Friday, 19 November 2021
Quote for the day
"So many things are possible just as long as you don’t know they’re impossible." - Norton Juster
Thursday, 18 November 2021
“Wealth is first a state of mind my friend.”
My Daughter Won’t Marry A Poor Man, Says Bill Gates
By Belove Olocha
Billionaire and founder of Microsoft, Bill Gates, has said he will not allow his daughter to marry a poor man.
The billionaire businessman made this known while attending a conference on Investment and Finance in the United States recently.
Giving responses during the question and answer section of the conference a man asked Gates a question that made everyone laugh.
He asked if Gates, as one of the world’s richest men, would accept his daughter to marry a poor or modest man.
The answer Gates gave, however, shocked everyone.
He said: "First, understand that wealth does not mean having a well-filled bank account. Wealth is primarily the ability to create wealth."
Example, someone who wins the lottery or gambling. Even winning 100 million is not a rich man: he’s a poor man with a lot of money, that’s why 90 per cent of lottery millionaires go back to being poor after five years.
You also have rich people who can’t afford it. For example, most entrepreneurs
They are already in the way of wealth, even if they don’t have money, because they are developing their financial intelligence and that’s wealth.
How are the rich and the poor different?
To be simple: The rich can die to become rich, while the poor can kill to stay.
If you see a young man who decides to graduate, learn new things, trying to improve continually, know that he is a rich man.
By Belove Olocha
Billionaire and founder of Microsoft, Bill Gates, has said he will not allow his daughter to marry a poor man.
The billionaire businessman made this known while attending a conference on Investment and Finance in the United States recently.
Giving responses during the question and answer section of the conference a man asked Gates a question that made everyone laugh.
He asked if Gates, as one of the world’s richest men, would accept his daughter to marry a poor or modest man.
The answer Gates gave, however, shocked everyone.
He said: "First, understand that wealth does not mean having a well-filled bank account. Wealth is primarily the ability to create wealth."
Example, someone who wins the lottery or gambling. Even winning 100 million is not a rich man: he’s a poor man with a lot of money, that’s why 90 per cent of lottery millionaires go back to being poor after five years.
You also have rich people who can’t afford it. For example, most entrepreneurs
They are already in the way of wealth, even if they don’t have money, because they are developing their financial intelligence and that’s wealth.
How are the rich and the poor different?
To be simple: The rich can die to become rich, while the poor can kill to stay.
If you see a young man who decides to graduate, learn new things, trying to improve continually, know that he is a rich man.
If you see a young man who thinks the problem is the state, and thinks the rich are all thieves and constantly criticize, know that he is a poor man.
The rich are convinced that they only need information and training to take off, the poor think others should give money for them to take off.
In conclusion, when I say my daughter is not going to marry a poor man, I’m not talking about money. I’m talking about this man’s ability to create wealth.”
He added: “Sorry for what I’m going to say, but most criminals are poor people. When they are in front of money they lose their minds that’s why they steal, rob etc…
To them, that’s grace, because they don’t know how they themselves could make money.
One day, a bank vigilante found a bag full of money, took the bag and went to deliver it to the bank manager.
People called this gentleman an idiot, but actually, this gentleman was just a rich man who had no money.
The rich are convinced that they only need information and training to take off, the poor think others should give money for them to take off.
In conclusion, when I say my daughter is not going to marry a poor man, I’m not talking about money. I’m talking about this man’s ability to create wealth.”
He added: “Sorry for what I’m going to say, but most criminals are poor people. When they are in front of money they lose their minds that’s why they steal, rob etc…
To them, that’s grace, because they don’t know how they themselves could make money.
One day, a bank vigilante found a bag full of money, took the bag and went to deliver it to the bank manager.
People called this gentleman an idiot, but actually, this gentleman was just a rich man who had no money.
One year later, the bank offered him a receptionist position, three years later he was in charge of clients and 10 years later, he manages the regional branch of that bank. He manages hundreds of employees and their annual bonuses are beyond the value he could have stolen.
“Wealth is first a state of mind my friend.”
Source: https://newsbreak.ng/
“Wealth is first a state of mind my friend.”
Source: https://newsbreak.ng/
Quote for the day
"In matters of style, swim with the current; in matters of principle, stand like a rock." - Thomas Jefferson
Wednesday, 17 November 2021
Tuesday, 16 November 2021
Quote for the day
"The only way to achieve the impossible is to believe it is possible." - Charles Kingsleigh
Monday, 15 November 2021
Sunday, 14 November 2021
The 4 Key Things Warren Buffett Looks At
In the book “The Warren Buffett Way” by Robert Hagstrom, the author introduces four tenets that Buffett employs in his investment decisions.
While Buffett may not use all of them for every investment, these common attributes consistently surface as guidance for his choices.
The four tenets are: Business, Management, Financial and Market.
Business Tenet
As a long-term investor seeks to park his money in a business without having to worry if it’ll still be around tomorrow, it is crucial that he understands the business itself.
To quote Albert Einstein: If you can’t explain it simply, you don’t understand it well enough. A simple test would be explaining it to someone who knows nothing about the business.
The business should be consistently profitable. This can be checked by looking at its past financial performance for sustainable growth in its top and bottom lines.
More importantly, it should continue to be profitable. This will require judgement on the outlook of the industry as well as the company.
Management Tenet
In life, we surround ourselves with people whom are honest and sensible and we trust their judgement because we believe they have our well-being at heart. In business, the same concept applies when choosing a management team.
