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How to Find Great Buffett Businesses

Jan 5

Posted by Steven D Alexander in business, investment gurus | No Comments

Warren Buffett’s 2007 Letter to Shareholders contains an interesting section entitled Businesses – The Great, the Good and the Gruesome. In this section, Buffett lays out the characteristics of what he considers great businesses, as well as the attributes that define a not-so-great business. Since Buffett certainly knows a good business from a bad one, it behooves us to take a look at his wisdom for picking stocks. What is remarkable is that, according to Buffett, the mechanisms used by the Magic Formula to screen stocks automatically pick out the good businesses for us (and hide the poor ones)! However, it’s necessary to do a little legwork to find the truly great ones. Let’s take a look.

Buffett offers up an example of what he considers a great business: Berkshire’s (BRK.B) own See’s Candies. What makes this a great business? When Berkshire bought See’s Candies in 1972, the company paid $25 million when earnings were about $5 million a year. In 2007, See’s delivered $82 million in pre-tax profits, a nice increase of $77 million over 25 years. However, this increase does not accurately reflect the cash generated for Berkshire. To calculate that, we must subtract the capital expenditures necessary to support the growth of the business. In 1972, See’s required about $8 million of capital to operate. In 2007, that figure was $40 million. So, in 25 years, See’s increased it’s profits 17.5 times over, while requiring only about 4 times more capital. Over those 25 years, pre-tax earnings totaled over 1.3 billion while capital expenditures totaled just 32 million. The rest (that’s about 1.27 billion, with a ‘b’) could be used by Berkshire to buy other attractive businesses… like Coca-Cola (KO), American Express (AXP), and Gillette (PG). All that cash from one tiny boxed candy maker!

Contrast that situation with Buffett’s example of a poor business: airlines. This business requires massive capital investments in new planes, maintenance, refurbishing, etc. And after all those expenditures are made, profits are low or non-existent due to intense competition. Spending a lot to generate little or no earnings for owners is clearly bad business.

Buffett sums it up with a single sentence: “It’s far better to have an ever-increasing stream of earnings with virtually no major capital requirements.”. And this, in a nutshell, is how the Magic Formula determines the “good business” requirement. By examining return on capital, the Magic Formula finds these See’s-like companies that require very little investment to generate earnings growth, while throwing the companies with little earnings and high capital requirements into the junk heap. Systematically, we are presented with a list of high earning, efficient companies.

If we left it at that, we would have a lot of “good” companies to look at. But how can we make the leap into finding “great” companies to invest in? Again, Buffett puts the relevant words into one sentence: “A truly great business must have an enduring “moat” that protects excellent returns on invested capital.” Moats are the central topic of Pat Dorsey’s excellent The Little Book That Builds Wealth. This short and easily understandable book is a great place for an investor to begin to learn how to find the “great” companies.

Unfortunately, the Magic Formula cannot help us find businesses with truly durable moats. Only through analysis can we find these attributes. But by using the Magic Formula and doing some moat analysis, we follow the world’s greatest investor’s blueprint for long term wealth building.

Author: Steven D Alexander
Article Source: EzineArticles.com
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Internet Business Gurus; List Building From The Start – Learn The Basic Keys To A Profitable List

Jun 29

Posted by Dan Newsh in business, investment gurus | No Comments

A must for the professional Internet marketer is knowing how to build a business list of clients or subscribers that you can mail your affiliate program, product or service.

First you need to Build a Business List of people that want or buy stuff already. You have to ask the right questions when your Building a Business List. 1) Are they buying stuff now? 2) Are there lots of people spending money to reach them? (type the product or service in Google and see who is advertising on the right side). These are ads that people are paying Goggle to run. If you want to sell a how to book ” How to play better golf a-z” you would Google “How to play better golf a-z” then look on the right side and see who’s selling that product. You want to know that purple are spending money to sell the product you want to sell. This will give a you good Idea if your product is one the people are buying now and start Building a Business List. 3 Use ClickBank.com to determine if the market is buying long term and not a fade.

We tested hundreds of Business List Building systems some are good most are old and poor programming. Kevin Sipe who is a SEO expert has his new system that just came out. program makes it easy to make Capture Pages. Type in SEO Capture Pages on a Google search and look for yourself also search under SEO web-site designing.

