Lesson 1

How to Invest in the Stock market

Download Preston's Free Checklist

Download Preston's free checklist. His checklist was developed after spending countless hours studying billionaires like, Warren Buffett, Carl Icahn, and Ray Dalio. With his checklist, you can find safe picks that protect and grow your principal. Additionally, Preston reads a lot of books and writes an executive summary for each book he reads. If you download his checklist, you will be added to his monthly e-mail list where he sends his book summaries. There are never any advertisements...ever. Here's an example of one of Preston's executive summaries, based on the book written by Billionaire Charlies Koch.

Got Questions?


The Investor's PODcast

Get a free autographed copy of the Warren Buffett Accounting Book or Warren Buffett's Three Favorite Books. Simply submit your question to The Investor's PODcast. If your question gets answered on the air, the founders of this site, Preston Pysh and Stig Brodersen, will send you a free signed copy of their book!


The Warren Buffett Forum

Ask your question at the Buffett's Books money forum and interact with other smart investors like yourself. You won't find any day traders on this forum! Here's the link to The Warren Buffett Forum.

Don't get lost in the Wall Street Fee-Factory

It's taken us a few years to finally figure out the right mix of tools that get results and save money. If you click on the toolbox, you'll see an article we wrote that lays-out the brokers and research tools we personally use.

Executive Summary


The Dow is going down and up and down at the period of election. When asked about his opinion on this, Warren Buffett said, “The lower the price for the sock, the better!”


Berkshire’s ownership of IBM is going significantly well since the end of the year. They are not laying out any money. They bought 6.7% of Coca Cola years ago and now, it’s already 9%. They also own 13% of the shares of American Express and still goes up eventually. What’s better than owning more wonderful businesses without laying out any money?


Great businesses contribute in the greatness of a country.


The best way to speed up developing countries is to get rid of graft and corruption. A great question asked to Buffett in the interview is, “If you were in Subterranean Africa and the government won’t allow you to bring vaccines for children, would you find out the way to do it through bribes? The end justifies the means anyway.”


Buffett answered wisely by saying, “You are at a disadvantage when your own country says you can’t engage in it, while other countries can. In the end, you need to follow the rules of the country and have people who work for you.”


If ever one of Berkshire’s subsidiaries did something wrong, the answer is not to get rid of the CEO, but to get rid of the person who committed the mistake.


Buffett quoted, “We want people who match our principles and not principles who match our people.”


Lastly and not related to business, Before Princess Diana died a few weeks later on, she told Buffett at a party that when she entered the White House, she found out that Bill Clinton is the sexiest man alive. Although this story does not have anything to do with Berkshire’s business, this shows that even people in the highest positions know how to be humorous at times. They are still people after all.


Summary


The Dow is going down and up and down at the period of election. When asked about his opinion on this, Warren Buffett said, “The lower the price for the sock, the better!”


Berkshire Hathaway, run by Buffett, owns stocks at IBM, Wells Fargo, American Express, Coca Cola and a lot more companies. They are even increasing their ownerships in all 4 of their largest investments without laying out a penny. The lower the stocks, the more amount of dollars are good. It’s significant overtime.


Berkshire’s ownership of IBM is going significantly well since the end of the year. They are not laying out any money. That happens long enough and it makes a lot of difference. They bought 6.7% of Coca Cola some years ago. Now, it’s already 9% without them laying another dime. American express is the same. They own 13% of its shares and still goes up eventually. Their interest in the company goes up. What’s better than owning more wonderful businesses without laying out any money?


There are thousands of shareholders who attended the annual shareholders meeting. The questions asked by the shareholders reflect what Buffett haven’t communicated well enough to them. However, they have discussed a logical stock repurchase program in the shareholders’ annual report as well as a local evident policy.


Of course, the topic of succession always comes to the discussion. Warren Buffett and the board are on the same page. They did not want to name a name. However, they tell people how they’re dealing with it. They include it in the annual report.


Like Coke, Well Fargo, and IBM, Buffett neither knows who the next CEO will be nor who picked them. He just knew they had a board of directors who had the job of choosing the best person. The board of Berkshire spends more time in talking about succession. They’re blessed in the sense that there are movable candidates. Those candidates are currently with them and they know them well; they see them perform.


Buffett said that they won’t consider dividend at this point, but they can discuss conditions that make sense today like times when you can’t keep money in the business and generate more than a dollar or present value by using that money.


Steve Jobs mentioned many years ago about the billions of dollars sitting around. It’s very unlikely that Apple will find an acquisition that is in the tens and tens of billions of dollars. There’s no sense sitting with a cash overtime. They either auto pay or repurchase.


Great businesses contribute in the greatness of a country.


The best way to speed up developing countries is to get rid of graft and corruption. If Buffett were a shareholder and looked at all the net benefits and costs, to get that jumpstart in Mexico and to do in Rome as the Romans do, he can almost make a case that as a shareholder, he’ll be really ambiguous about the decisions they make. In the end, when in Rome, you can only do what the romans do as long as it is not against your country.


A great question asked to Buffett in the interview is, “If you were in Subterranean Africa and the government won’t allow you to bring vaccines for children, would you find out the way to do it through bribes? The end justifies the means anyway.”


Buffett answered wisely by saying, “You are at a disadvantage when your own country says you can’t engage in it, while other countries can. In the end, you need to follow the rules of the country and you got to have people who work for you and believe that they follow the rules.”


With Berkshire having 270 people, somebody’s doing something wrong. Of course, Buffett hopes to find out about it. If it’s minor, he wants it corrected. When people are doing what they aren’t supposed to be doing, the problem will never be solved 100%. Someone has to find a way to fix it.


If the management of Berkshire learned within the Walmart issue that somehow it got to the board that there was a cover up of a grander proportion, Buffett said it would depend on who the person is and what the situation is whether or not it will change his view to own it.


If it’s something really terrible and it got to the board without them knowing anything about it, change the board! There won’t be a problem owning the stock afterwards. That is not a reason to throw away a business.


If one of Berkshire’s subsidiaries did something wrong, the answer is not to get rid of the CEO, but to get rid of the person who committed the mistake.


Buffett quoted, “We want people who match our principles and not principles who match our people.”


Although out of the topic, here’s one interesting story about Buffett and Princess Diana. Buffett was in a library alone one time with Princess Diana. He was dumbfounded and didn’t know what to say at that time. In another scenario, they again saw each other at a party at Jake Graham’s house. Princess Diana died a few weeks later on. The surprising thing in this story is much unexpected. She told Buffett at the party that when she entered the White House, she found out that Bill Clinton is the sexiest man alive. Buffett wondered but didn’t ask who the least sexy guy alive is.