Summary

An investor recounts a serendipitous encounter with Warren Buffett in a Singapore Airlines lounge, overhearing an investment tip, and making a significant profit by following Buffett's lead.

Abstract

The narrative begins with the author being granted access to a priority lounge where they unexpectedly meet Warren Buffett. Buffett is overheard discussing a stock purchase over the phone, which the author, a small-time investor, decides to act upon. The author quickly buys shares of the mentioned company, leveraging the insider-like information. The decision is based on the affordability of the shares, supported by a favorable Price to Earning (P/E) ratio, indicating the company's potential for growth. The author reflects on the investment's success, expressing regret for not investing more, as the share price multiplied significantly. The story concludes with the author emphasizing the importance of P/E ratios in investment decisions and the impact of large investors, or "whales," on the market, while also revealing that the encounter with Buffett was a dream.

Opinions

The author believes that overhearing investment decisions made by prominent investors can provide a valuable edge in the market.
The author suggests that a low P/E ratio is indicative of a company being undervalued and a good opportunity for investment.
There is an opinion that following the investment patterns of "whales" can lead to substantial financial gains for smaller investors.
The author implies that investing conservatively, as they did, can be a source of regret if the investment proves to be highly profitable.
The author humorously contrasts the dream of effortless wealth through savvy investing with the reality of continuing to work and write.
Despite the dreamlike nature of the encounter with Warren Buffett, the author maintains that the lesson about investment strategies and the significance of P/E ratios is real and valuable.

The Day I Swam With The Whales I Made Big Money – And You Can Too

my encounter with the greatest investor of all times

Despite flying in economy class, a friend invited me to wait with him in the Singapore Airlines priority lounge for a flight to New York.

I did not trust my eyes when we entered into the lounge.

Warren

Warren Buffet was sitting there with his wife. Obviously, they had a good holiday in Singapore. Both of them were chatting fondly about the Marina Bay Area, the Esplanade, Mc Ritchie Nature Reservoir and other landmarks they enjoyed while in Singapore.

Their vivid talk was unfortunately interrupted by a phone call. Warren had to switch to business talk and had to converse over the phone.

The Order

„Buy them at below 60 USD and buy for 50 Million“ was all that I could hear sitting just 3 meters away from him. This was an advise to buy shares to one of his employees in New York.

By chance, I understood the name of the shares. For me, a small-time investor, this was an exciting moment.

This was first-hand information about a big investment on the stock exchange going to happen today.

I did not waste my time and logged into my broker account on my hand-phone. Somehow a bit shy, I was stealthily squinting at Warren Buffet, as if I wanted to assure, that he can not sense what I intended to do.

Whales

One thing I have learned in the comparably short time since I am investing, markets are moved by whales.

Whales are investors or institutions, who are buying or selling incredibly large amounts of shares or other assets. Knowing when those big fish are investing and in what particular asset is a precious advantage for any investor.

Not one minute I was in doubt that this is the chance of my lifetime. I took the remaining cash on my brokerage account and bought exactly those shares, which Warren mentioned to his employee over the phone.

Price versus Earning

I did a quick check if the shares were not overvalued, which means assuring that the share price is in a reasonable range.

They were affordable with a P/E ratio of 12. Whenever a P/E ratio is below 20 I would be comfortable buying. Of course I would consider the overall market situation as well.

P/E ratio stands for Price to Earning ratio.

The price-to-earnings ratio (P/E ratio) is a ratio to measure the value of a company. It compares its actual share price to its earnings per share (EPS).

If the company’s Earnings are 5 USD Per Share, the EPS is 5 USD.

If the actual share price is 60 USD, the P/E ratio would be 60 divided by 5, which is 12. The P/E = 12.

Investors use P/E ratios to determine the relative value of a company. They use P/E as a guide for their investment decisions.

Keep in Mind

The price-to-earnings (P/E) ratio compares a company’s share price to its earnings per share (EPS).

A high P/E ratio means that a company is overvalued.

Overvalued means expensive.

A low P/E ratio means that a company is undervalued.

Undervalued means cheap.

At a low P/E investors are expecting the company to grow in the future.

For companies losing money (no earnings), the P/E can not be calculated.

Investors consider an undervalued company as a good opportunity to buy shares of this company.

For sure Warren’s people have verified several other factors before they would dare to recommend him to buy shares for such a large amount of money.

A few weeks later I regret that I did not dump all my available cash into this investment. The share price soared 10 times to an all-time high and I could have retired at the age of 64 already.

But unfortunately as I am not a risk-taker, I have to keep on going to write fictional stories on Medium in the hope to cover the cost of my coffees. Don’t worry I do not have a coffee donation account yet, might never have.

I hope you could at least enjoy the educational part of my story. Sorry the meeting with Warren Buffet was a dream and did not really happen. Still come over, have a visit to Singapore, it is a beautiful city.

Takeaway

Whales are not only ocean creatures, but as well market makers
Watch and follow the whales if you want to invest
P/E ratio is an important criteria for investment decisions
Singapore is a beautiful city

||||||||||||||||||||||||||||||||

Read, Write and Earn.

Join Medium, it will change your life.