If you are a beginner that’s a great book but if you have read quite a bit already on value investing like I did, then that’s the usual stuff that you already know. Nevertheless, this book had some impact on me. Since it was written in 1999, already 18 years ago, it made me realize that on the topic of value investing, everything has already been written many times over and since many years already. To figure this out, you'll need to estimate how much a company should realistically be worth five years from now, and such an estimate is only possible if a company has consistent earnings.

Examine the kinds of companies that capture Buffett's interest, and learn how you can use this information to make your own investment choices of the future Timeless investing strategies for any economy—in this step-by-step guide, you will learn the formula Warren Buffet used to succeed. In addition, individuals involved in the production of investment articles are subject to a personal account dealing restriction, which prevents them from placing a transaction in the specified instrument(s) for a period before and for five working days after such publication. This is to avoid personal interests conflicting with the interests of the recipients of those investment articles. Keith Ashworth-Lord: Very rarely. I mean, our portfolio turnover currently, if you exclude where we've had to sell things, say, for meeting redemptions or whatever, it's currently 7.5%, and that's high by historic standards. So no, we don't chop and change the fund. Like Buffett, our ideal holding period is forever.Don't believe it? Ask people you know why they chose to invest in a particular mutual fund and they will more than likely tell you it was because the fund was ranked as a top performer. The nature of the mutual fund beast influences a lot of very smart people into playing a short-term game with enormous amounts of capital. No matter what fund managers' personal convictions may be, producing the best short-term results possible is the way to keep their job. The main author – Mary Buffett is the former spouse of one of Warren Buffett’s sons. Nothing like making a little bread off the ex-father-in-law’s name…

to be precise. This 12.7% is your Annual Compounding Rate of Return. In other words, purchasing IBM at the current share price will likely earn you around 12% a year for each of the coming five years, given that your estimate is correct. You can calculate this rate of return using the following formula: Please note that our article on this investment should not be considered to be a regular publication. But more important than the return on sales is the return on equity. We look very closely at that. We want to see a high return on equity, both average equity and also marginal equity, the latest incrementals. The average for the fund is currently 28.1% return on equity, so we really are high. And then the other thing that we're very keen on is cash conversion. We like companies that convert at least 80% of their accounting earnings into free cash measured over a five-year moving average. And again, we have that within the fund. To be able to determine your rate of return, earnings and profitability should not only be above-average, but also predictable .

Fund Objective

Keith Ashworth-Lord: Yes, it's a very disciplined process. We start off looking for businesses with an economic moat, which effectively means they've got barriers to entry and they've got pricing power. And the way we go about it is we analyse the growth potential of the companies in their markets, the growth potential of the markets themselves. If you are looking for some ground-breaking Buffett investment revelation in this book, you'll be disappointed. But if you follow Warren Buffett, then you know that very little of his investment philosophy is truly ground-breaking, but that's the point. It's simple, but difficult to apply. Without some predictability of future earnings, any calculation of a future value is mere speculation, and speculation is an invitation to folly." Buffettology Keith Ashworth-Lord, fund manager of the CFP SDL UK Buffettology fund: Thanks for inviting me, Kyle. Because of that, our companies tend to have very strong balance sheets, this focus on cash flow. And, to give you the median interest cover for companies in the fund is currently about 28 times. We've got 14 of the 27 companies with net cash and another 11 with modest gearing. So those are the sort of financial metrics we're looking at, but the key thing is management, management that acts with the owner's eye and behaves like an owner of the business, not a sort of hired hand.

First determine what you want to own, then wait for a good price. The price you pay determines your rate of return. What you will find in this book is what I have found to be difficult to find elsewhere. This book essentially combines the qualitative investment philosophy that Warren talks about a great deal about publicly with the quantitive aspects he rarely talks about directly. And it does a pretty good job of combining these two worlds.

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With the help of Munger, Buffett seriously improved upon Graham. The key realization was that if you only focus on getting something for the cheapest possible price, you will end up with crappy companies in your portfolio which never realize their value, or even worse, see their value decline over time, because many of these cheap companies are cheap for a good reason! The discussion of Warren's qualitative approach is nothing new if you've heard any of Warren's talks or if you've read any of his shareholder letters. I think some of the phrases might have been lifted straight from the letters.

Keith Ashworth-Lord: Very much so. What you were seeing there was a contraction of price-to-earnings (P/E) multiples on the investee companies that we own. And just to prove that point, 23 of our 27 companies in 2022 reported earnings or trading statements that were in line with expectations or even better than expectations. But of those 27 companies, 22 of them finished the year with their share prices down and in some cases down quite a lot. So, I can't stress really too much that the operating performance of the companies is absolutely up to scratch. And it's been purely a market phenomenon. This rotation, so-called rotation into value, which has affected the multiples that the market accords our companies. I have to say, Ben Graham had a lot to learn as an investor. His ideas of how to value companies were all shaped by how the Great Crash and the Depression almost destroyed him, and he was always a little afraid of what the market can do. It left him with an aftermath of fear for the rest of his life, and all his methods were designed to keep that at bay.

Fund Managers

There are dozens of books written on the topic of value investing, and many even claim to reveal the secrets that made superinvestor Warren Buffett billions of dollars. David Clark and Mary Buffett's bestselling book Buffettology , as the name suggests, belongs to the latter category, but the reason it stands out is that it actually delivers on its promise.