Warren Buffet - Essay Example

Comments (0) Cite this document
This may be done on yearly, half yearly or quarterly terms. This payment is however paid in direct proportion to the number of shares an entity holds. In the United States, the law requires…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER96.2% of users find it useful
Warren Buffet
Read TextPreview

Extract of sample "Warren Buffet"

Introduction Companies that trade publicly always make some payments to shareholders and the owners. This may be done on yearly, half yearly or quarterly terms. This payment is however paid in direct proportion to the number of shares an entity holds. In the United States, the law requires that the payment only be made out of the current company’s earnings or out of what was held from the previous periods. The company makes a decision regarding the whole amount to be shared before dividing it by the number of shares in deciding the dividend.
Active investors try to apply their intelligence in the pursuit of arriving at the best deals inside the financial market. The active management always attempts to select attractive areas of investment. They decide the ripe time to join and enter markets, sectors, and places of leverage in the market. Their point is to make profits, and always aspire to do more than they could be doing.
Passive management of investments does not make an attempt to differentiate between unattractive and attractive securities, or keep tabs on the markets. They invest in wide sectors that are called indexes. The aim is also to make profits (Bernstein 2001). But due to the nature of the market they accept average returns. They actually diversify their investments. Active management of shares is quite appealing on paper. But it is substantially costly and surrounded by decreasing returns when compared to passive investment.
Given the unpredictability of markets and economies, it is better to diversify the risks rather than put one’s investment in one company or market. Some people can make accurate predictions on investment returns, but this may not always be the case. If the predictions are right, the returns are also abundant. In case of a misjudgment, the losses incurred could be quite severe.
The future security prices are equally unpredictable. As a result, it is difficult to predict their future. On the basis of this, a passive investor who spreads the risk is better taken care of. If one can predict rightly, then the returns are always good.
The risks and returns are basically correlated. This is the major positive side of active investing. The high potential returns are always risky to venture in. A risk in investment is the potential to lose on the investment. Passive investment spreads the risks by diversifying the investment areas, hence a reduced risk overly.
Active management is by a great deal more expensive than passive one. Active investors must incur costs in order to match the returns of the normally passive investor. The costs include: management fees, trading expenses, market impact fees, commissions, and other taxes. On the converse, the passive investor’s index is approximately zero point five percent in a year. The wrap fee in the active investment case ranges from two to nine percent (Evanson Asset Management 2009).
From the above comparison between the active and passive investors, I agree that Buffet is correct in his statement. In as far as the chance to amass huge returns exists; the active investor has more fees to incur and stands a big risk to make losses on the investments. The fact that Buffet is an active investor in the Berkshire Hathaway and has witnessed a reasonable return cannot blind any potential investor on the needs of active investment.
The implication of this situation is not to discourage active investment but rather to call for caution while investing. This paper does not in any way dissuade people from engaging in investment as active investors. It only presents a case in support of passive investment ahead of active one.
Bernstein, W, 2001, The intelligent asset allocator, McGraw-Hill, Australia.
Evanson Asset Management, 2009, Specializing in index and passive management,
Low cost, fixed annual retainer fees. Evanson Asset Management press, Viewed 24 November 2009, Read More
Cite this document
  • APA
  • MLA
(“Warren Buffet Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
Warren Buffet Essay Example | Topics and Well Written Essays - 500 words. Retrieved from
(Warren Buffet Essay Example | Topics and Well Written Essays - 500 Words)
Warren Buffet Essay Example | Topics and Well Written Essays - 500 Words.
“Warren Buffet Essay Example | Topics and Well Written Essays - 500 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document


How Storytelling Builds Next-Generation Leaders: Warren Buffet

..., essence and the leadership personality; further a detailed study of Buffett’s leadership qualities is performed in order to understand the qualities that resulted in his success. The paper concludes with identification of few leadership challenges. Table of Contents 1. Introduction 4 2. Why Warren Buffet? 4 3. Leadership- In general 5 3.1. Its Scope 5 3.2 Its Essence 5 3.3 The Leadership Personality 6 3.4 Leadership Qualities 6 3.5 Variables of Leadership 6 4. The Role Model: Warren Buffett and his leadership attributes 7 4.1. Constant Reflection and Learning 7 4.2. Passion and Commitment 8 4.3. Character and Principles 8 5. Pre-requisites for Leadership 9 5.1. Ownership and...
12 Pages(3000 words)Essay

Lessons on Business in What Can You Learn from Warren Buffet

... would continue to prosper, I would apply Buffett’s investment principle, which is to control money, hold it, and try not to spend too much on unnecessary resources. Works Cited Anderson, Joel. “Words of Wisdom from Warren Buffett.” Equities. Equities, 24 Jan. 2012. Web. 10 Feb. 2012. warren-buffett/>. Cho, Myeong-Hyeon. “Ownership Structure, Investment, and the Corporate Value: An Empirical Analysis.” Journal of Financial Economics 47 (1998): 103-121. Print. DuBois, Shelley. “Warren Buffet: The People’s Businessperson of the Year.” CNNMoney. CNNMoney, 17 Nov. 2011. Web. 10 Jan. 2012. warren-buffett-peoples-businessperson... ?Lessons on Business in What Can You Learn from Warren Buffett: A Book Review The Premise The global community today depends mostly on successful business...
5 Pages(1250 words)Book Report/Review

