investment Itself
Buffett advises that it’s more important to vet the investment managers than the finances of the investments themselves, as outlined in Berkshire Hathaway’s 2022 letter to shareholders. Essentially, he looks for long-lasting favorable economic characteristics and trustworthy managers. While it’s not as difficult to look up a company’s financials as it is to research the people on its management team, he believes that understanding the latter is of paramount importance before investing.
3. Stay Away From Commodity-Like Companies
Companies that sell interchangeable products, such as similar products that are o ffered by competitors, are ones that Buffett avoids when it comes to investing. If the main factor of a company is that it’s selling products that are easily replaceable or interchangeable by a direct competitor, there’s a greater chance that the investment will lose value. His take is that investors can earn more money over time via long-term productive assets rather than commodities that may be subject to greater fluctuation.
Warren Buffett is one of the richest people in the U.S. and the 8th richest person in the world today. He certainly knows what he’s doing when it comes to smart investing. Consider his advice above when it comes to your own personal investing — a little advice goes a long way.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