Here is the Ugly Truth about Business List Building, some people will not buy it (your products- service). Some may never buy your stuff. But almost all of them will buy something at some other time. 1) Treat your list Right, even small lists, they will make you money if you treat them with Respect. Even if you stop Building a Business list if they are a Quality list you can earn from them for years, because they like and respect you as a friend and an Authoritative figure.. 2) Only mail your list cool stuff and things that you would like to receive in your email box. Your list is already getting bombarded with junk mail they don’t want. You want to send them emails that they enjoy opening because your always giving something of Value to them.

OK here is the Big Secret Formula for List Building: 1) Find something that will help your market and will be of Value to your people. 2) You want to offer your list something for free in Exchange for their email address. 3) Do that A LOT! That is List Building 101.

Here are the Mechanics of How Business List Building Works. Send Traffic to your Webpages or Capture page. Offer the Free thing to get their email address and then send them to another page about their free stuff. Some will join your Business list and some will buy your stuff. It’s that Easy.
Here are 4 Big questions that pop up. 1) How do I get Traffic? The big question.. 2) What do I give away? 3) How do I turn Leads Into Buyers” 4) How do I set all the stuff up?

First question Traffic: You either buy it or get it from JV partners. The big boys or the Guru Business List Builders just buy their traffic. Google adwords – Yahoo paid search – Banners – CPM mail drops. 1.) Traffic turns into leads 2.) The leads turn into buyers 3.) The buyers turn into repeat buyers.

When Building a Business List you need to make more money then you spend on leads, so let’s do the Math. 1.) If you spend 10 cents per visitor and you get 100 visitors to you Web Page or Capture Page it will cost you $100.00. 2.) If your Opt In page (Capture Page) converts at 20% (which is about normal for “Cold Traffic” you’d end up with 200 leads from that original 1000 visitors (Traffic). That’s 50 cents a lead per subscriber. Here is the Cool part. OK lets say you convert only 3% of your leads into Buyers in the 1st week of having them. 200 x 3% = 6 sales. If your selling something for $97.00 you would make $582.00. Take out the $100 you spent for traffic and your net is $482.00 minus what you product cost? The Best part is the you still have the list or leads so now you can offer them other cool stuff. There are still 196 people that have not bought anything. Believe me they are as good as money in the Bank. The Internet Millionaire guy that taught me Business List Building made over $1,000,000 on one of his lists of just over 7,000 subscribers the last 2 years. What’s Great is that you already have a net profit from having 6 people buy in the first week you started Building your Business List. Now the list you built is all pure profit when you mail these people in the future with other cool products and services.

Are you in a MLM or Network Marketing company? List Building will help your recruiting big time. One Online marketer I know is very good at List Building. She loves MLM and Internet businesses and by the way she buys most of her leads like I explained above. In one company last year she brought in over 800 personal sign-ups by herself. That’s what I’m going to Teach everyone to do. So now you can run with the Big Hitter List Builders and blow right passed them.

Next Big Question is “What do I give away? 1.) The Old Stand by Free Reports. 2.) Down-loadable Audios. 3.) Videos are really hot. 4.) As long as its something your prospects can benefit from and get Value for, your Good.

Next How do I turn People into Buyers? This is what nobody really teaches in Business List Building. What people even most Gurus don’t realize is the money isn’t really in the list. It’s in the Relationships with your list! Once you Create a Great Relationship with your list, your set for Life!
Simple Steps: Rise above the Noise and Be Different. No Hype Stand up and Step up. Give Excellent Value to your list or subscribers. Be a strait shooter (NO Bull) Help people decide they want your stuff instead of convincing them. Use audios, videos, teleseminars and email to communicate with your list.

Why This Works: You and I primarily Trust two people. A friend or a person of Authority. This is Human Nature and never has and never will change. The system I’m going to teach you does both.
In the next segment of Business List Building 101 we will show you how to set up Auto responders for follow up messages to your list. Also we will show you how to build Capture Pages with our system, it is so easy you will be a pro instantly.

Well this should give you a good start to building your list. I believe that if you do what we tell you to do and stick to it you will be the best marketer you can be. And that’s all you can ask for in the crazy thing called Life. Smile your on your way. And no your not going to learn everything in one day. So relax and work day to day this is called your DMO or Daily Method of Operation.

Author: Dan Newsh
Article Source: EzineArticles.com
Provided by: Digital Camera Information

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Buffett and Kennedy – Learn From Them How to Be Making Money Quick

May 8

Posted by Raymond Aaron in business, business history, investment gurus, warren buffett | No Comments

The Story of Joseph Kennedy

Joseph Kennedy was a stock market investor in the late 1920′s. One day, in the Summer of 1929, he overheard an elevator boy boasting about how much money he had made in the stock market. Joseph Kennedy reasoned that if totally-uneducated low-income employees have now been attracted to the stock market, then the prices must be at their all-time highest. So, he raced to the floor of the stock exchange and famously yelled: SELL! For months, his friends laughed at him as prices kept rising and rising and rising. Then, one day, October 29, 1929, the market crashed. Joseph Kennedy and his family were safe. They had no money whatsoever in the market.

