Value Investing – The Original Warren Buffet Technique

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I am currently rereading and summarizing Warren Buffet’s partnership writings to his investors from his original partnership. What is captivating about his writings to his investors is that these letters were written prior to the time that Buffet was famous in the investment world as a great stock picker. He was 25 years of age when he founded the partnership and he was running the equivalent of less then 1 million dollars in 2010 dollars. At the time he started the partnership he had just finished working for 2 years in NYC working for his well known Columbia Business School teacher, Ben Graham.

There are a lot of myths about how Buffet invested his money in his beginning states. His partnership letters help revile what sort of investment choices he was making at the time.  His early and relatively lesser known partnership letters are extra important for most at home, do it yourself, investors. Because honestly most of us are investing less than 1 million dollars, exactly like Buffet when he first started, but he  over time became the richest man in the world. To a majority of “home gamers” these letters are vital because unlike the Berkshire Hathaway letters of today, Buffet wasn’t controlling billions of dollars. And he wasn’t causing the prices of stocks to move up or day simply because he was purchasing or selling stock. Essentially, when these letters were written, Buffet was just like us, but then he began compounding his money…

Warren Buffet’s Value Investing approach to his 1st million dollars and beyond – The Buffet Partnership Letters
In his now famous letter, the Super Investors of Graham Doddsville, Buffet tells of the success of his investment partnership, which was operational between the years 1957 to 1969. The partnership returned 29.5% annually, limited partners received a annual rate of return of 23.8% annually. The difference between the {2 (general partnership and limited partnership) is mainly the management fees (the amount Buffet got to keep for helping to make his investors rich).  {During the same amount of time the Dow Jones returned 7.4% annually. This means that before Buffet took a portion of the profits for managing the capital, he was able to outperform the stock market by 22.1% every year!
These are the annual results in table format.


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