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International, First Empire State, Gillette, Salomon Inc, and US Air All these investments could be characterized as value investments because the downside risk was low Large company preferred stocks, on average, are safe investments because they are not expected to default on their dividend payments or the principal amounts Out of these ve, only Gillette turned out to be a good growth stock In 1990, Berkshire invested $600 million in Gillette, which was taken over in 2005 by Procter and Gamble, with Berkshire receiving about $5 billion in Procter and Gamble stock in exchange Over the 15-year period, Berkshire earned about 16 percent per year, which was twice the rate on the S&P 500 index for the same period The other four investments essentially generated normal returns In 2008, Berkshire invested in three preferred stocks or convertible instruments that are similar to preferred stock They are issued by Goldman Sachs ($5 billion), General Electric ($3 billion), and Wrigley ($65 billion) Even if one of them turns out to be a growth stock, returns to Berkshire will be high If not, Berkshire will earn decent interest on these investments It is important to realize that low downside risk is very important In the previous example of picking ve stocks, if you were to pick them from a fast-growing high-tech industry, you would have probably lost all your investment in one or two stocks Assuming that you make 200 percent on one stock as pointed out earlier, earn the market return on the remaining two, and lose all your investment in two stocks, your nal sum will be $5,662, giving you an annual rate of only 42 percent on your initial $5,000 investment This is substantially less than the 10 percent that you would have earned had you simply invested in the market At least two of Buffett s well-known practices can be directly linked to the two-step process I ve outlined First, consider his practice of investing only in his circle of competence In the two-step process, you need to compute a stock s intrinsic value, which requires eliable earnings forecasts for several years in the future You can forecast well only when you know the company well or when it is in your circle of competence Second, Buffett rarely invests in high-tech or fast-growing industries One possible reason may be that they are not in his circle of competence But even if Buffett knew a lot about some fast-growing companies, he might avoid them because it is hard to nd stocks with a high margin of safety. crystal reports barcode generator free Barcode Generator for Crystal Reports - Free download and ... 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