The New Trophy Wife

Moral of the Story (for those who don't have time to read the article): we need to be drop dead georgeous and SMART!!! So getting that advance degree is a KEY element in marring rich. (okay, it is not a necessity, but why not increase your chances?)

Seriously now- the real moral of the story - be careful! you never know who is the trophy in the relationship

The New Trophy Wife By: Deborah SiegelSummary: Alpha women are highly sought-after partners, but men may be more intimidated than they admit.

Pete Beeman, a 36-year-old sculptor, met Page Fortna, 34, on New Year's Eve in 1997, while she was studying for a doctorate in political science. "I was totally impressed that she was getting a Ph.D.," recalls Beeman. "She has a powerhouse background that speaks of personal drive and dedication. It was attractive, not in a sexual way, but in a necessary way. I'm not interested in someone who doesn't have as much to offer me as I have to offer her."
Massimo Tassan-Solet met Karin Dauch at an Internet merger party in 2000. She introduced herself to the derivatives trader, now 36, by announcing, "Hi, I'm Karin, and I have to go now." "She was strong and unconventional in her approach, but she did it with humor," recalls Tassan-Solet of Dauch, who at age 29 owned doubleKappa, a Web design and branding company. "I don't look at people as a list of what they've done," says Tassan-Solet. "But what she's done is remarkable."

Beeman and Tassan-Solet aren't the only newlyweds who are proud of their wives' CVs. New trends in the mating game—marrying someone like yourself—plus an unstable economy breathe new life into the term "peer marriage." In previous generations, successful doctors, lawyers and bankers sought wives who looked good, were well-bred and made a mean Stroganoff to boot. Now, more and more alpha males are looking for something else from the A-list: accomplishment.

According to a Match.com poll, 48 percent of men (and an equal percentage of women) reported dating partners who drew the same income as they did. Twenty percent of men reported dating women who earned more. Jim Pak, 34, was introduced to Kristin Ketner, 38, a Harvard MBA and a hedge fund manager, through a mutual friend, who warned him not to be intimidated by her credentials. She was a research analyst for Goldman Sachs; he was unemployed and playing a lot of golf. "In certain regards, she outshines me," says Pak of his wife. "She's more accomplished academically. People may be more impressed with her than with me." (Pak is now chief financial officer at an electronic stock trading services group.)

Men's attraction to professionally achieving mates is one piece of a much larger story. "We're experiencing a historic change in the things people want out of marriage, the reasons they enter into it and stay in it," says historian Stephanie Coontz of Evergreen State College in Olympia, Washington. Men in their 20s and 30s embarking on first marriages are relieved to no longer be the sole breadwinner and decision-maker, a burden many watched their fathers shoulder. "These men are truly redefining masculinity," says Terrence Real, a psychologist and author of How Can I Get Through to You? Closing the Intimacy Gap Between Men and Women. And the pursuit of a high-achiever is not solely the province of youth. Status-conscious tycoons want to have second marriages—and affairs—with alpha women. "Older men want the most impressive achiever in the office. In the eyes of a man's peers, the woman with the career and degrees counts for more than Miss America," says Frank Pittman, psychiatrist to Atlanta's elite. "Status is attached to a woman who is successful, not to a woman with a perfectly pear-shaped ass."
Common wisdom holds that men are socially programmed and biologically compelled to select women based on beauty and youth, physical traits that signal reproductive health. But many men date "across" and, increasingly, "up" the axes of education and achievement, with less regard for age, or for the notorious "arm candy" factor.

"There's a higher degree of parity between marital partners," observes Pak. "Men want a wife who reflect well in every aspect." In some circles, more eyebrows are raised when a guy marries a woman who doesn't match him in education or professional status. Says David, a single 33-year-old assistant professor at a prestigious university who routinely filters online dating ads using the criterion of education: "If I were with someone who wasn't of comparable intelligence, energy and drive, there'd be those who thought I'd wimped out and chosen a relationship where I could call the shots and be the all-powerful center."

