How Warren Buffett Made His First Million by Investing in Cigar Butts
Channel: Understanding Stocks
Date: 25/02/2023

longer video here https://www.youtube.com/watch?v=hc3ImOxS_QA

Warren Buffett started out investing in cigar butts, or cheap stocks, because he believed that they were undervalued and had the potential to generate high returns. He learned this approach from his mentor, Benjamin Graham, who was a value investor. Value investors look for stocks that are trading for less than their intrinsic value, or the value of the company's assets minus its liabilities.

Buffett's first investment was in Cities Service Preferred stock when he was 11 years old. He bought three shares for $38 per share, but sold them when the stock price fell to $27. He later regretted selling the stock, as it quickly rose to more than $200 per share.

In the early 1950s, Buffett started managing his own investment partnership. He used the value investing approach to find undervalued stocks, and his partnership was very successful. In 1965, Buffett merged his partnership with Berkshire Hathaway, a textile company. He then began to use Berkshire as a holding company for his other investments.

Buffett has been one of the most successful investors in history. He has made billions of dollars by investing in cigar butts, and he is now one of the richest people in the world. His success is a testament to the power of value investing.

Here are some of the key principles of value investing:

Look for stocks that are trading for less than their intrinsic value.
Invest in companies that have strong fundamentals, such as a good management team, a competitive advantage, and a history of profitability.
Be patient and hold your investments for the long term.
Value investing is a long-term strategy that can be very rewarding. However, it is important to remember that there is no guarantee of success. Investors should always do their own research before making any investment decisions.




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