World's Greatest Investors -Warren Buffet

Online, February 12, 2011 (Newswire.com) - World's Greatest Investors -Warren Buffet

Doug Allen, author of "Million Dollar Profits," comments on the latest report about Warren Buffet's current investment strategy, and how you can model Warren Buffet's psychology to become wealthy.

You can also review Doug Allen's previous op-ed piece
"Secret to Million Dollar Profits -Be Unreasonable".
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One of the fundamental principles of success is modeling. This means find somebody who's achieved the results you want, and model what they did to achieve those results.

Wealth comes from aligning three areas -your psychology, your strategies, and implementation of a plan. By looking at incredibly successful people we can begin to become aware of how to take the first steps to model all of these areas.
Today let's look at Warren Buffet.

Warren Buffett
CEO, Berkshire Hathaway

At a recent Omaha bridge game, Warren Buffett was asked about his smart-looking navy jacket. Buffett opened it and flashed a custom-made Chinese label. "I have a whole closetful," he said. The chairman of Berkshire Hathaway is usually eager to buy American brands like General Electric, Coca-Cola and Harley-Davidson for his investment portfolio-but when the price is right elsewhere, he'll change direction. And as it turns out, he's just as willing to make over his company as he is his wardrobe.

Buffett's 44-year investment record at the helm of Berkshire is the stuff of legend. The 20 percent-a-year increase in the company's book value per share-the company's assets minus its liabilities-is more than double the S&P 500's 9.3 percent return over the same stretch. This month Buffett celebrates 80 years on this planet. He's fond of joking how he plans "to work until six years after" his death. But judging by his recent actions, the significance of his age is not lost on him. With a few deft moves, he has put Berkshire on something closer to autopilot, and some Buffettologists think he's preparing for the day he no longer sits at the helm. "Buffett is foolproofing his portfolio," says Paul Lountzis, a Wyomissing, Pa., asset manager whose portfolio includes Berkshire shares.

The end result: a company that relies much more on day-to-day corporate earnings for its revenue-and less on stock and bond investing. In 2009 revenue from Berkshire's manufacturing, service and retail companies totaled $61.7 billion, up from just $5.7 billion in 1999, while earnings from Uncle Warren's investment portfolio have declined as a share of revenue. No move underscored this change in emphasis more than Buffett's groundbreaking $26.3 billion acquisition of Burlington Northern Santa Fe. To help raise money for the purchase, Berkshire sold shares of long-held names like Johnson & Johnson, Procter & Gamble and Kraft. And other signs have recently emerged that Buffett is less inclined to play the market: At his 2010 annual shareholder's meeting, Buffett and longtime partner Charlie Munger floated the possibility of paying a dividend, a previously sacrilegious idea that would further shrink Berkshire's pool of investable money.

All this means that whoever assumes the reins from Buffett will be managing a very different company. In 2008, Buffett announced a horse race for his successor as chief investment officer, with four secret candidates. The timetable for a transition is anyone's guess, and Buffett declined to comment for this article. But at the annual meeting, Munger, 86, dropped a strong hint, saying the firm would add an investment person "sooner rather than later." One thing is certain: Even with a smaller pool of capital, he or she will have a big suit to fill.

Buffett's Picks
Buffett has sold shares of some of his favorite names over the past year, but he's quietly bought these companies' stock.

Republic Services (RSG: 30.05, -0.36, -1.18%)
Fast-growing waste-management company also pays a healthy dividend.

Becton Dickinson (BDX: 81.29, +0.09, +0.11%)
Uncertainty about health care reform made shares of this medical-device maker look cheap.

Iron Mountain (IRM: 26.68, +0.01, +0.03%)
Information-management firm is benefiting from fears about cyber-snooping.

Tesco (TSCDY)
UK-based 4,800-store chain has been adept at adapting to local markets worldwide-including, since 2007, in the U.S.

Source: SmartMoney.com
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Warren Buffet has two skills that enable him to be incredibly successful. One is the ability to anticipate the future. The other is the ability to understand an assets current value in relation to its current price. Both of the skills are incredibly important when it comes to financial success.

Always anticipate the future and make decisions now based on your best judgment of what's going to happen in the future.

Read more of Doug Allen's commentary on his "Million Dollar Profits" blog.