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Oracle of Omaha offers words of wisdom

February 28, 2006

Warren Buffett is arguably the world's greatest investor. And like anyone who is an expert at something, be it an Olympic athlete, an Academy Award winning actor or a world renowned musician, he makes his craft seem easy. When asked how he felt about Joel Greenblatt's recent bestseller, "The Little Book that Beats the Market," Warren Buffett said "I agree with buying good companies cheap." Sounds simple, but he also gave us a well-known framework for doing it - a Benjamin Graham three-point mantra, so to speak:

1) A stock is a piece of a business. If you don't want to own the business don't buy the stock

2) Market is there to serve you not to instruct.

The market is a psychotic, drunk, manic depressive selling 4,000 companies everyday. "If you buy a farm, you look to the farm to determine the value of your interest, not to some guy coming by giving you a quote everyday."

3) Know your "Margin of Safety" with every investment.


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