Buffett

Definition

Buffett refers to Warren Buffett, one of the most successful investors in history and the chairman of Berkshire Hathaway. Known for his value investing strategy, Buffett's principles are often studied in finance courses for their practical insights into stock valuation and market performance.

5 Must Know Facts For Your Next Test

1. Warren Buffett is a proponent of the Dividend Discount Model (DDM) to assess the intrinsic value of stocks.
2. He emphasizes long-term investment and holding onto stocks with strong fundamentals.
3. Buffett has consistently outperformed the S&P 500 over several decades, showcasing his investment acumen.
4. He prefers companies with a durable competitive advantage and reliable management.
5. Buffett advises against trying to time the market, advocating instead for purchasing undervalued stocks with growth potential.

Review Questions

• What investment model does Warren Buffett often use to evaluate stocks?
• Why does Buffett prefer long-term investments over short-term trading?
• How has Warren Buffett's performance compared to the S&P 500 historically?

Related terms

Value Investing: An investment strategy where stocks are selected based on their intrinsic value being higher than their market price.

Intrinsic Value: The perceived or calculated true value of an asset, as opposed to its current market price.

S&P 500: A stock market index tracking the performance of 500 large companies listed on stock exchanges in the United States.