"Showing up with a stacked bubblehead is like conspicuous consumption," agrees Real. "It's embarrassing to flag yourself as not interested in a real relationship." But is a woman's success sexy?

"Absolutely," says David. "And the absence of an attempt to do something interesting or difficult is a turnoff." Henry Kissinger may have been right: Power is the ultimate aphrodisiac.
Rise of the Power Bride

When Scott South, a sociologist at the University at Albany, State University of New York, examined the characteristics most desirable to black and white men ages 19 to 35, he found that a woman's ability to hold a steady job mattered more than her age, previous marriages, maternal status, religion or race. Men were more willing to marry women with more, rather than less, education than they themselves had. A wise move, since women eclipse men at the same rates at which they attain bachelor's and master's degrees, and the number of women pursuing higher education continues to steadily climb.

Many of today's grooms believe that through positive or negative example, their own moms set the stage for a high-octane wife. After his parents separated when he was 12, Jim Pak watched his mother raise three kids while pursuing an advanced degree in art history. "That kind of role model helps you not be intimidated by highly motivated, successful women," he says. Others view their mothers' lives as cautionary tales. "My mom was very unhappy that she had little energy for anything other than raising her four kids," says a former newlywed groom who married a woman who works in finance. "I wouldn't want to marry someone who felt that unfulfilled."

"Our generation is highly cognizant of the divorce rate," adds Pak. "We learned from our parents' mistakes."

But it's not always easy. Charting a marital course markedly different from that of one's parents means there's no role model to consult. And alpha woman expects more of a domestic partnership—and an emotional connection—than her husband may have seen growing up. "Women are demanding more emotionally because logistically they don't have to get married," says Real. "They want guys to be articulate and open about their feelings." The trouble, finds Real, is that "most men are not trained to do those things."

A solution to this impasse, says Barry McCarthy, a psychologist in Washington, D.C., who works with many high-achieving couples, is for spouses to communicate their expectations from the get-go: "It's great that men are no longer the success object and women are no longer the sex object. But when people organize their lives differently from their cultures or families of origin, they have to make it work practically and emotionally. You have to negotiate before [marriage] how you're going to deal with the core issues of sex, money and kids."

The Unromantic Bottom Line
There's another pragmatic reason men prize new high-earning brides. Our romantic ideals are always grounded in economic realities, from the Victorian marriage model to the 1980s masters of the universe for whom a standard-issue trophy wife was a badge of honor. The bearish market calls for couples to act as an economic unit. Families with two breadwinners have been in the majority since 1998, and single twentysomethings' and thirtysomethings' desire for a two-income merger has intensified in the shadow of the recession. Women earn less than men (78 cents to the male dollar) and seriously lag in the highest-paying sectors, like engineering, investment banking and high tech. But wives have been catching up to and surpassing their husbands since the 1980s, particularly among the well-off. (Of wives who earn more than $100,000, one in three is married to a husband earning less.)

"It used to be that men were a good catch because they were high earners. It now looks like this applies to women, too," says University of Wisconsin economist Maria Cancian, who teamed up with Megan Sweeney, a University of California, Los Angeles sociologist, to study the increased importance of wives' wages.

How openly embraced is the prospect of a female breadwinner? According to Pak, a 30-year-old is much less likely than his father to correlate his self-worth with his ability to provide for a family. Pak's wife, Ketner, believes that men who are comfortable with themselves will factor a potential bride's income into the marital calculus, as women have long done. Says Page Fortna, "Men think, 'If we combined our two incomes, how would we do?' But I wouldn't say it's flipped [to the point where] men say, 'I won't have to work, I'll just live off her.'"

Real is more emphatic: "Men aren't just OK with it. They're relieved." Men have long considered traditional marital roles "anemic and constricting," according to Real, and no longer being the sole breadwinner is a loosening of the straitjacket. Not to mention the improved standard of living. "These guys aren't worried about their male ego in relation to their wife's income," says Real. "They just want to plan a nice vacation together."

