Buffett has often said, 'I am a good investor, because primarily I am a businessman'.
Interesting to follow Buffett's evolution. He started off as a 100% Grahamite, buying low PE, low Price to book value stocks. Berkshire Hathaway was textile mill when Buffett took it over, thinking he could turn it around. What he discovered after pouring lots of capital into the business was that there is nothing you can do to make money out of a competitive, low margin commodity business. As soon as he invested in new equipment to reduce costs all his competitors followed suit and he was back to square one. He finally closed it down.
This lead Buffett to say 'when a cr*ap business with bad economics meets a good manaegement, its the reputaion of the cr*ap business which remains intact'.
It is only after his Berkshire Hathaway lesson that Buffett saw the light. He combined Graham's ideas (ie buying business for less than what they are worth) with Philip Fisher's ideas for finding the right businesses to buy in the first place (ie franchise value, good brands, price setting oligopolies etc).
The rest is history.
CHO Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
