Brian Zen's blog

During our portfolio reviews and private advisory sessions for value investors, we discovered a mental blind spot that resulted in heart-breaking losses for many otherwise very intelligent value investors.

According to investing guru Warren Buffett, U.S. stocks are a logical investment when their total market value equals 70% to 80% of Gross National Product.

Read more:
http://money.cnn.com/2009/02/04/magazines/fortune/buffett_metric.fortune...

Last year, Buffett was right on the money by predicting that a $700 billion bank bailout was not enough.

It may be time for investors to dust off their copy of Ben Graham and David Dodd's classic Security Analysis. Graham and Dodd paid a lot of attention to the liquidation value of companies as a way of lowering the risk of loss even under a worst-case scenario.

Here is what Bill Gates has to say in the very detailed annual letter of his foundation:

In 1989, the year of the Tiananmen Square turmoil in Beijing, I came to America with practically nothing except some philosophical ideas from Confucius, Lao Tzu and Buddha. I later met Warren Buffett in New York and start to read about his teachings. As I read along, I start to realize that Warren Buffett and the oriental philosophers were essentially teaching the same thing.

As we heal our wounds in 2008, we are doing some deep "reverse thinking" about value investing.

One intelligent investor pin-pointed what's on the back of our mind: Are we over-thinking a simple process? Maybe. Maybe not.

Seeing the vibrant volunteering community in free software open source community, I had serious worries about Microsoft (MSFT) for months. Yet I did not act on my insight because a number of superinvestors I respect were tooting Microsoft. So I had doubts about my first-hand experience and my own judgment.

Today, my first hand knowledge about Microsoft and my worst nightmare is confirmed:

I recent had a chance to ask Alice Schroder about Warren Buffett's filing system, since she had a chance to look into everything first hand.

It turns out the Mr. Buffett regularly keeps the following files:
1. Financial reports from subsidiaries of Berkshire;
2. Investments and securities he follows;
3. People files, including a file on Alice Schroder;
4. Events;

When asked to summarize all his success secrets into one word, Warren Buffett, the world's greatest investor, said that word is "focus". And sitting on the same dinner table, Bill Gates, the world's richest man, agreed.