If financial straits make alpha women hot commodities for younger men, then financial and social status make these same women desirable to older men seeking a mistress or second wife. "Men have always chosen women who make them feel heroic," states Pittman. "It used to be sufficient to be the hero in your wife's and children's eyes. But when narcissistic men feel they've undermarried and their kids are grown, the real audience becomes your peers, the guys who are eating their hearts out because you've just married a former stripper turned circuit court judge."

Powerful men seek powerful wives, and in an era in which power is increasingly equated with intellectual capital, that translates into wives who match or perhaps even exceed their husbands in educational and professional status. (Think Candace Carpenter, founder of iVillage and second wife of Random House president and CEO Peter Olson.)

If men in first marriages are relieved to be outearned by spouse or partner, some older men are positively "proud" of this fact, finds Pittman, who also notes a spike in the number of thirtysomething and fortysomething men pursuing older, successful women. But when it comes to second wives, some things never change. Whether she's a 27-year-old secretary or a 47-year-old corporate vice president, the second wife will likely not be as beneficial a partner as was the first, says Pittman. "The woman who has seen a man get started and develop is more useful than the woman for whom he always has to perform, who may bring out the worst in him."

Alpha-alpha first and second marriages make sense against the backdrop of a shifting pecking order in the nation's governing class. As author David Brooks noted, changes in the prestige factor among couples whose wedding announcements make The New York Times bear this out. "Pedigreed elite used to be based on noble birth and breeding," writes Brooks in Bobos in Paradise: The New Upper Class and How They Got There." Now it's genius that enables you to join the elect."

A Confidence Gap
If high-aiming women are more marriage-eligible than ever, why don't they seem to know it? When a Match.com poll asked marriage-minded men whether they were reluctant to seek out career women as partners, 62 percent said no. But 74 percent of the women surveyed think men are intimidated by women with high-powered careers. "Women have an asset they perceive as a liability," says Pepper Schwartz, author of Love Between Equals: How Peer Marriage Really Works and professor of sociology at the University of Washington. "Young men see these women growing up: She's your doctor, your teacher, your professor. These models can be quite erotic."

So why, then, the confidence gap? Men may be more intimidated by high-powered women than they're willing to admit. And high-achieving women, who tend to marry later, are used to being told that success causes their marrying and childbearing stock to plummet. Sylvia Ann Hewlett, author of Creating a Life: Professional Women and the Quest for Children, made headlines in 2002 by recycling the claim that the more a woman achieves in the workplace, the less likely she is to marry or to have kids. The book triggered a panic reminiscent of Newsweek's highly publicized 1986 report that a 40-year-old woman was more likely to be attacked by terrorists than to marry. That "finding" turned out to be a tale as tall as the heels on single icon Carrie Bradshaw's Manolo Blahniks, and Hewlett's conclusions, based on a small sample of highly elite women, are equally suspect when applied to professionally ambitious women at large.
When Heather Boushey of the Center for Economic Policy Research in Washington, D.C., crunched numbers on 33.6 million American women (gleaned from the 2000 and 2001 Current Population Survey), she found that women between the ages of 28 and 35 who work full time and earn more than $55,000 per year or have a graduate or professional degree are just as likely to be successfully married as other women who work full time. They're just finding love slightly later. While American women marry on average at age 25, college graduates marry at 27. Those with masters or professional degrees wed on average at age 30.

Pop-psych punditry about fragile male egos may cloud the real problem inherent in many alpha-alpha marriages. Psychologists agree that difficulties most often arise not because a man feels emasculated by his wife's star power ("No one can emasculate you except you," avows Pak), but because the woman grows disappointed with her partner.

"If a woman is powerful, smart and ambitious, her expectations for her husband, and for the relationship, rise," says Nando Pelusi, a New York City psychologist who has counseled plenty of alpha-alpha pairings. McCarthy says it's the primary reason that middle-class marriages fail in the first five years: The woman feels her spouse is not keeping his end of the pact.

