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Want to increase the value of your investment? Here's Warren Buffet's advice

Want to increase the value of your investment? Here's Warren Buffet's advice

If you're an investor on Dalal Street, you must be looking for some meaningful advice from ace investors and market experts amid such tough times. Investment guru Warren Buffet, in a recent letter to shareholders, has some points to ponder.

Want to increase the value of your investment? Here's Warren Buffet's advice Want to increase the value of your investment? Here's Warren Buffet's advice

The Indian market is going through unprecedented volatility amid the Russia-Ukraine crisis. Last week, the benchmark equity indices tanked over 3 per cent amid an escalation of crisis between Russia and Ukraine.
 
The 30-share BSE Sensex plunged 1,974.45 points to 55,858.52 on February 25 against 57,832.97 on February 18. Likewise, the 50-share NSE Nifty index declined 617.90 points to 16,658.40 during the same period.
 
If you're an investor on Dalal Street, you must be looking for some meaningful advice from ace investors and market experts amid such tough times. In an annual letter,  sent out on February 26, written by Warren Buffett to Berkshire’s shareholders, he has highlighted three ways by which he can increase the value of your investment.
 
He said that the first way is always front and center in his mind: increase the long-term earning power of Berkshire’s controlled businesses through internal growth or by making acquisitions. Today, as per the ace investor, the internal opportunities deliver far better returns than acquisitions. The size of those opportunities, however, is small compared to Berkshire’s resources.
 
The second mantra is to buy publicly traded stocks (non-controlling part-interests in the many good or great businesses). From time to time, such possibilities are both numerous and blatantly attractive.
 
The CEO of Berkshire Hathaway sought to reassure shareholders that he retains a strong appetite for acquisitions and stock investments, but he hasn't found many of either that interest him at today's inflated prices. He blamed the continued low-interest rates for helping drive up the price of stocks and whole companies alike.
 
The investment guru has a caveat, however. "Today, though, we find little that excites us. That’s largely because of a truism: Long-term interest rates that are low push the prices of all productive investments upward, whether these are stocks, apartments, farms, oil wells, whatever. Other factors influence valuations as well, but interest rates will always be important," he highlighted.
 
Lastly, the final path to value creation is to repurchase Berkshire shares, he said. Through that simple act, we increase your share of the many controlled and non-controlled businesses Berkshire owns, the 91-year-old investor added.
 
The Oracle of Omaha reckoned that when the price/value equation is right, this path is the easiest and most certain way for to increase wealth. 
 
Billionaire Warren Buffett also said that he and his partner Charlie Munger have pledged that Berkshire (along with its subsidiaries other than BNSF and BHE) will always hold more than $30 billion of cash and equivalents. "We want your company to be financially impregnable and never dependent on the kindness of strangers," he said.
 
Munger is an American billionaire investor, businessman, and former real estate attorney. He is also a vice-chairman of Berkshire Hathaway, the conglomerate controlled by Buffett.