Warren Buffett - The Mr. Market Concept

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Warren Buffett wanted to be a millionaire by the time he was 30. That was just who he was. After school, he went to New York to study under Ben Graham. He was Buffett's guru and introduced him to the concept of Mr. Market. The market is there to serve you, not to instruct you. Mr. Market is a fellow you can do business with, but he has mood swings. You have a wonderful opportunity to do business with a psychotic fellow.

Buffett moved back to Omaha after his 20's. He married Susie Thompson. He taught his children a lesson by installing a slot machine in his home. He looked to invest in obscure companies. He had to scrutinize the stock market back then, while today you could get all of this information with the click of a mouse. He looked for companies that he could buy on the cheap that had just a bit more value left in them.

A lot of people have made money buy buying a cheap company that isn't making money, and then selling off the assets. It serves a useful economic function, but it will not make you popular. It means that people will lose their jobs. Buffett liked making a profit this way, but he didn't like how unpopular it made him among people. Owning Coca-cola (KO) is a lot funner.

Buffett says that you should be a business owner. Since the 1960's, he has been buying entire companies. He is a manager as well as an investor. His His management secret is that he is very light-handed. He recently bought Clayton Homes for more than a billion dollars without even going to look at the company. He rarely even visits his own companies. Bill Gates gave him a tour of Microsoft, and that was more than he had ever seen of any company he owns.

It is important to allocate capital properly. He wants to take the money that one of his businesses is earning and put it into another.

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