And when women feel that their husbands aren't reaching their earning or emoting potential, men may decide they've gotten more than they bargained for. "Men truly want brighter, more articulate, aggressive women. They want to be seen in the world with them. But they also want these women to leave some of it at the doorstep," says Real. "These guys love their wives. They just haven't figured out what to do when that strength is channeled toward them."

Real is quick to add that most wouldn't have it any other way. "I must have said it a thousand times," he quips: "'Mr. Jones, you wouldn't be happy with the kind of woman who would put up with you.'"

True to form, most alpha males take pride in the bumps. "If I can sustain a relationship with a real, serious, powerful, happening gal, it means that I'm more real, serious and happening," says Beeman.

"Being involved with these women is like driving a Ferrari," says Pelusi. "It can be uncomfortable and dangerous, but it's ultimately more rewarding than owning a Ford Taurus, which is safe but boring."

How to Marry Rich

How to marry rich
By Xanadu Xero - RAW STORY COLUMNIST

Dusk. I was splayed on my loveseat when a Higher Power spoke to me. In song! Right through a laptop MP3! An old, wailing blues diva delivered the Word: “You can sell it, honey, or sit on it, but girl – don’t you give it away…”
NOW she tells me.
“It’s just as easy to marry a rich man as a poor man,” my mother chirped throughout my teen-hood, when there was still hope. What a crock.

To marry a poor man, all you need is a fifth of Mescal and gas to Vegas. To marry rich in L.A. however…

Heed me, my sisters – you need a plan.

Back in Mom & friends’ moneyed MILF heyday, some hot, Swedish imports blew onto their scene, staking claims in the Beverly Hills Wife Club. They seemed to appear out of nowhere, but ah, ‘twas not the case.

Legend goes that an entrepreneurial older woman (I’d cast Charlotte Rampling) handpicked the perky cupcakes back in Sverige. She perfected their English, dressed them, taught them the arcane ‘which fork’ etiquette that B.H. mistakes for class.

When the bait was prepped (and here lies the brilliance) Madam dangled her herrings in all the right ponds. Lunch, dinner, cocktails at Rich Man haunts, golf/tennis lessons at country clubs, etc.
‘Etc.’ including, I’d wager, scads of unspeakable acts, and how to think of the Queen when grossly disgusted.

It wasn’t long before the bait was snapped up. Nouveau Riche men love nothing more than a natural blonde (carpet matches drapes). Madam was paid, discreetly, a large, pre-arranged fee.
(Wait. Time out. Think about this: ‘Extreme Makeover – The Real Thing’. Would that be a, like, dope reality show or what? Producers, contact me.)

I was recently buoyed by an ad for a seminar given by Lisa Johnson, auteur of the codex, ‘How To Snare A Millionaire.’ Who says our country has eschewed the middle class? Golddigging has come to the people!

“Erase the word ‘golddigging’ from your mind!” simply bubbles Ms. Johnson. Fast-forward to said seminar with my butt in a chair. “Women are hard-wired to mate with the alpha male. Biology is destiny.”

Yeah? Then wouldn’t it follow that the ‘alpha male’ would choose the youngest, most fertile, most beautiful female, knocking all of the broads here right out of the ring?

“I feel its my right as a woman to be well taken care of” snorts a tan, one-process redhead with dye on her scalp who, at fifty-some, has the face she deserves.
“Absolutely!” says Lisa. “I mean, all power to any woman who can get rich on her own, you know? But me…” she shrugs, “I’m artistic.”

We are gathered, to succor destiny, at the LAX (Airport) Holiday Inn, a ghastly place. A jog to the runways, on a sleazy boulevard, you can feel rats in the walls without being psychic. Packs of rap-clad young men clogged the entrance and lobby, perhaps looking for women to beat.

