The Warrent Buffet Way – Part I

Here’s what I’ve got from reading “The Warrent Buffet Way” written by Robert G. Hagstrom:

* Took the ideas and integrate into your own approach in investing. Only from your own ideas you can create wealth. Be your own self.

* When the price of a company stocks are sold below their intrinsic value; act firm and decisive.

* Preferences in buying stocks:

1. Buy certainty in a discount price. Certainty in here means: possibility to predict and forecast the next economy condition of a company.
2. You’re in your competency circle: a cumulative of your experience.
3. If there’s no opportunity at all then wide your competence circle by learn diligently of a new business models.

* Knowledge from Benjamin Graham:

Economic Disaster

Michelle Zanini on Mckinsey Quarterly Report discusses about what natural and economic disasters have in common. Many scientists in the field of complexity theory argue that earthquake, forest fires, power blackouts, and the like are extremely difficult or even impossible to foresee because they are the products of many interdependent “agents” and cascades of events in inherently unstable systems that generate large variations.

This is just in line with chaos theory which defined as sensitivity to the initial condition. This is happened on a dynamic system (a system that changed over time).

Then, how do we use this kind of analysis in practice?

Economic Society – Part 1

Robert L. Heilbroner on The Making of Economic Society argued that the economic problem is related with the individual and its society. That is how the individual interact with the society. The individual needs each other just to stay survive. This is called the struggle for existence.

The basic problem of economics is how societies forge and maintain the bonds which guarantee their material survival. Scarcity came not as a natural caused but it’s “human nature”. Humans are limited in using and managing the nature to fulfill their needs.