Warren Buffet Analysis of Sociological Approach

...? Warren Buffet: Analysis of Sociological approach Division The rise of the United s as a First World country cannot be accredited only to its dominant capitalist Government theory. We have seen evidence to the nation experiencing phases of great wealth even under socialist government policies, giving rise to many millionaires that contributed towards the economy. There are very many theories on the evolution of society and the causes and effects of change in social status. However the current financial crisis that the nation is facing can be contributed to many factors that go far beyond simplistic Marxian theories of social class. When we review the current economic climate in the United States based on...
4 Pages(1000 words)Essay

Prepare a comparative analysis research paper on people whom you feel are great business communicators, (e.g. Warren Buffet, Opr

... Section/# A Comparative analysis of Three Great Business Leaders: Steve Jobs, Oprah Winfrey, and Bill Gates When one considers the three names which have been listed within the title to this brief research paper, they may be quickly inclined to think that due to the nature of these individuals as well as the distinctly different realms of business that they represent that there would be little to any similarity between them. However, the truth of the matter is that even though the products that they might be representing and/or selling are inherently different, the methods by which they engage the consumer with and the means by which the actual communication takes place is far more similar than different. As a function... Section/# A...
5 Pages(1250 words)Essay

Tesco - Warren Buffet

...? Tesco - Warren Buffet 0 Introduction The report aims to talks about entrepreneurship and the skills associated with it. The report is based on Tesco and the man behind Tesco success, Warren Buffet. The overall purpose of the report is to analysis the key skills of entrepreneurs such as Warren Buffet which has helped them to become great entrepreneurs. By analyzing the key skills it will help individuals to cultivate the necessary skills which can make one successful entrepreneur. In addition to the entrepreneur’s skills, the concept of marketing and marketing mix has also been explained in relation to the chosen organization. In an organization the culture plays a vital role and henceforth the report also aims to discuss about... ,...
6 Pages(1500 words)Lab Report

Equity Valuation in the Style of Warren Buffet Project

...? Equity Valuation in the Style of Warren Buffet Project Table of Contents Introduction 4 The Four Filters Approach 4 Filter Understanding of a company and its products 4 Filter 2 – Competitive Advantage 5 Filter 3 – Ability and Trustworthiness of Management 5 Filter 4 – Intrinsic Value Analysis 5 Free-Cash Flows 5 Key Assumptions 6 Stock Valuation – Determination of Intrinsic Value 7 Ratio Analysis 8 Profitability Ratios 9 Solvency Ratios 10 Turnover Ratios 11 Liquidity Ratios 12 Conclusion and Recommendations 14 Works Cited 15 Appendices 16 Table 1 – Income Statement of Apple Inc 16 Table 2 – Balance Sheet of Apple Inc 17 Table 3 – Cash Flow Statement of Apple Inc 18 Introduction The investment decision...
7 Pages(1750 words)Essay

Warren court

...Baker v. Carr Introduction Earl Warren was the Chief Justice of the Supreme Court of the United s from 1953 to 1969. This period is referred to as the Warren Court because of the epoch making judicial decisions. Judicial review of political powers and actions was perhaps never more strongly exercised. Earl Warren was the judge who delivered the judgment in Brown v. Board of Education. This case is considered to be the most important decision the Warren Court. Yet, according to Earl Warren himself, the most important case is Baker v. Carr. Baker v. Carr dealt with the question whether the political establishment had absolute powers to reapportionment....
2 Pages(500 words)Essay

Warren E. Buffet 2005

...Warren E. Buffet 2005 0 Introduction Widely known as 'the Oracle of Omaha' Warren Buffett is the Chairman of Berkshire Hathaway and considered to be the greatest investor of the century. Even though the wealth of Warren Buffett oscillates with the performance of the stock market, the valuation of his wealth was standing close to $ 42.3 billion and he continued to be the second richest man in the world. The investments of Warren Buffett are being handled by his company Berkshire Hathaway as a holding company. The investments of Warren Buffett at some point of time included investments in companies like Coca-Cola, American Express, and...
19 Pages(4750 words)Essay

Warren Buffet & His Organization

...How the organization was led Warren Buffet led his organization to success and won the heart of the employees as well as the other members of the society. Warren was inspirational to his followers which had positive impacts on their ability to carry out their duties effectively. According to the participative leadership style, the leaders can achieve their goals and objectives by sharing the decision making abilities with the employees. This was evident during the leadership of Warren. Empowering the employees to make decisions is useful in ensuring that a sense of belonging to the organization is developed. This encourages the employees to be loyal to the company....
3 Pages(750 words)Assignment

1st Warren Buffet and 2nd Hershey Foods

...Case study of Warren Buffet and Hershey Foods Introduction Warren Buffet/ Berkshire Hathaway In 2008, he was ranked as the world’s wealthiest person. Warren Buffet is one of the world’s leading investor. He is the CEO of Berkshire and holds majority of its shares. With his wealth, he is a well renowned philanthropist. He has given majority of his vast wealth to charity and other humanitarian programs. His investment philosophy has been majorly based on business value. Investment Philosophy Over years, Buffet has changed his philosophy on investment based on change in times. Currently, he has been practicing value...
4 Pages(1000 words)Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Warren Buffet for FREE!

Contact Us