‘The Rich Have To Marry — Why Not You?’ took place in a ‘meeting’ room suitable for double use as a snuff film set. It was next to the bar, across from the men’s toilet. But none of this disturbed the Romans, no siree.

Our group included a be-wigged Hispanic hussy who said she was French, a phlegmy, dry-haired blonde d’un age no spring chicken, some Regis fans from Accounts Receivable, a scary Moroccan with implants akimbo, and a large, tattooed teacher who yelled ‘Yippee!’ at Lisa’s cock-kipeing tips.

“Millionaires just love me,” Lisa peeped. “I’ve been proposed to fifty times by millionaires. In really elegant places — yachts, fancy restaurants. Some of the proposals came from the same men; repeat offenders! And saying ‘no’ after seeing those big ol’ diamonds was not easy, believe me!”
I guess she sensed that every eye flew to her left hand fourth finger, which was bare. She held it up.
“I’m such a romantic,” she said. I’m just waiting for the right guy.”
I would venture to say… bull-pucky.

Until this point, I had compassion. Lisa is pleasant looking, that’s all. She describes herself as “no genius” and I believe her. She’s allegedly a journalist, but I could find no evidence, unless she writes about science in Vancouver. So she hacked out a little niche, however smarmy, and is working it. So what. A girl’s got to pay the bills.
But try to con me… and my core roils with thunder.

“There are a mill-ee-on single millionaires in L.A. County, ladies,” Lisa’s words squiggled forth. “Your chances are good.”

Out where? The lobby? Hades? The Andromeda Strain? As for their ‘chances’… If a mill-ee-on millionaires were trapped in this very room horny and starving – and if these women were naked with food on their loins… I’d say their chances still weren’t good.

“One of the best things you can do, girls, is learn to play golf. Millionaires love to play golf. You should start hitting balls at a driving range. One of the best is at Rancho Park.”

“Wrong!” I clacked out, snide. “Rich men in L.A. don’t go to public parks. They belong to country clubs, and use the range there.”

Lisa was flustered. “Well, yes, but… sometimes on their way home from work…”
“Never.” Okay, I was somewhat obnoxious. All of the lazy, wormy, lifeless, blank faces turned my way with a pout.

“And what do you mean by ‘millionaire’?” I blurted, indelicate. “That’s such a quaint term. Do you include guys who just have a mil on paper, or a million cash? If a guy has a million cash and lives off the interest, we are not talking yachts here, girls, or even Frexinet. Let’s say his money’s in a thirty-year t-bill. He’ll only gross about fifty-five thou. After taxes – thirty-five?

No health insurance. Hardly enough for himself around here, much less a family!”

Actually, I didn’t say that last part. I thought it.

I thought next of a B Actress I know who had managed engagements to three rich, famous men.
All three had dumped her. At one stroke to midnight she wrangled a third. Number three was in his sixties, newly divorced from his nasty wife of forty years. B Actress became his fantasy girl, cooking pot roast in flowing dresses and the like. Now she’s the mother of two hellions, trapped in convention, tied to an old, tired man she never loved.

‘Bow down before the cash you serve, you’re going to get what you deserve,’ as Nine Inch Nails would say.

As for Lisa’s ‘tips,’ I couldn’t bear to repeat them, but here are mine: Get off your ass, learn something and shut-up. You may not marry rich, but you just might have a nice life anyway.

Global Rich List

Do you want to know how rich you are compared to everyone in the world. Check out the Global Rich List, and type in your income.

Small Investment for a Bright Future

There is a new airline in town called Maxjet. This is similar to your jetblue type carrier - making air travel more affordable. The difference here is that MAXjet is an exclusive business class carrier. So you now too can enjoy the luxuries of business class without breaking your bank! Now, they are offering a special $1000 round trip (INCLUDING all taxes and and fees) from the westcoast US to London. Just use the promo code: FSS406.

