5. Warren Buffett Stock Basics

Preston Pysh is the #1 selling Amazon author of two books on Warren Buffett. The books can be found at the following location:

In lesson five, we learned that Warren Buffett has four rules that he uses for investing in stocks. All the rules must be met in order for him to purchase shares of a company. Those four rules are the following:
Rule 1: A stock must be stable and understandable
Rule 2: A Stock must have long term prospects
Rule 3: A Stock must be managed by vigilant leaders
Rule 4: A Stock must be undervalued
We also learned a very basic valuation technique that Warren Buffett used when he worked for Benjamin Graham. The technique multiplies the P/E ratio by the P/BV ratio and the result needs to be lower than 22.5.
A key fundamental of Warren Buffett stock basics is the idea that the stock market is nothing more than a location where he can buy or sell his shares. The market only provides a platform for him to purchase undervalued companies. He always buys on the assumption that they stock market could close tomorrow and not open for five years ñ and it would have no impact on his decision to buy a particular company.
Finally, we learned that Warren Buffett possess great patience. He never tries to make enormous gains, but instead consistent gains at reasonable levels. He always thinks for himself and always determines the value of a stock based on what HE thinks a company is worth - not the market.

[Alfosan]

Preston, you are doing gods work.
I really appreciate it.
If you were a "stock" I would definitely buy you and hold you long term.

[dawgg]

Don't forget that Charlie Munger and Warren Buffett invented the idea of investing and buying at both market highs and lows. As Warren Buffet noted, he has witnessed this occur frequently during his life. I'm not a trader. Never did my husband and I make more money than others in the middle class. With a $4 million stock portfolio, we intend to retire at age 58. Never have we ever sold even one share of stock...

[wayneoh]

Watching this during the 2020 virus lockdown!! Such a good use of spare time. Amazing lessons, thanks

[surao]

This is by far the best lessons I have seen on
Stock market. Why can’t universities teach us in such a brilliant way?
Great jo!

[Nico-qsdy]

I can’t thank you enough! You are literally the only one that explains everything in such a way that I can fully understand it!

[sunilvamadevan]

Thanks for making the calculations to be understood clearly & thereby helping to be safely positioned in the market !

[eyoong]

I first started learning from Preston since Dec 2016. Preston had changed my life completely. I and my family is so happy we have people like Preston that providing great help to the community. The most valuable thing i learned and hardest to do was not to do anything and wait for the right opportunity . I am currently (Apr 2020) 60% on USD cash & 20% on PM (physical & hi quality gold equities). Unfortunately i bought more physical silver that lag, subjected to industry demand and less liquid than gold which i should be the other way. I guess i just need to be more patient for silver time. Thanks Preston

[BrandonChung]

This is amazing, how is it free! Thank you for simplifying stocks.

[alialrubayee]

Incredible value in these videos. Thankyou so much

[dimaskelvianto]

Dear Mr Preston Pysh, Greeting from Indonesia. I would like to thank you so much for all your educational videos you made for all of us, especially for me. You made it so simple and relevant. Wishing you all the best in whatever you do and your future endeavors! Thank you once again!

[georgebeaulieu]

Excellent and concise explanation indeed. You spoken slowly and clearly and it is refreshing. I will only add that one must also improve the market timing after that using the Elliott wave principle. Thank you for this essential tutorial. Best regards.

[julianvalencia]

This is awesome information. The only thing I would change would be to give examples with actual, real life, businesses and stocks so that it is more directly applicable.

[stephanieoconnor]

Nice intro on P/E that I was struggling with. Agree that a stock like AT&T is underpriced. even more so right now in the COVID 19 crisis. BUT AT&T does pay a great dividend. So I do consider dividend payout and history behind the dividend that's paid as very important.

[maboshesekeli]

@Preston Pysh. Thank you for the simple and clear video, my concern is what do i compare to the market price for me to conclude that a stock is undervalued? After a company has passed all the four rules?

Rule 1: A stock must be stable and understandable
Rule 2: A Stock must have long term prospects
Rule 3: A Stock must be managed by vigilant leaders
Rule 4: A Stock must be undervalued

[ItzMaxYongz]

Holy, thank you very much sir ! I can't believe all of this course are free !! May god bless you and your family !

[neighborhoodandrew]

Watching in 2024 and so thankful. Thank you Preston

[mps]

Starts with the fundamentals and then applies them nicely to stocks! Thanks :)

[rowanphillips]

I love your course. Its very well structured and I've already learned a lot.

[MrJonRio]

This is a great series of videos and very easily understandable. I very much appreciate that you have gone to the trouble. May blessings follow you.

[MrSAM]

Hi Sir the way you explained was really fantastic ..I am actually new to the Stock market and looking for long term investments in India...still learning and hoping if this formula still works in 2020 ???? Please help me on this