A revision of the book-The Warren Buffett Way by Robert Hagstrom（2）

Chapter three is titled, “Our Main Business ( Publicity PR ) is Insurance.” Buffett is a nice stock picker and knows a worth enterprise when he sees one. He started buying insurance companies in 1967 in Nebraska, introducing Berkshire to the complicated world of insurance. In two years he managed to increase the stock/bond value of both companies by 11 million dollars. After purchasing the insurance company first two, has eyes for Geico and Geico bought large quantities of shares and made a profitable business and. He paid two later.Three billion dollars to gain the rest of GEICO, and then paid about 16 billion dollars to gain General Re. Berkshire Hathaway’s insurance distribution has went on fairly beneficial,with a cash stream of 44.Two billion dollars in 2003 alone.

Chapter four is titled, “Buying a Business ( Crisis communication ) .” Buffett and his company are experts at buying companies; he owns over 100 of them. This chapter brings in the reader to an important substance:no matter if you possess a corporation or possess a corporation outright ,you possess the firm. Buying large amounts of stock in a company gives you partial ownership, but Buffett says it never allows you to do what he likes most, and that is capital allocation. If you do not own a company, you cannot tell officers what to do with money and when, and that is a negative to Buffett. This chapter discusses what Buffett seeks for when purchasing a corporation. One of the main things is he only buys companies he understands. If he buys a company which is too complex or makes a product he does not comprehend, he risks losing large sums of money.

Chapter five titled:. He uses three main areas when examining the workings of a business. The first is if the business ( Corporate communications ) is simple and understandable. Basically, does Buffett understand what the business sells/produces and how they do it. Second,does the commerse have a continual operating history? This means that the corporation is not just a hot stock that will certainly grow in worth in the short run,however,a corporation that will grow year after year ,even though only a yearly five percent growing. Third, Buffett looks for favorable long term prospects. This ties in with the second idea, that a company should get better realize more profits year after year. If a company does not meet these three criteria, Buffett is not interested. After all, there are thousands of companies out there to choose from.