Just imagine, there you are, sipping champagne, have your leg raised, enjoying a four course meal... and chatting it up with that RICH cutie next to you on his/her business trip! Before you know it, you'll exchange numbers, you'll go on an unforgettable date in London... and the rest is history.

Take advantage of this special deal now and put yourself where you can meet the millionair you want to marry!

Slowly but Surely

As most of us know, the best way to land that rich stud is to be rich ourselves. Just look at Paris Hilton, she is able to date all these billionars because she herself is VERY well off. Yes, she is not as rich as a billionar, but she sure travel in their crowd! And she travels in their crowd because she is very rich herself. It is one of those things - you will date the people you hang around with. That is why most celebrities date each other!

Take a step to get yourself ahead. One of the easier thing you can do - and watch your money grow is open an high interest internet account.

Citibank is offering 4.75% interest - with no minimum.
INGDirect has been a popular one in the last couple of years- but their current interest cannot beat Citibank.

let your money work for you - and you are off to marrying the next shipping billionar.

Drink to get Ahead

we are not talking about going to some dinky pub and down those beer, it is time to move away from the college keg years. RICH people often like to drink wine, they go to wine tastings and other wine events. Hey, if you want to be with them, you better start learning their ways. Hence, it is a good idea to learn more about wine. That way, when you have the opportunity, you can demonstrate your sofistication with your wine knowledge. Here is a great web site that review wines and top tier restaurents: spike's random thoughts.

You can only learn more about wine by drinking wine - so let's all go out and keep drinking your way to the top.

there are also classes you can take. I've heard good things about them - check it out
www.localwineevents.com

Running with the RICH

I am currently trying to find an apartment to move into. This is a pain in my behind. How to find a nice place that does not cost an leg or an arm. Not to mention, people move so fast - don't they ever think about what they are getting before they get it????

I saw a great condo for sale for a reasonable price. But the sales office is only open M-W!!! I guess they can do that because they are snobby like that. I hope the unit I want is not sold yet. Can't even find anyone to respond to my e-mail!! What is up with that! And it is not like it is too cheap or anything!

It is hard to keep up with rich people, they just see it and grab it - they don't even give the rest of us a chance to think about it! Haw..... gotta run faster!

It hits you where you least suspect it!

If you live in the DC metro area, you will know you have a choice between living in DC, Virginia or Maryland. Here is a little info to think about when picking your piece of the world to call your very own.

Here is how the Virginia State income tax rates are structured:

If your income range is between $0 and $3,000, your tax rate on every dollar of income earned is 2%.
If your income range is between $3,001 and $5,000, your tax rate on every dollar of income earned is 3%.
If your income range is between $5,001 and $17,000, your tax rate on every dollar of income earned is 5%.
If your income range is $17,001 and over, your tax rate on every dollar of income earned is 5.75%.

Here is the DC income tax structure:

If your income range is between $0 and $10,000, your tax rate on every dollar of income earned is 5%.
If your income range is between $10,001 and $30,000, your tax rate on every dollar of income earned is 7.5%.
If your income range is $30,001 and over, your tax rate on every dollar of income earned is 9.3%.

And Here is Maryland:

If your income range is between $0 and $1,000, your tax rate on every dollar of income earned is 2%.
If your income range is between $1,001 and $2,000, your tax rate on every dollar of income earned is 3%.
If your income range is between $2,001 and $3,000, your tax rate on every dollar of income earned is 4%.
If your income range is $3,001 and over, your tax rate on every dollar of income earned is 4.75%

From the graph above, we can see that for example, if you live in VA (this calculation is done without any other deductions), and you make $55,000 a year, you will pay about $2905 in income tax a year. And if you lived in DC, you will pay $4325, and $2560 if you lived in Maryland. Therefore, it is cheapest to live in Maryland. Now, is this is the reason why all the rich well to do individuals in the DC metro area live in Potomac Maryland? So, on a $55,000 salary, you will be paying $1402 more to live in DC than Virginia, and $1765 more to live in DC than Maryland. But now we wonder – why do us young professionals love living inside DC?