Joseph Kennedy waited. Prices fell. He waited. Prices fell. Then, one day, in 1932, a full three years later, he bought a chain of department stores at 5¢ on the dollar. He bought the real estate, the buildings, the inventory, the goodwill – everything at a 95% discount. He then parlayed that brilliant purchase into a fortune that spawned a political dynasty of famous and politically successful Kennedy’s, including one President John Kennedy. His wealth and his influence will last for centuries – because he had the courage to go against the conventional wisdom. He played the INNER game instead of just reading the newspaper headlines.

Joseph Kennedy SOLD when everyone was buying. Then, he BOUGHT when the Depression was at its very worst. He made a gigantic fortune BECAUSE of The Great Depression. We are not in a Depression now, but we are in a serious Recession. And, you can make your fortune right now – BECAUSE of the Recession.

The story of Warren Buffett

For years, Mr. Buffett was the greatest stock market investor of all time. Indeed for almost four decades. However, in September of 2008, something amazing happened. A sudden shock to the financial markets occurred in which several banks failed, banks which had been around for over a 100 years. Banks which had survived a decade of The Great Depression. They failed. Huge financial organizations failed. The Big Three Auto Manufacturers are on the verge of failing. And, the headlines screamed all this bad news. In the midst of this whirlwind of disaster, Warren Buffett was quoted in gleefully exclaiming: “I’ve been waiting for this day for ten years!” Warren Buffet knew the secret – that the flip side of financial disaster is gigantic opportunity.

What both Mr. Kennedy and Mr. Buffett have taught us with their actions is that it is NOW the time to seize opportunities. Right now. What others call a “lousy” economy, the wisest businessmen know is the greatest opportunity. Seize it!!

Author: Raymond Aaron
Article Source: EzineArticles.com
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Warren Buffet Essays are a Classic for Corporate Governance

Apr 1

Posted by Lance Winslow in business, investment gurus, warren buffett | No Comments

The Warren Buffet essays are as good for Corporate America as Milton Friedmans papers were for Free Markets or Henry Kissinger’s essays for Foreign Affairs. The stuff Warren Buffet wrote about is timeless. They are old now, but could have been written yesterday. Remember he is old school not a stock flipper, although today you could say he is a market maker, as his investments move stocks and industries. Well, I guess Kramer on TV is too these days.

The Warren Buffet essays on Corporate Governance should be considered classics. My copy is a hard copy, so I do not even know if they are digitally available on the Internet, I bet they are somewhere;

http://www.amazon.com/Essays-Warren-Buffett-Lessons-Corporate/dp/0966446119

Yes this is the copy I have. I think if you will set your mind in efficiency mode, you will indeed think like that anyway. I do automatically now, even wrote a few essays myself.

Well I have bunch you should read on the Flows of Civilization; Water, Energy, Raw Materials, Transportation, Monetary, etc.

Let me know if you are interested in more of the philosophy of efficiency, flows and realities human civilizations? Most importantly you must concentrate on what you are doing and then constantly feed you mind as you do, it helps the thinking, problem solving and innovation process.

Really it separates the men from the boys in industry, government, research and development or your personal life. Those who succeed and those who also ran; You know what I mean? I hope you have enjoyed this thought I have shared with you today and I hope it helps you in your quest to be the best in 2007.

Author: Lance Winslow
Article Source: EzineArticles.com
Provided by: Excise Tax

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Legg Mason Fund Manager: How to Beat the Market

Mar 5

Posted by admin in business, commodities, investing, investment gurus, mitigating risk, mutual fund, stocks, strategies, warren buffett, wealth | No Comments

Everyone wants to beat the market.  Very few investors do.  Your friends at Black Swan Management, LLC are always on the lookout for information that will make the road to the riches a little bit smoother.

If the stock market doesn’t go up much, your index fund won’t bring big returns. Robert Hagstrom of investment firm Legg Mason says you should use actively managed funds.

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Millionaire Mindset: How to Become a Millionaire

Jan 29

Posted by admin in business startup, investing, investment gurus, mindset, mutual fund, real estate, stocks, strategies, wealth | No Comments

How to Become a Millionaire

Lotto vs. Lightning?