We know that all businesses go through phases of good and bad. While it’s easy for management to deliver positive news, it’s tough for them when the company is not performing. This is where candor is prized. A management team that is willing to tell you the truth, despite the difficulties faced.
We want a management team that is logical in their decisions, particularly if it goes against the grain of the general view, but is beneficial to the company in the long run.
Financial Tenet
Firstly, one key difference is the focus of profitability, the book suggests an emphasis on return on equity, over earnings per share.
As a company makes a profit, any balance after deducting dividend payments is kept as retained earnings in equity. This means that earnings base for next year has increased.
Buffett does not see anything phenomenal about a company that has increased its earnings by 10 percent, if its earnings base increased by the same amount. It’s akin to compounding interest in a savings account.
Return on equity on the other hand, shows how well a firm’s management is able to generate a return on its operations from the capital at hand.
Secondly, we fall back on the basic profit margins. Simply put, the higher the margins, the higher profit the company is able to extract out of each dollar of revenue.
Next, Buffett prefers owners’ earnings compared to cash flow. To calculate the former, we take net income, add depreciation, minus capital expenditure (capex) and additional working capital.
The difference between the two formulas is capex. Buffett argues that a company that does not make the necessary capex will surely decline. Thus, he views it as a critical component to assess the owners’ actual earnings.
Last in the line of financial tenets, we must question if the company is able to deploy its retained earnings profitability. If a company’s retained earnings go up by $1 per share, the market value should also go up by at least $1.
If the company is able to earn more than $1 on that dollar, the market will likely price it higher as well. If it is unable to do so, then the firm’s shareholders will be better served if the company pays out the earnings via dividends instead.
Market Tenet
Last but not least, we should derive an estimated value of the business. Value and price are not to be confused, value is what you get, price is what you pay.
Buffett, the star pupil of Benjamin Graham, the late father of value investing, stressed a need for margin of safety when purchasing a stock. This is the difference between the value and price of a business.
After all, overpaying for a business does not provide an investor with sufficient room for manoeuvre. Even if it satisfies the first three tenets, we must be ready to admit that we may be wrong and share price could go against us.
A large margin of safety allows one to exit the stock, hopefully, without much capital loss.
Next up, we’ll go through a case study by assessing a company using these four tenets.
Disclaimer: All information is credited to the book “The Warren Buffett Way” and its author, Robert Hagstrom.
Spurce: http://www.sharesinv.com/
While Buffett may not use all of them for every investment, these common attributes consistently surface as guidance for his choices.
The four tenets are: Business, Management, Financial and Market.
Business Tenet
As a long-term investor seeks to park his money in a business without having to worry if it’ll still be around tomorrow, it is crucial that he understands the business itself.
To quote Albert Einstein: If you can’t explain it simply, you don’t understand it well enough. A simple test would be explaining it to someone who knows nothing about the business.
The business should be consistently profitable. This can be checked by looking at its past financial performance for sustainable growth in its top and bottom lines.
More importantly, it should continue to be profitable. This will require judgement on the outlook of the industry as well as the company.
Management Tenet
In life, we surround ourselves with people whom are honest and sensible and we trust their judgement because we believe they have our well-being at heart. In business, the same concept applies when choosing a management team.
We know that all businesses go through phases of good and bad. While it’s easy for management to deliver positive news, it’s tough for them when the company is not performing. This is where candor is prized. A management team that is willing to tell you the truth, despite the difficulties faced.
We want a management team that is logical in their decisions, particularly if it goes against the grain of the general view, but is beneficial to the company in the long run.
Financial Tenet
Firstly, one key difference is the focus of profitability, the book suggests an emphasis on return on equity, over earnings per share.
As a company makes a profit, any balance after deducting dividend payments is kept as retained earnings in equity. This means that earnings base for next year has increased.
Buffett does not see anything phenomenal about a company that has increased its earnings by 10 percent, if its earnings base increased by the same amount. It’s akin to compounding interest in a savings account.
Return on equity on the other hand, shows how well a firm’s management is able to generate a return on its operations from the capital at hand.
Secondly, we fall back on the basic profit margins. Simply put, the higher the margins, the higher profit the company is able to extract out of each dollar of revenue.
Next, Buffett prefers owners’ earnings compared to cash flow. To calculate the former, we take net income, add depreciation, minus capital expenditure (capex) and additional working capital.
The difference between the two formulas is capex. Buffett argues that a company that does not make the necessary capex will surely decline. Thus, he views it as a critical component to assess the owners’ actual earnings.
Last in the line of financial tenets, we must question if the company is able to deploy its retained earnings profitability. If a company’s retained earnings go up by $1 per share, the market value should also go up by at least $1.
If the company is able to earn more than $1 on that dollar, the market will likely price it higher as well. If it is unable to do so, then the firm’s shareholders will be better served if the company pays out the earnings via dividends instead.
Market Tenet
Last but not least, we should derive an estimated value of the business. Value and price are not to be confused, value is what you get, price is what you pay.
Buffett, the star pupil of Benjamin Graham, the late father of value investing, stressed a need for margin of safety when purchasing a stock. This is the difference between the value and price of a business.
After all, overpaying for a business does not provide an investor with sufficient room for manoeuvre. Even if it satisfies the first three tenets, we must be ready to admit that we may be wrong and share price could go against us.
A large margin of safety allows one to exit the stock, hopefully, without much capital loss.
Next up, we’ll go through a case study by assessing a company using these four tenets.
Disclaimer: All information is credited to the book “The Warren Buffett Way” and its author, Robert Hagstrom.
Spurce: http://www.sharesinv.com/
Subscribe to:
Posts (Atom)