I guess we love the night life and the convenience – but now, we must stop and think – where do all the RICH SINGLES live? We need to live near them in order for them to incorporate us easily into part of their world!

Moreover, before you meet that RICH man of your dreams – you better think about your own finances, and think whether it is worth paying the premium taxes just to live in DC.

Warren Buffett: How He Does It

Warren Buffett: How He Does It
April 22, 2005 By Investopedia Staff, (Investopedia.com)

Did you know that a $10,000 investment in Berkshire Hathaway in 1965, the year Warren Buffett took control of it, would grow to be worth nearly $30 million by 2005? By comparison, $10,000 in the S&P 500 would have grown to only about $500,000. Whether you like him or not, Buffett's investment strategy is arguably the most successful ever. With a sustained compound return this high for this long, it's no wonder Buffett's legend has swelled to mythical proportions. But how the heck did he do it? In this article, we'll introduce you to some of the most important tenets of Buffett's investment philosophy. Buffett's Philosophy Warren Buffett descends from the Benjamin Graham school of value investing. Value investors look for securities with prices that are unjustifiably low based on their intrinsic worth. When discussing stocks, determining intrinsic value can be a bit tricky as there is no universally accepted way to obtain this figure. Most often intrinsic worth is estimated by analyzing a company's fundamentals. Like bargain hunters, value investors seek products that are beneficial and of high quality but underpriced. In other words, the value investor searches for stocks that he or she believes are undervalued by the market. Like the bargain hunter, the value investor tries to find those items that are valuable but not recognized as such by the majority of other buyers. Warren Buffett takes this value investing approach to another level. Many value investors aren't supporters of the efficient market hypothesis, but they do trust that the market will eventually start to favor those quality stocks that were, for a time, undervalued. Buffett, however, doesn't think in these terms. He isn't concerned with the supply and demand intricacies of the stock market. In fact, he's not really concerned with the activities of the stock market at all. This is the implication this paraphrase of his famous quote : "In the short term the market is a popularity contest; in the long term it is a weighing machine."(see What Is Warren Buffett's Investing Style?) He chooses stocks solely on the basis of their overall potential as a company - he looks at each as a whole. Holding these stocks as a long-term play, Buffett seeks not capital gain but ownership in quality companies extremely capable of generating earnings. When Buffett invests in a company, he isn't concerned with whether the market will eventually recognize its worth; he is concerned with how well that company can make money as a business. (Interested in what companies Warren Buffett is buying and selling? Check out Coattail Investor, a subscription product tracking some of the best investors in the world.) Buffett's Methodology Here we look at how Buffett finds low-priced value by asking himself some questions when he evaluates the relationship between a stock's level of excellence and its price. Keep in mind that these are not the only things he analyzes but rather a brief summary of what Buffett looks for:
1. Has the company consistently performed well? Sometimes return on equity (ROE) is referred to as "stockholder's return on investment". It reveals the rate at which shareholders are earning income on their shares. Buffett always looks at ROE to see whether or not a company has consistently performed well in comparison to other companies in the same industry. ROE is calculated as follows:
=
Net Income
Shareholder's Equity Looking at the ROE in just the last year isn't enough. The investor should view the ROE from the past five to 10 years to get a good idea of historical performance. 2. Has the company avoided excess debt? The debt/equity ratio is another key characteristic Buffett considers carefully. Buffett prefers to see a small amount of debt so that earnings growth is being generated from shareholders' equity as opposed to borrowed money. The debt/equity ratio is calculated as follows:
=
Total Liabilities
