Long term investing...

[Werner_1]

I've built my strategy on indept analysis of the following three people, Warren Buffett, Sandy Weill and Jamie Dimon. It is amazingly clear after reading many books on these guys how close their respective strategies are to one another. I think one must see ones portfolio as a business, not as the shares one buys, and hold for long term which i see many people fail to do. By reading these 3 books one doesnt learn how to select shares, but the basic business idea behind the winning strategy can be tought to people reading inbetween the lines, then work on building models to value companies etc can be created to build a successful platform for long term portfolios... these books are - "The Snowball (Warren Buffett)", "The Read Deal (Sandy Weill)" and "Last Man Standing (Jamie Dimon)"... for the intelegent, this can create some ideas to building a fortress portfolio (note Jamie Dimon's Fortress Balance Sheet worked extremely well for JPMC)... any thoughts?

[#2]

I read Rule #1 by (errr can't remember) and his success is also based on "owning the business" and not just procuring shares.

[Werner_1]

yes, Phil Town has the same idea, also very much like Buffett. By analysing empire builders one can devise a excellent strategy... i have implemented some of these ideas and will acquire one more share this year, then already have the plan in place to build up reserves to take advantage of future crashes/corrections...

[Mr_S]

Werner, do u do any short term investing to boost your capital? or are u a strictly long term investor? if so what instruments do you use? I tried that, and lost quite a bit, but the excitement was amazing. Im sure some of the people, including buffet, went into short term trades to boost thier capital for long term purchases? im quite interested in instalments after barrys educational threads!!

[Werner_1]

Mr S, a few years ago i actively traded SSF and Warrants, but after taking initial losses just before the crash i stopped then used remaining cash to acquire cheap shares. The main reason i stopped was that i couldnt spend time looking at the prices while at work, my main focus is on my work which results in not much time during trading sessions. I worked out a system where i build reserves similar to that of Buffett/Dimon in good times and put the reserves to use when opportunities arise. This cash is then put to use into companies that does exactly the same -> leading onto my enormous interest in JPMC in USA. I believe over time i can outperform short term trading with my approach. From discussions on this forum and Simon saying that elite traders achieve 30% compounded/pa, I dont see the reason to take on the extra costs of active trading and risks associated with it as i can achieve similar results using my approach. Jamie Dimon focuses on 'waste cutting' as one of the key points in his strategy, i see excessive portfolio churn and resultant costs as exactly this if one can get the same effect without it.

[theyoungster]

werner the more i look an longer term horizon the more i like it, take GND for example: i know you like this one - over 10 years its had 58x capital growth excluding dividends, those kinds of returns over 10 years are great, problem is which companies will perform like that is the difficult question...

[Werner_1]

Yip, thats the problem. For me the key is to find companies that have solid management, and strategies that make the best use of their cash reserves and allocate them at the correct time. GND is one such company, they allocate reserves to bargain deals when times are bad, this is a recipe for huge success when times go well, that is why they have those good numbers. find these type of companies buy them at discount prices and have patience. the profits will come in the end.

[#8]

hang on now, anyone buying GND 10 years ago was not a value investor in Buffet's view - it was pretty much a penny stock back then, so you can't compare the growth. there is a big difference buying small caps with a long term view compared to bluechips - the strategies are completely different IMO

[Werner_1]

true, but that doesnt mean GND will not do well going forward, their strategies and management nowdays are of a very high quality.

[Major]

You're very wise Werner. I've been investing for 10 years now - also started trading but realised how elusive substantial consistent gains can be relative to the amount of time you have to put in. So now I pick companies like GND & MSM which have great long term earnings growth and sit back. Much less stressful, much easier and frees up more time for the better things in life. Even after last years mayhem, few of the long term holds lost significant money compared to their purchase price, and the dividend stream allowed me to pick up some knocked down bargins such as IPL at R50.

[Werner_1]

Major, that is exactly the same ideas i have had. also when following what Sandy Weill and Jamie Dimon did in building up empires like 'the former Citigroup - i say this because Citi isnt what it used to be under the guidance of Sandy and Jamie - one sees the strategy of building long term portfolio like you mentioned. really works out better than most people can even think. if you like you can email me and we can discuss more details, i always like to meet new long term investor friends - [email protected]