7 secrets that we learnt from warren buffett

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““77 IInn v v eessttmmeenntt SSeeccrreettss II LLeeaarrnneedd FFrroomm WWaarrrreenn BBuuffffeett!!””TThhaatt MMaaddee MMee $$7755,,998833 IInn LLeessss TThhaann 3366 MMoonntthhss…… PPaassssiivveellyy!!

BByy CClliivvee TTaann aanndd KKeenn CChheeee



7 Investment Secrets I Learned From Warren Buffett

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“7 Investment Secrets I Learned From Warren Buffett!” is a © copyright-protected production of 8 Investment Private Limited

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From: Clive Tan & Ken Chee

Re: 7 Investment Secrets I Learned From Warren Buffet

Hi there!

Thank you for downloading this FREE report on the investment secrets that welearned from the world’s most successful investor, Warren Buffett and hissidekick, Charlie Munger when we were among the shareholders who attendedhis Annual General Meeting at Omaha, USA in May 2009.

Before we dwell into the details of what went on during that meeting, allow me(Clive) to give a brief introduction about myself and my partner, Ken.

Ken (left) and I at Invest Fair 2010 and on the cover of Shares Investment magazine.

My name is Clive Tan, an ordinary Singaporean man who used to be a Highschool Teacher. During my days of training to be a teacher, I came into theconcept of value investing and was intrigued by it to want to research and readmore into value investing. I seek out mentors on investing and in that process, I

began to invest my savings from my teaching job into stocks.

Over a span of 5 years, I was diligently doing teaching by day and studyinginvesting by night. During that span of time, I achieved a return of compounded 25% per year, which enabled me to start my first business inchildcare. Soon after starting my business, I quit my teaching job and went intothe business full time.

After a couple of years in the childcare business, I met Ken Chee during aprogram called the Entrepreneur Action Program. We became friends, and at one






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of our coffee shop meetings, we realized that we have a common interest ininvesting, more specifically, value investing. We decided to grow our interestfurther by setting up a mastermind group.

What a mastermind group is basically a coming together of people with acommon purpose. In this case, the purpose is to understand and apply valueinvesting principles in our investments.

The financial crisis in 2008 happened and we knew that we can do somethingabout it to take advantage and take charge of the opportunities arising. That’swhy we came together to create an experiential yet intellectual valueinvesting program in Singapore, marketed as the Millionaire Investor Program.

Successful graduates of the Millionaire Investor Program.

It has become very popular and that’s when we realized that more people wouldlike to learn about value investing.

Since we cannot reach everyone using a program, we decided that a free reportwill get people started, and that’s why we are writing this for you now. As youread this report, we hope that it will inspire you to learn even more aboutinvesting and get started on your Financial Freedom and Abundance!

Happy Reading!

Clive Tan & Ken Chee






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MMeeeettiinngg WWaarrrreenn BBuuffffeetttt iinn PPeerrssoonn!!

Everything happens for a reason.

We arrived a day before the event actually started to collect our internationalpasses. My partner, Ken was so affected by jet lag (after all, we were in the air for over 20 hrs with at least 4 flights between Singapore & Omaha) that we wokeup late to go to collect our meeting credentials and because of that, we ran intoWarren Buffett himself!

We met the man (with his bodyguards) at a parking lot. Even though we couldn’t take a shot together with him, he told us it was fine to snap a picture of him.

So without further ado…






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The 7 Investment Secrets I learned from Warren Buffett

Secret #1: One bird in hand is worth twobirds in the bush?

This popular saying basically means that it is better to stick with somethingyou already have, rather than pursuing something you may never get.

Charlie commented that this saying is not exactly true; one must consider thecontext surrounding it. What if there are more than two birds in the bush? Howabout if the birds are injured? Investment is really about laying out cash, and how

much cash one can get back.

If a person cannot assess with much certainty the future value of what one canget back, he/she is actually speculating. The more we know about the birds inthe bushes, the more certain we are of our Return on Investment.

Coming down to a more practical level, one must ask ourselves how certain weare about the returns and whether they are sustainable. Obviously, the morepredictable the returns are, the more an investor will be willing to put his cash in,both in terms of amount and duration.

The reason why this saying makes sense is when there is a high level of uncertainty in the returns expected. Many a times, quotes not contextualizedproperly can often lead to mistaken understanding.

##22 V V aalluuee sshhoouuttss aatt y yoouu!!

According to Warren, when one sees value, it should shout/scream at you .It is widely circulated that Charlie (or any other persons) have never seen Warrentake out a calculator/computer to assess whether a company is undervalued or not.

Obviously, Warren probably has more processing power in his brain than mostpeople when it comes to investing. It is also a result of him reaching a level of unconscious competence over the years after looking at plenty of businesses andinvesting opportunities.

As I have observed around me, I notice that the people who achieved masteryin their areas are those who keep doing it better and repeatedly . Many worldclass athletes are a case in point. For that period of exertion that they have






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(example: less than 10 seconds for 100 meters run), the athletes have clocked inmuch more hours of intense training.

Another simple analogy will be: shopping for a product that you are familiar with.If you are very aware of what the prices are for the product is, you will be verylikely to see a great bargain when the price is lower than usual or when it is onsale. Basically, the bargain will shout at you!

##33 DDoonn’’tt bbee aa ssmmaarrtt aalleecc!!