Shareholders' Equity This ratio shows the proportion of equity and debt the company is using to finance its assets, and the higher the ratio, the more debt - rather than equity - is financing the company. A high level of debt compared to equity can result in volatile earnings and large interest expenses. For a more stringent test, investors sometimes use only long-term debt instead of total liabilities in the calculation above. 3. Are profit margins high? Are they increasing? The profitability of a company depends not only on having a good profit margin but also on consistently increasing this profit margin. This margin is calculated by dividing net income by net sales. To get a good indication of historical profit margins, investors should look back at least five years. A high profit margin indicates the company is executing its business well, but increasing margins means management has been extremely efficient and successful at controlling expenses. 4. How long has the company been public? Buffett typically considers only companies that have been around for at least 10 years. As a result, most of the technology companies that have had their initial public offerings (IPOs) in the past decade wouldn't get on Buffett's radar (not to mention the fact that Buffett will invest only in a business that he fully understands, and he admittedly does not understand what a lot of today's technology companies actually do). It makes sense that one of Buffet's criteria is longevity: value investing means looking at companies that have stood the test of time but are currently undervalued. Never underestimate the value of historical performance, which demonstrates the company's ability (or inability) to increase shareholder value. Do keep in mind, however, that the past performance of a stock does not guarantee future performance - the job of the value investor is to determine how well the company can perform as well as it did in the past. Determining this is inherently tricky, but evidently Buffett is very good at it. 5. Do the company's products rely on a commodity? Initially you might think of this question as a radical approach to narrowing down a company. Buffett, however, sees this question as an important one. He tends to shy away (but not always) from companies whose products are indistinguishable from those of competitors, and those that rely solely on a commodity such as oil and gas. If the company does not offer anything different than another firm within the same industry, Buffett sees little that sets the company apart. Any characteristic that is hard to replicate is what Buffett calls a company's economic moat, or competitive advantage. The wider the moat, the tougher it is for a competitor to gain market share. 6. Is the stock selling at a 25% discount to its real value? This is the kicker. Finding companies that meet the other five criteria is one thing, but determining whether they are undervalued is the most difficult part of value investing, and Buffett's most important skill. To check this, an investor must determine the intrinsic value of a company by analyzing a number of business fundamentals, including earnings, revenues and assets. And a company's intrinsic value is usually higher (and more complicated) than its liquidation value - what a company would be worth if it were broken up and sold today. The liquidation value doesn't include intangibles such as the value of a brand name, which is not directly stated on the financial statements. (To learn more about Warren Buffett and the holdings his investment vehicle, Berkshire Hathaway, currently owns check out Coattail Investor.) Once Buffett determines the intrinsic value of the company as a whole, he compares it to its current market capitalization - the current total worth (price). If his measurement of intrinsic value is at least 25% higher than the company's market capitalization, Buffett sees the company as one that has value. Sounds easy, doesn't it? Well, Buffett's success, however, depends on his unmatched skill in accurately determining this intrinsic value. While we can outline some of his criteria, we have no way of knowing exactly how he gained such precise mastery of calculating value. (To learn more about the value investing strategy of selecting stocks, check out our Guide To Stock-Picking Strategies.) Conclusion As you have probably noticed, Buffett's investing style, like the shopping style of a bargain hunter, reflects a practical, down-to-earth attitude. Buffett maintains this attitude in other areas of his life: he doesn't live in a huge house, he doesn't collect cars and he doesn't take a limousine to work. The value-investing style is not without its critics, but whether you support Buffett or not, the proof is in the pudding. As of 2004, he holds the title of the second-richest man in the world, with a net worth of more $40 billion (Forbes 2004). Do note that the most difficult thing for any value investor, including Buffett, is in accurately determining a company's intrinsic value.
By Investopedia

The consensus

I know I have not posted for sometime, but in the last month or so I was doing some serious field research. I was searching for the ultimate answer to "how to succeed in life without doing anything." I traveled across the globe to Taipei, Vancouver, New York and Washington, DC - and the answer = MARRY RICH!

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if you are a gold digger, and you just want to marry rich, and go to spas and get messages, and take luxury vacations and have maids to clean your mansion, please visit regularly, and before you know it, you'll be one filthy rich MRS