Warren Buffet's decision to gift a few shares of the companies in which he owned stakes, to his daughter-in-law, marked the beginning of what would turn out to be a long and satisfying journey for Mary Buffett in the world of investing.
"Till then, Warren used to gift us $10,000 in cash and we would spend it in no time. One year, he handed over a much wider envelope and said he had decided to gift some shares in the companies that Berkshire (Warren Buffet’s firm) had a stake in," Mary told CNBC-TV18.
She said she held on to the shares for some months instead of cashing them, and noticed that their prices had appreciated. "So I went out and bought some more, and since then whenever Warren gifts me shares, I buy more of them later on," she said.
Mary Buffett was one of the speakers at Extreme Wealth Summit's India’s edition, managed by Team Resh, a global online education company that specialises in investment education.
On India, Mary said it had many companies that ticked the key boxes of ‘Buffetology'—shorthand for the investment techniques used by Warren Buffet.
"Even Warren has mentioned that he wants to invest in India…it has companies with great brands, low debt—typically less than 5 times annual earnings—and great financials," Mary said.
As to the rules, she followed while investing, Mary said the most important thing was to understand the company’s history and not just its balance sheet.
"The history of any company is important—when was it started, who started it," she said.
"The letters written by the head of the company to shareholders reveal quite a bit. After you have researched the company’s background, read the company President’s letter to shareholders, you then check the balance sheet and see if it matches what is said in the letters," Mary said.
She said she never invests in initial public offerings.
"For me, a company should have been around for ten years at least, so that I can have a good idea of the trend in the company’s earnings. I am OK with companies that report a steady increase in earnings, rather than those which see sudden spikes and drops," she said.
Like Warren, Mary says her holding period for stocks is "forever."
After doing her research and being convinced about a company, she does not invest the entire amount right away.
First Published: IST