In the academic world and life in general, it is often preached or assumed thathigh intelligence is a prerequisite to in life. While that may apply to certaincontexts, there are increasing research reports that showed that it may not be thecase.

In fact, Charlie went on to say that a person could have an IQ of 150 and stillbe a disaster in investing. Another person with IQ of 120 and operates withinhis circle of competence, will be able to do much better!

Having said that, I think to be a good investor (or a great human being!) requiresa certain level of intellect. Once past a certain point, the extra intellectual abilitywill contribute a lesser role to the overall success of the person. Instead, the nextpoint will become more important.

##44 IInn v v eessttiinngg iiss ssiimmppllee bbuutt nnoott eeaass y y bbeeccaauussee

ooff eemmoottiioonnaall iinnssttaabbiilliitt y y

Instead of intellect, the key to investment success is emotional stability.Investing is simple but not easy because of emotional stability. What is emotionalstability about? In simple terms with regard to this, it refers to the way a personhandles his/her emotions when the investments make or lose money.

Fear and greed are two emotions that the investor can never run away from. Howhe/she handle those, in spite of all the knowledge that he/she has is crucial toinvestment success.

When the stock market drops like a rock, say down 50% or even more,many people will intellectually know that it is the time to buy. However, theywill hesitate (and hesitate) due to their fear of being wrong and also fear of goingagainst the crowd.






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On the other hand, when the market is bullish, and many people around him/her seems to be making money so easily, it is hard for the person not to also join inthe herd to buy stocks when it seems so easy to make money.

How one keeps one’s sanity in the face of market fluctuations is the key totrue investment success.

#5 Leverage is what causes trouble for you.

Leverage has been instrumental in making a lot of people wealthy and alsoa lot of people broke. It is a double-edged sword. Because of leverage, gainsand losses can be magnified many times, making it the ultimate tool for thespeculator.

In Warren’s opinion, leverage is what causes trouble for you. After all, wheneveryone is rushing for the exit door at the same time, there will be manycasualties.

Think about this, people who did not leverage on borrowed money, the most theycould lose is what they have in the market. However, for those who haveleveraged heavily, the money lost could be more than what they even own intotal, making them the candidates for bankruptcy.

In addition to the famous quote referring to derivatives as “financial weapons of mass destruction”, Warren also stressed that derivatives pose great risk tofinancial well being because many people think they are safe from over-leveraging.

##66 TT w woo w waa y yss ttoo pprrootteecctt y yoouurrsseellff ffrroomm

iinnffllaattiioonn

With increasing inflationary worries and concern, it was inevitable that there were

questions ask about inflation and how to combat it. According to Buffett, the bestprotection against inflation is your own earning power . After all, if you arethe best doctor, lawyer, teacher, or whatever, you will get your share of thenational economic pie, regardless of the value of the currency.

The second way to protect you against inflation is to invest in a greatcompany. People will give up their own earnings to enjoy whatever productsyour company is making.






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His sidekick, Charlie Munger, suggest becoming a brain surgeon and investing inCoca Cola. I would say that it is a more specific way to combat inflation. After all,very few patients will be arguing with the brain surgeon on the price of his/her services at that critical stage in life.

##77 WWaarrrreenn w wiillll tteeaacchh 22 ccoouurrsseess oonn iinn v v eessttiinngg

Warren was asked to explain his investment strategies and how to teach that tothe next generation. He explained that he will teach 2 courses on the following:

1) How to value a business2) How to think about markets

Being able to value a business is essential to be an investor. Warren mentionedthat one should start with his circle of competence, that is, invest in companies or assets that one understands. Knowing where that edge of the boundary isimportant. There are a lot of people who do not realize that there is afundamental difference between price and value, causing many to overpayfor their stocks (or other assets).

For a business, valuing it basically take three approaches: dividends, income andassets. To be able to value a company is not just an exercise in the analysis of the numbers in the company; it is also being able to assess the future viability of a business. Most importantly is the ability to assess the intrinsic value of abusiness to be able to pay a low or at most fair price with an adequate margin of safety for the investment.

Warren likes to use Benjamin Graham (Warren’s teacher & mentor) analogy of acharacter called Mr. Market to illustrate the behavior of the markets.

Imagine that there is this fictional character whose mood swings from beingextremely optimistic to being extremely pessimistic. The prices that Mr. Marketwill quote will swing in accordance to his mood. If he is very optimistic, the pricesin which he will quote will be high. If pessimistic, the prices in which he will quotewill be low. There are some people who think that value investors like pessimism.Actually, that’s not quite accurate. Value investors are not necessarilyoptimistic or pessimistic. Value investors just like the low prices thatpessimism brings.






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A A rree Y Y oouu RReeaadd y y TToo BBee A A V V aalluuee IInn v v eessttoorr??

Warren Buffett and his company, Berkshire Hathaway, have seen many crisesthroughout their many years of investing. The success that Warren Buffett andCharlie Munger have brought to their investment results bear testimony totheir sound investment principles.

Their nuggets of advice are derived from their experiences and learning fromthem will bring you (and many others who are reading this report) to the nextlevel of applying the principles and secrets that work for this legend.

With this report, we hope that it has served its purpose of “enlightening” you tothe merits and principles of value investing. Putting these secrets to work isthe next stage that you will need to do in order to achieve the kind of financial abundance that you deserve.

For more information on how you can become an even better value investor, justclick on the link below and I’ll tell you more:


7 secrets that we learnt from warren buffett

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