Question

Would you make any changes to Warren Buffet's investment strategy? Why or why not?

Answer 1

Warren buffet is no doubt, one of the most inspiring and legendary investor that the world has ever produced. The investment strategy of Warren Buffet states that investments should be done in stocks for a longer perspective and with some margin of safety. As per his investment strategy stock market is not a place where money can be made in short term or with speculation, the money is made in the long term and with investment in good companies that yield return on their equity and are having strong operational cash flows. His strategy states that an individual should build a " circle of competence" which means a person should be aware of his limitations as to which businesses he understand and investments should be done in only those businesses.

I would like to make a slight change in the investment strategy of warren buffet, in his strategy he does not give importance to latest IT companies which has grown exponentially. He ignored companies like Microsoft, Apple, Facebook, Amazon etc. on the ground that he was not aware of these companies and thus the same are beyond his " circle of competence". In my opinion, this circle of competence can be made a bit more flexible while making investment decisions in ever changing world. Hence, investment opportunity is a opportunity whether it exist in a particular sector, that one might not be fully aware of, therefore,investing should be more flexible and a continuous learning process instead of making rigid rules like " circle of competence".