Wealth creation isn’t as easy as buying a lottery ticket.  (Your chances of winning the lottery vary depending on which lottery you play, but as a rule of thumb you are still 6 to 45 times more likely to die from being struck by lightning than you are to win the lottery.)   In fact, winning the lottery will never make you wealthy!

Wealth is defined as “having wealth”, “being affluent”, and “characterized by abundance”.  Too many people focus on the money and not the abundance.  That is why most of the people who do win the lottery lose all their money and end up miserable.  In a 1999 survey conducted by the Consumer Federation of America and Primerica, 40% of Americans with incomes between $25,000 and $35,000 — and nearly one-half of respondents with an income of $15,000 to $25,000 — thought winning the lottery would give them their retirement nest egg. Overall, 27% of respondents said that their best chance to gain $500,000 in their lifetime is via a sweepstakes or lottery win.

“If Americans understood that their chances of winning a big lottery jackpot were 10 to 20 million to one but that they could accumulate hundreds of thousands of dollars through regular saving, more families would put the $50 away rather than spending it on gambling or unneeded consumption,” said Joseph Plumeri, chairman of Primerica.

In our culture, there is a widely held belief that money solves problems. People think if they had more money, their troubles would be over. That’s not necessarily true.  There are two components to money. The first is the psychology of money (i.e.; how you feel about money). The second is the rules of money like tax codes, money allocation, etc.  The goal is to form a wealth creation plan that integrates the two components.

Research has shown that wealth creation has nothing to do with luck, education or intelligence. The truth is that wealthy people understand the principles of accumulating wealth and simply put them into action.  Like most things in life, wealth begins with a decision. You must choose to build wealth.  If you don’t control your money, money will control you! Controlling money simply means taking responsibility for what you have. You need to know where your money comes from, how much you have, and where it’s going.

Wealthy people use the “pay myself first” principle. They usually take 20% from their earnings and bank it or invest it in a separate account every payday for absolute emergencies. These untouched savings accounts earn compound interest (interest on interest) and their money keeps increasing.

Strive to increase your income and reduce your expenses.  Giving freely of your time, money and resources to those less fortunate contributes immensely to society and is your guarantee of receiving love, joy and peace. If everyone contributed in this way abundance would be commonplace.

Don’t believe me?  Here’s what some of the most successful business leaders have done.

  • First, you must do work you love and focus on more than money.  American industrialist, John D. Rockefeller, who defined the structure of modern philanthropy said, “The man who starts out simply with the idea of getting rich won’t succeed, you must have a larger ambition.” Sir Richard Branson, of Virgin fame advises “Have fun, work hard and money will come. Don’t waste time – grab your chances. Have a positive outlook on life. When it’s not fun, move on.”
  • Second, spend less than you earn & invest the difference. Sound too simple? Warren Buffett one of the most successful investors in history (and one of the richest men on Earth) says that “there seems to be some perverse human characteristic that likes to make easy things difficult.” Of course Buffett filed his first income tax return, deducting his bicycle and watch as a work expense for his work as newspaper delivery boy at age 13!
  • Safeguard your assets from loss and provide in advance for the needs of old age/retirement and the protection of your family.  If you make millions of dollars but fail to protect it you can still end up with nothing!  American two-time former World Heavyweight Boxing Champion, Olympic gold medalist, and successful entrepreneur George Foreman has been quoted as saying “The question isn’t at what age I want to retire, it’s at what income.”
  • Work hard.  News flash—if wealth creation was easy everyone would be wealthy!  Becoming wealthy is a simple process, but not an easy task.  This is mostly because people are not committed to wealth creation and do not do what is necessary to become wealthy.  Andrew Carnegie, one of the most famous captains of industry, who went from ‘rags to riches’ claimed that “…the average person puts only 25% of his energy and ability into his work. The world takes off its hat to those who put in more than 50% of their capacity, and stands on its head for those few and far between souls who devote 100%.”

Remember, when it comes to wealth creation and attaining the millionaire mindset, hope is not a strategy.  Follow in the footsteps of other wealthy individuals and observe the rules of money and you will be on your way in no time.

About the Author

Anthony Sills, M.B.A. formerly traded FOREX from the Atlanta Financial Center and has worked for stock advisory services, brokerages, Fortune 100 companies, and national banks.  Mr. Sills is currently a licensed loan officer and freelance writer.  You can reach him at anthony@professionalpenwriters.com.

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