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Price is what you pay, value is what you get.

Charlie Munger

Vice-Chairman of Berkshire Hathaway, Berkshire Hathaway

A share represents a fractional ownership of an underlying business and a bond is a loan to a business. Therefore, in the medium to long term, the performance of shares and bonds should strongly correlate with those of the underlying businesses.

I see myself as a value investor. That is, I invest in undervalued securities instead of betting on the development of the market as a whole. I buy securities if the market price is below my fair value estimate. I do not believe in timing the market as this would be speculation. Neither do I believe in overweighting certain countries or industries simply to beat a certain index. I avoid leverage and try to minimize complexity in order to provide better protection from permanent capital loss.

My goal is to generate annual returns greater than 10% with a few select value investments. It is difficult or near impossible to exactly predict when these undervalued securities will reach fair value – in some cases the progression could be very fast, but in many cases it could take years.

In my mind, a long-term track record of at least five years is required to draw conclusions about the quality of a portfolio manager. Financial markets are very volatile and what may appear to be a trend, even over a couple of years, can sometimes be misleading.

You will not be right simply because a large number of people momentarily agree with you. You will not be right simply because important people agree with you. You will be right, over the course of many transactions, if your hypotheses are correct, your facts are correct, and your reasoning is correct.

Warren Buffett

Chairman of Berkshire Hathaway, Berkshire Hathaway

Warren Buffet – The Superinvestors of Graham and Doddsville

“Superinvestor” Warren E. Buffet, who got an A+ from Ben Graham at Columbia in 1951, never stopped making the grade. He made his fortune using the principles of Graham and Dodd’s Security Analysis. Here, in celebration of the fiftieth anniversary of that classic text, he tracks the records of investors who stick to the “value approach” and have gotten rich going by the book.

The Superinvestors of Graham and Doddsville – (English)

The Superinvestors of Graham and Doddsville (Deutsch/German)