The Dark Side Of Warren Buffet Philosophies And Strategies (Warning: Very Offensive Blog!)

I’m not sure if nabasa mo na previous blog ko but I already hit a 6-digit gain sa trading.

6 digit in dollars ha meaning nasa over 6 Million pesos na sa peso.

Galing lahat yan sa sarili kong trades at sarili kong diskarte.

Walang may nagreco or naghype sa akin. Proper trading approach lang ang gamit ko.

A lot of traders and investors are a fan of Warren Buffet.

I like him as well and I tried studying his ways when I first started sa stock market.

Sa ngayon ay andaming sumusunod sa style ni Warren without even understanding yung kinaiba ni Warren Buffet sa kanila.

This blog might offend you or mabubuksan nito ang eyes mo.

Their is this thing called “trading personality.”

Warren can buy a stock and hold it forever kasi hindi naman siya galing sa mahirap na pamilya.

I think most miss this important detail sa buhay ni Warren Buffet.

Warren’s father was a congressman. Yung uncle niya ay stock broker.

Walang rags-to-riches story sa kwento ni Warren.

His family is rich even before pa yan siya maipanganak.

That however does not discredit the fact na naging Billionaire siya on his own but maraming traders at investors ang inaakala na mahirap si Warren or ang pamilya niya noon.

Take a look at any congressman sa Pilipinas na 3rd world country. Look at their kids.

Do you think ba same ang level nila sa ordinary na kids?

3rd world country pa na Congressman yan ha eh si Warren sa US pa.

“Eh ano naman kung may kaya ang pamilya niya eh siya naman mag-isa ang nagbuild ng wealth niya?”

Okay, pupunta tayo sa pagbuild ng wealth na yan sa later part ng blog na ito.

Lets say may dalawang trader. Si Jose at Si Juan.

Si Jose ay galing sa mahirap na nagtatrabaho as an OFW at siya ang breadwinner ng pamilya niya.

Si Juan ay anak ng Governor.

Both of them ay investor.

Naglagay sila ng 100,000 pesos sa SCC na stock kunyare.

Do you honestly believe na parehas silang dalawa ng mentality at personality pagdating sa investment nila?

Iba yung patience, disiplina at personality mo kapag yung investment mo ay extra money mo lang na hindi mo nga pinapansin kesa doon sa investor na inaasahanng pang retirement ang investm,ent niya.

Kapag nagkaroon ng emergency, sino sa dalawa ang ipupull out yung investment niya sa SCC early?

Malaki ang chance na si JOSE kasi breadwinner siya at walang siyang Governor na tatay na pwedeng pagkunan ng pera.

Example lang ito para mas maintindihan mo ang tinutukoy ko na may reason bakit Warren can hold stocks longer kesa sa average investor.

Personality at circumstance niya yun. Hindi yun para sa lahat.

Hindi kasi natuturo itong mga ganito.

I can bet na hindi mo nga alam na may certain profile, personality at financial background ang mga nagtatagumpay as investors.

Once ang tao hindi pa financially secured at naging investor siya ay nasa over 90% ang chance niyang magfail.

I will talk more about this later.

Punta muna tayo sa paano napalaki ang pera ni Warren.

He owned insurance companies within his conglomerate and could invest their “float”—the premiums they take in but don’t have to pay out in claims right away. Insurance float is the bread and butter of his wealth. He has used these money to create his vast empire and allow him to invest in or buy outright great companies like Geico, American Express, Coca-Cola, Wells Fargo and recently, Apple.

I think most of you don’t know what float is so explain ko muna. In the insurance industry, “other people’s money” is known as float. We are all familiar with the terms premiums and claims, they are both the money that we pay every year for an insurance policy, and the money paid back to us when we have an accident, medical, or other circumstances.

Saan ba napupunta ang pera na binibigay or hinuhulog niny sa insurances?( Dali ask your insurance agent/financial advisor) Insurers don’t pay out all the money right away. Instead, an insurance company will collect money in premiums, invest that money, and pay out claims as needed in the future. The difference between premiums collected and claims paid out is the insurance float. It is very similar to how a bank will collect deposits, invest that money (through loans), and then will repay that money in the future with a withdrawal . You don’t believe me? Here is what Warren had to say about it:

Insurers receive premiums upfront and pay claims later. … This collect-now, pay-later model leaves us holding large sums — money we call “float” — that will eventually go to others. Meanwhile, we get to invest this float for Berkshire’s benefit. …

If premiums exceed the total of expenses and eventual losses, we register an underwriting profit that adds to the investment income produced from the float. This combination allows us to enjoy the use of free money — and, better yet, get paid for holding it. Alas, the hope of this happy result attracts intense competition, so vigorous in most years as to cause the P/C industry as a whole to operate at a significant underwriting loss. This loss, in effect, is what the industry pays to hold its float. Usually this cost is fairly low, but in some catastrophe-ridden years the cost from underwriting losses more than eats up the income derived from use of float. …

Our float has grown from $16 million in 1967, when we entered the business, to $62 billion at the end of 2009. Moreover, we have now operated at an underwriting profit for seven consecutive years. I believe it likely that we will continue to underwrite profitably in most — though certainly not all — future years. If we do so, our float will be cost-free, much as if someone deposited $62 billion with us that we could invest for our own benefit without the payment of interest.

I could add more ideas sa blog na ito but parang ang haba na.

The point I’m trying to make is you cannot just blindly follow what works for Warren Buffet kasi hindi naman kayo same ng background, knowledge at personality.

Baka nga yung idea na bibili si Warren ng stock at plan niya ihold forever eh hindi mo magets.

“Hold forever eh paano ang retirement ko? Paano ang mga bills ko?”

He can do that. Can you?

Gets mo ba ang point ko?

Isang major difference nyo pa na di sinasabi sayo ng mga die-hard Warren Buffet at Ben Graham fans sa Pinas ay yung fact na ang market na pinag-iinvestan mo ay emerging market.

Warren do not like emerging markets. Hindi yan siya nag iinvest sa market natin.

Doon pa lang finish na dapat eh. Lahat ng ideas niya kapag inaapply mo sa PSE stocks ay may mali na sayo.

No one pays attention sa emotional at psychological aspect ng trading at investing.

May dahilan bakit may ibang trader at investor ay mahimbing ang tulog despite may losses or despite cutting their losses on certain trades.

May dahilan bakit ikaw balisa sa mga positions mo.

Di makatulog kakacheck ng port.

May dahilan bakit hindi ka makacut ng losses mo.

May dahilan bakit inuurong mo ang stoploss mo.

May dahilan bakit you feel like a failure sa trading or feel mo malas ka.

Marami ka pang kailangan malaman sa mundo ng trading.

We have this Trade Management Bootcamp kung saan maiintindihan mo bakit ganyan ang performance mo sa mga trades mo.

Kung saan malelearn mo ang mga tamang diskarte sa pagmanage ng trades.