Warren Buffett Buying Shares Of Kraft
The Dynamic Wealth Report
April 9, 2008
Follow The Smart Money
Have you ever had a problem you couldn’t solve? A project that you had
never done before? You had no idea where to start? I know I have. We all
have. So what do we do? We seek out someone with experience and
knowledge. Someone who’s “been there, done that”.
Most self help gurus and personal improvement coaches agree. You want to
improve something about yourself . . . find someone who’s already
successful. Watch them closely and mirror their actions. Want to cook
better? Watch a professional chef and try to think like they do. Want a
better tennis serve? Watch tennis pros and copy their moves exactly. Want to lose weight? Find someone who has already lost weight and do
what they do.
This is called modeling.
You model your actions and thoughts like someone who is already
successful. Your success will often follow as well. When it comes to
investing we can do the same thing. Lucky for us it’s fairly easy to
study some of the great investors of our time. Just walk into any
bookstore and look around. I like Borders but any local shop will do.
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You’ll find a number of books written by or about successful people on
investing. Want to be a real estate developer . . . read something by
Donald Trump. Want to invest like Peter Lynch? He has a book too. So
does Jim Rogers. Read something by Jim Cramer if you want to go crazy
and pull all your hair out (just kidding . . . kind of).
Even George Soros got into the act and published a manifesto on himself.
I still love the title of his book “Soros on Soros” by George Soros. No,
that man doesn’t have an ego.
The key is you don’t have to act blindly.
These great investors have already figured out how to make money. What
you need to determine is if their investment strategy is right for you. Then mirror what these great investors do.
There is one investor who doesn’t write books. And he’s one of the best
investors in the world . . . Warren Buffett. So what do we read on
Warren? Everything he has ever written. Once a year he pens a letter to
the shareholders of Berkshire Hathaway (BRKA) where he talks about the
markets and his thoughts on investing.
These are some really great reads. Best of all you can find each of
these letters free of charge on the company website. Trust me. It’s
worth your time. He’s very insightful.
But here’s the rub. . . Warren won’t tell you what he is investing in.
Nope. He tries to keep that a secret. He knows when people see him
buying something they will follow him and bid the price up. That makes
it more expensive for him to buy.
But Warren can’t keep a secret.
Most people don’t know this. Big money managers and companies like
Berkshire Hathaway have to tell the government what they own – what they
are buying and selling. It’s the law. And guess what. That information
is considered public information and you can get it right from the
government – free of charge.
Now I don’t have enough space to get into all of the details. But,
learning what Warren is buying is easy to find out. Just a few days ago
I took a look and discovered a company that Warren likes. It’s not some
small startup. It’s not some miracle biotechnology company. It’s a
company I’m sure you know about . . . and you might even have some in
your portfolio already.
What company am I talking about?
Kraft (KFT). In the last few months Warren has been slowly accumulating
millions and millions of shares of Kraft. Maybe you have heard of some
of their products: Kraft cheese, Oscar Meyer meats, Philadelphia
cream cheese, Maxwell House coffee, Nabisco crackers and Oreo cookies. They have
another 50 brands that I don’t have room to mention.
Now I know what some of you are thinking. Didn’t this news come out a
few months ago? It did. But here is what everyone is missing. Buffett is
building his stake. Just look at the announcements. He has been a buyer
for some time now. And he paid too much!
That’s right. He overpaid.
Shares of Kraft traded between $32 and $36 per share while Warren was
building his position. Look at it today. Since the start of the year the
stock has traded below $32 and at one point reached a low of around $28.
Right now you can buy all the Kraft you want for $31.50 per share. If you
believe in the Warren Buffet style of investing and want to mirror what he does,
now is the time to back up the truck on Kraft. . . . you
can buy it at a better price than the greatest investor of all time.
• Copper (Over $4 per pound)
Copper prices continued a march higher this week approaching record
highs of $4.04. Demand from China and India top the list as to why the
metal is moving higher. Also adding to higher prices is the weakening US
Dollar. The cheaper dollar makes international purchases of copper less
expensive.
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