Hi this is Tutor Nick P and this is Quotes 265. The quotes today are by Warren Buffet.
Okay. We have several quotes and on top we have two quotes that kind of go
together. So let's look at the quotes here. Of course remember this is the very
famous Warren Buffett , the one that's on the you know, the Forbes list. He's usually
second I think he's actually third supposedly , the richest person in the
world. But anyway, let's continue. So here's the first one. Risk comes from not
knowing what you are doing. Okay. The next quote that goes together
with this is "Never invest in a business you cannot understand. " All right. So let's
look at these two quotes first. Let's look at the note here. What Buffett is
telling you is that if you buy what you know, your chances of making mistakes are
greatly reduced. They greatly are lower. You'll have less. You'll have less risk
and hopefully you should do better. Okay let's continue, let's continue here. When
we say by what you know, we mean did you have experience in that industry ? In that
field of the companies or the commodities you want to invest in ? Did
you major in this area ? Did you do any actual study in this area ? Did you have a
job that somehow connected to this industry ? And finally did you do any
serious homework, what we sometimes call research ? You know, did you check
on you know what the current prices are ? What the prices were in the past ? Or were
the actions over the last few years of it going up and down ?
What makes this stock you know, rise and what kind of what kind of situations in
the economy would make this this you know, stock possibly fall ? If it's a
product, if they sell products or something did you actually buy them ? How
do you feel comparing them to others ? So you have to look at the competition.
Things like that. So he says you know, only buy what you know. Only buy what you
think you can actually understand. Well and that's basically what he means by
that. All right. Here's another little note. Warren Buffett claimed to avoid
tech stocks because he says he did not understand the tech industry. So he was
trying to ... I guess he's saying he practices what he preaches. So he's
telling you don't buy what you don't understand and he himself says that he
never really understood tech or he couldn't understand all of it. You know,
what mean you know , what factors may make this go up and down. So he avoided it.
All right and let's look at the second part down here. Here's another quote.
Forecasts may tell you a good deal about the forecaster or the forecasters the
people that are giving you the forecast, They tell you nothing about the future.
Okay. Let's look at the note here. He is basically telling you to beware of
forecasters, especially those that appear on business stations. Some of them may
have ... may simply have been paid to promote a stock. You know, so . so you don't
know. that could be one thing that you kind of learn about them or possibly
learn about them. Or you're looking about you know, their logic that they're using
or their explanation. So you can learn a lot about them. But I guess he's saying
don't actually trust their forecasts. Often they disclose if they own the
stock or not and then that's kind of important. But there's two ways of
thinking about it. So I don't know if this really helps. So let's continue here.
Although I'm not sure this tells you much because some think if he does own
the stock. Maybe he's just trying to encourage you to buy the stock. So you
pump up the price or at least all the people out there pump up the price and
then he may sell at that point. And that would be actually like taking advantage
of the people and if he doesn't own the stock. Like what we say here. And, and if
he doesn't own the stock then, then why is he encouraging you to buy it ? If he's
not practicing what he preaches. So , so this is what he's saying be careful
about you know what forecaster's you take advice from. There are some other sites
out there you know, that, that's all they do. If you do want to listen to them
check out their track record. See if they if their forecasts have really come true
or not. That might be part of it too. If you want to listen to their advice at
all. Anyway hope you got it. I hope you found it informative. I hope you found it
enjoyable. Thank you for your time. Bye- bye.