Value Investing – The Early Warren Buffet Way

Value Investing – The Early Warren Buffet Way

Author: Moneyvineyard

I am presently rereading and recapping Warren Buffet’s partnership writings to his partners from his original partnership. What is amazing about his letters to his investors is that these letters were written before the time that Buffet was renowned in the investment world as a fantastic stock picker. He was 25 years old when he started the partnership and he was entrusted with the equivalent of less then one million dollars in 2010 dollars. At the time he started the partnership he had just ended working for two years in NYC working for his famous Columbia Business School teacher, Ben Graham.
There are a lot of illusions about how Buffet invested his money in his partnership. His partnership letters help shed some light on what sort of stock picks he was making at the time.  His early and relatively unknown partnership letters are even more important for many at home, do it yourself, investors. Because honestly most of us are investing less than one million dollars, just like Buffet when he first started, but he eventually became the richest man in the world. To a majority of “home gamers” these letters are great because unlike the Berkshire Hathaway letters of today, Buffet wasn’t controlling billions of dollars. And he wasn’t making the prices of stocks to move up or day simply because he was buying or getting rid of stock. Simply put, when these letters were written, Buffet was just like you and I, but then he started compounding his money…
Warren Buffet’s Value Investing approach to his 1st million dollars and more – The Buffet Partnership Letters
In his now world renowned letter, the Super Investors of Graham Doddsville, Buffet tells of the performance of his investment partnership, which was operational between the years 1957 to 1969. The partnership returned 29.5% annually, limited partners received a yearly return of 23.8% annually. The main difference (general partnership and limited partnership) is mainly the management fees (the amount Buffet got to keep for himself helping to make his investors rich).  {During the same amount of time the Dow Jones made 7.4% per year. This means that before Buffet took a portion of the profits for fees for managing the money, he was able to outperform the stock market by 22.1% each year!

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