Hello friends, in today’s, article we see how warren buffet uses the method for his investment and they become the investment secret of warren Buffett, which comes from chapter 2 of the common stocks and uncommon profits book. This secret of warren buffet helps him to become the $100 billion club person.
Chapter 2: What ” Scuttlebutt” can do (Investment Secret of Warren Buffett)
So, friends, we know up to now from the stock market we can make a lot of money, just by finding outstanding companies and investing in them.
How do know we if this company is an outstanding company or what, this is only possible by using the Scuttlebutt method? (Investment Secret of Warren Buffett)
So many people say this method, we can’t apply this, so authors say those people if you want to find out an outstanding company, you should have to follow it.
So let’s start, you have to talk with the customer, suppliers, competitors, management, and former employee, by asking these people you get a clear image of the company of relative strengths and weaknesses. these people are right about the company because they are directly involved in the company connection. so these people know better than the outsider broker. (Investment Secret of Warren Buffett)
You can also talk to other people like research scientists in universities and government companies. And you can also talk with executives of trade associations and former employees of the company.
The former employee helps you to know about companies strengths and weaknesses insights so whatever you get the information, you have to make them cross-check, that information because it is very important.
Sometimes an employee is fired and talks bad thought about the company, so you have to ask them a question like, ” why are you leaving the company.” So this question helps you to know if his thought is right or wrong about the company. (Investment Secret of Warren Buffett)
It is not necessary to get you whatever information about the company from any part is almost true as the company shows you. so you have to match it. and compare this information and that information and use common sense and get the right outstanding company.
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If a Company is outstanding, then the average investor also gets a clear image of that outstanding company. If you like a company by scuttlebutt method, then you to do talk to the management. (Investment Secret of Warren Buffett)
After meeting management people, you can fill the gap present in your clear image of an outstanding company.
if you talk about five companies in any industry, you have to talk about the other 4 companies to one company that you have to invest in that. After asking this, you get the best information about the companies and their strength and weakness. And you get a clear image, of which company is better than the other company. (Investment Secret of Warren Buffett)
While following the scuttlebutt method ( talking to customers, suppliers, employees, former employees, competitors, and management people) we get the information that we know which company is outstanding or not.
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But now the question is what actually we have to talk about and what we have to know about asking questions they will see in the next chapter. (Investment Secret of Warren Buffett)
So, this is all about the scuttlebutt method, ken(Philip A. Fisher) talks about the diamond point of this book.
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