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@kulpresh

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INSIGHTS FROM WARREN BUFFETT'S PORTFOLIO.

A couple of days ago, I came across Warren Buffet's portfolio, and at a first glance, here's what immediately stood out:

1) Total portfolio value is over $300 billion.

2) Apple alone accounts for over 40% of the portfolio.

3) Despite having a portfolio of 47 companies, the top 7 account for over 80% of the entire portfolio value.

While I found these interesting, I took a deeper dive. Here are 3 takeaways from the Oracle of Omaha.

DOUBLE DOWN ON YOUR WINNERS: Apple is the largest holding in Buffett's portfolio. In the time since he first invested, Apple's market value has tripled. It is no wonder that from an initial investment of $1 billion, Buffett's stake in Apple is valued at over $122 billion now.

INCOME IS THE PRINCIPAL THING: Buffett earns over $6 billion in dividend income every year. Over 20 stocks in his portfolio pay him dividends. He earns over $700 million from Coca-Cola which he's held since 1988, and over $900 million from Chevron. Cash might be king after all.

INVEST IN INDEX FUNDS: Buffett has famously said that “by investing in index funds, a know-nothing investor can outperform most fund managers”. Buffett himself invests in an index fund [S&P 500]. Index funds like the S&P 500 offer diversification and because they're passively managed, investors can maximise their returns.

#InYourBestInterest is a #PersonalFinance community that simplifies #Investing for long-term investors.

🔗: inyourbestinterest.substack.com

#InYourBestInterest | #LongtermMindset | #PersonalFinance | #Investing | #FinancialLiteracy. by @kulpresh

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4 years ago

TIME, MORE THAN ANYTHING ELSE, IS AN INVESTOR'S GREATEST ALLY.

A few days ago, I asked the popular AI platform OpenAI to explain what the phrase “time, more than anything else, is an investor's greatest ally” meant. Its response further proved the importance of staying invested for the long term.

#InYourBestInterest is a #PersonalFinance community that simplifies #Investing for long-term investors.

🔗: inyourbestinterest.substack.com

#InYourBestInterest | #LongtermMindset | #PersonalFinance | #Investing | #FinancialLiteracy | #StayInvested.

Happy holidays. by @kulpresh

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4 years ago

WHY DO SHARE PRICES GO UP?

When you invest, you expect that after a while, the value of your investment increases. Investing is a long-term endeavour, and so the longer you #StayInvested for, the higher your odds of earning a positive return on investment (ROI). On any given day, the odds of the stock market rising is 52% and there's a 48% chance of it falling. The odds get slightly better when you invest for 1 month, with the stock market rising 61% of the time. Over 5 years, however, the odds get even better as the stock market goes up 81% of the time and over every 20 years, the stock market has risen 100% of the time. That is to say, the longer you invest, the higher the odds of earning a positive return on investment.

The U.S. stock market has seen its value go up from $13 trillion in 1998 to over $50 trillion at the end of 2021. This is despite the market having a zero or negative ROI over 55 times at year-end in 200 years. That is, the stock market has had a zero or negative ROI in 55 years out of almost 200 years since 1825. Despite this, the market has an average annual return of 10% since its inception.

So, WHY DO SHARE PRICES (and the stock market) GO UP (in the long term)? The answer is simply GROWTH. Share prices go up in the long term because businesses get bigger and earn more revenue over time. When earnings rise, share prices rise and not the other way around. How then do businesses grow to reward investors' faith in their business over the long term? Essentially, how does a business increase its earnings? Here are 3 ways a business increase its earnings:

[rest of the caption is in the comments] by @kulpresh

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4 years ago